Incoterms when buying from China: EXW, FOB, DDP and the one that fits

1What Incoterms are, and what they decide

Incoterms are the three-letter trade terms published by the International Chamber of Commerce. The current edition is Incoterms 2020, with eleven rules. Each one is written as the term plus a named place, such as FCA Foshan or FOB Shenzhen, and together they answer three questions: where the seller hands the goods over, who pays for each leg of the journey, and at what point the risk of loss or damage moves from seller to buyer.

They do not decide when you pay, when you own the goods, or what the goods are worth for customs. Payment and ownership are in your contract with the supplier. Customs value is set by Singapore rules, whatever term your invoice shows, which matters for GST and is covered further down.

Most Singapore buyers meet only six or seven of the eleven: EXW, FCA, FOB, CFR, CIF, DAP and DDP. The rest (CPT, CIP and DPU) are close cousins of these, and you will rarely see them on a quote from a Chinese factory or a 1688 seller. For the whole route from China, including modes, transit and customs, start with the guide to shipping from China to Singapore.

2EXW, FCA, FOB, CIF, DAP and DDP compared

Two things in that table catch buyers out. First, under CFR and CIF the supplier pays the freight but the risk is already yours from the moment the goods are loaded in China, so a loss at sea is your claim, not theirs. Second, FOB, CFR and CIF are sea-only terms. For air freight the matching terms are FCA, CPT (carriage paid to) and CIP (carriage and insurance paid to).

3The term that fits a forwarder: delivered to our hub

Shiplet's published service is hub to door. Your supplier delivers to our hub in China by domestic courier or truck; we receive and check the cartons, consolidate them, ship, lodge the Singapore import permit as Registered Declaring Agent, clear customs and deliver to your Singapore address. Sea cargo goes to the Foshan hub below; air cargo goes to our air freight warehouse in Shenzhen instead.

So the price to agree with your supplier is the goods delivered to our hub. In Incoterms language that is closest to FCA, with our hub as the named place: the supplier's job ends when the cartons are handed over at our door, and from there the freight is ours to arrange. Most 1688 and Taobao sellers will never write FCA on anything. They quote free domestic delivery (包邮) or delivery to an address you name (送到指定地址), and for a hub in Guangdong that comes to the same thing. The 1688 shipping guide for businesses covers that workflow in detail.

Three things make this the right fit for LCL. The handover point is somewhere you can name precisely, down to the copyable address above. Domestic delivery inside China costs the supplier very little. And because several suppliers can deliver to the same hub, we merge their cartons into one consignment, with one price, one permit and one delivery. Cartons travel in the supplier's own packaging, arranged neatly together at the hub as part of the rate; complete repacking into new packaging is available on request, at extra cost. If you buy from many small shops rather than one factory, the Taobao consolidation guide shows how that works.

The risk point matters too. Under FCA it passes to you at the handover, which is why our rate includes cargo cover at declared invoice value from the hub: missing cargo is compensated in full, and damage is assessed case by case.

4EXW (ex works): when the supplier will not deliver

An ex works price is the goods at the factory gate. Under EXW the supplier does not even have to load your goods onto the truck, and on paper the export clearance in China is yours as well. It is the lowest number a supplier can quote, and the least complete one.

If a supplier quotes ex works, first ask for the price delivered to our hub. Many will add domestic delivery for a small sum, and a factory in Guangdong is often a short truck ride from Foshan. If a supplier only sells EXW, collection from the supplier to the hub can be quoted separately on request: tell us the supplier's address, the carton count and the dimensions when you get an instant quote, and the pickup appears as its own line on the confirmed quote, so you see the whole cost before anything moves. The pickup is run by our China domestic delivery service, which also takes goods to any other forwarder's warehouse in China.

5FOB, CFR and CIF: port terms and why they don't fit LCL from our hub

FOB is the term most people have heard of, and for a full container it works well: the supplier trucks the container to the port in Shenzhen or Guangzhou, clears it for export and loads it, and your forwarder takes over from the ship. For LCL it fits badly. Shared cargo is handed over at a warehouse days before it is loaded, so an FOB price describes a handover that never happens. The ICC itself recommends FCA rather than FOB for goods handed over before they reach the ship.

With our hub, an FOB quote simply means the supplier has priced delivery to a port you do not need. Ask for the price delivered to our hub instead. If your order fills a container, full containers (FCL) are quote-only with us, because carrier rates move weekly; send the supplier's location and the term they offer when you ask, and the LCL vs FCL guide explains where the break-even sits.

CFR and CIF go a step further: the supplier's own forwarder books the freight to a Singapore port, and you take over there. The supplier chooses the carrier and the forwarder; you pay the costs at the Singapore end (terminal charges, the release of the goods, the import permit, GST and the delivery to your premises), billed by people you did not choose. CIF also includes insurance, but only minimum cover, bought by the supplier. None of this is wrong, but it splits one shipment between two forwarders and makes the true landed cost hard to see until the goods arrive.

6DAP and DDP Singapore offers: what to check

DAP (delivered at place) means the supplier pays to bring the goods to a named place in Singapore and carries the risk until they arrive, ready for unloading. Import clearance and GST stay with you. DDP (delivered duty paid) goes further: the supplier also clears the goods into Singapore and pays the GST, so the goods price is the whole price. Some Chinese suppliers offer DDP Singapore as a convenience, and for a one-off small order it can be exactly that.

Because freight, clearance and GST are folded into one number, you cannot see what each costs. Before you accept a DDP offer, ask:

• Who is the importer on the Singapore permit? Every import permit names an importer. Find out whose company it is, because that is who answers to Singapore Customs for the declaration.
• Is GST really included? DDP means the supplier pays it. If you are asked for GST or other charges on delivery, the price was not DDP.
• What value will be declared? It should be the price you actually paid. Writing a lower value to reduce GST is a false declaration, and the importer named on the permit carries it.
• Where does delivery end? The named place should be your address, not a depot you must collect from.
• Who covers loss or damage, and at what value? Under DDP the risk is the supplier's until delivery; ask how a claim would be handled.

If you are GST-registered, DDP has one more drawback: GST paid under someone else's permit is not yours to claim. With us, freight is one all-in price and GST is a separate line passed through at cost, payable on arrival. By default our company is the importer on the permit, at no extra cost; a GST-registered business that wants to claim the GST back can name its own company as importer instead, an add-on shown on the pricing page. The GST and customs clearance guide explains the permit and what a Registered Declaring Agent does.

7What goes on the commercial invoice

The commercial invoice is the document Singapore Customs uses to value your goods, so the trade term on it needs to match the deal you made. Ask the supplier to show:

• The Incoterm and the named place, for example FCA with our Foshan hub address, Incoterms 2020, or EXW with the factory's city. A 1688 order that includes delivery to our hub can simply say so.
• The currency, and the unit price and total in that currency.
• The price you actually paid, including any domestic delivery charge the supplier billed separately.
• The seller, a plain description of the goods and the quantity, so the goods can be classified.

Whatever the term, GST is charged at 9% on the CIF value: the goods plus freight and insurance to Singapore, plus duty if any. An EXW or FCA invoice does not lower it; the freight and insurance are added to reach the customs value. By air, a shipment valued below S$400 is not charged GST; sea freight has no such allowance.

For 1688 and Taobao orders, a clear order screenshot showing the seller, the goods, the quantities and the price paid is accepted as the invoice. If the order has more than five different items, we also need a proper packing list with carton count, dimensions and weights. The post on the commercial invoice and packing list shows what each line must say.

8What our part costs, from the hub to your door

Once the goods are at our hub, the freight is a published all-in price. Sea LCL is S$82 per CBM, hub to door, with a minimum of 1 CBM; a smaller shipment is charged at the minimum. Air is from S$6.50 per kg on chargeable weight, minimum 10 kg. Transit is 10–14 days by sea and 3–5 days by air, hub to door.

The rate includes receiving and carton check at the hub, sorting and consolidation, trucking to the port or airport, port charges, document fees, the freight, the Singapore customs declaration, import permit and clearance, delivery to your Singapore address and cargo cover at declared invoice value, plus 5 days' storage at Foshan for sea cargo. On top are GST and any duty, collection from the supplier if you need it, storage beyond the free days and special handling such as stairs or timed delivery.

Put your supplier's carton sizes into the CBM calculator to see the freight before you agree a price, and read how to read a freight quote to compare our figure with a supplier's CIF or DDP offer line by line. You pay when your cargo reaches Singapore, before we deliver it, by PayNow or bank transfer. When you are ready, get an instant quote: it appears as you type, you receive a reference number immediately, the confirmed quote follows in writing within a few hours, and nothing is booked until you accept it.