For international furniture buyers, a complete and accurate understanding of the supplier’s quotation terms is essential to precisely calculate the final cost and clearly define risk responsibilities.
The most commonly used Incoterms in Chinese export trade are EXW, FOB, and CIF.
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1. EXW (Ex Works) – Factory Delivery Price
EXW, or Ex Works, places the minimum responsibility on the furniture supplier and the maximum responsibility on the buyer.
The furniture supplier completes the delivery process simply by making the goods available to the buyer at their factory. Therefore, an EXW quote represents the lowest purely product-related cost you can obtain.
Furthermore, the furniture buyer assumes all costs and risks after picking up the goods from the factory, including local transport, export customs clearance, ocean freight, and insurance. This model is more suitable for buyers who have an office in China or long-term cooperation with a freight forwarder.
2. FOB (Free On Board) – On-Board Delivery Price
FOB, or Free On Board, means the supplier completes delivery when the goods are loaded onto the vessel at the designated port of shipment. The costs and risks of transporting the goods from the factory to the vessel are borne by the supplier.
The product cost in an FOB quotation usually includes all local charges, such as local transportation, terminal handling charges, loading charges, and export customs clearance fees.
3. CIF (Cost, Insurance and Freight) – Cost, Insurance, and Freight
CIF is an Incoterm that places greater responsibility on the furniture supplier.
In this model, the furniture supplier is responsible for delivering the goods to the port of destination and paying the freight and minimum coverage insurance premiums. Therefore, a CIF quotation is the FOB price plus the ocean freight and insurance costs.
A key point to note with this model is that the point of risk transfer is the same as FOB: on board the vessel at the port of shipment! This means that if the goods are damaged during sea transit, the risk and responsibility for claiming the damage are still transferred to the buyer.
CIF is suitable for buyers who are unfamiliar with international logistics or have smaller purchasing volumes.