A Chinese factory quote fits in a line of acronyms: "500 pcs MOQ, FOB Shenzhen, T/T 30/70." This glossary decodes every term of field sourcing and importing — suppliers, Incoterms, costs, logistics, quality — with a one- to two-sentence definition per word. Keep it open when you read a quote or negotiate at a booth: understanding the vocabulary already spares you half the bad surprises.
The acronyms below show up in almost every exchange with a supplier. They're grouped by theme so you can find the right one fast. For topics that deserve a full article, a link points to the detailed explanation.
Suppliers, products and orders
This is the vocabulary of the first conversation: who makes what, in what minimum quantity, and on which document.
| Term | Definition |
|---|---|
| MOQ (Minimum Order Quantity) | The smallest quantity a supplier will produce per SKU or per order. It's the first number to negotiate. See negotiating your MOQ. |
| OEM (Original Equipment Manufacturer) | The factory builds a product to your specifications and brand (you bring the design). |
| ODM (Original Design Manufacturer) | The factory starts from its own existing design and customizes it to your brand (faster, less control). |
| Private label | A generic factory product to which your logo and packaging are applied, without changing the product itself. |
| PI (Proforma Invoice) | The binding quote detailing product, quantity, price, Incoterm and payment terms — signed before production starts. |
| PO (Purchase Order) | Your official buying document sent to the supplier to launch production. See from photo to purchase order. |
| Trading company | A middleman reselling other factories' output; handy for small multi-product volumes, but adds margin and hides the real factory. |
| Sample | A unit of the product sent before ordering to validate quality and compliance. See handling samples. |
Incoterms: who pays what, where risk transfers
Incoterms (International Commercial Terms) are three-letter codes published by the International Chamber of Commerce (ICC) that split, between seller and buyer, who pays for transport and exactly where risk passes from one to the other. Two quotes are only comparable under the same Incoterm.
| Incoterm | What it covers |
|---|---|
| EXW (Ex Works) | The price covers only the goods at the factory gate; all transport, export and risk fall on you from that door. The most "bare" price. |
| FOB (Free On Board) | The supplier delivers, clears export and loads the goods on board the vessel at the Chinese port; sea freight and insurance are then yours. The most common Incoterm for China imports. |
| CIF (Cost, Insurance & Freight) | Like FOB, but the seller pays sea freight and minimum insurance to the destination port. Risk, however, transfers as soon as goods are loaded. |
| DDP (Delivered Duty Paid) | The seller delivers all-in, duties and taxes paid, to your address. The most "complete" price, but often opaque on the cost breakdown. |
Details and traps in Incoterms explained.
Costs and customs: building the true price
The factory price is never the price you pay. These terms rebuild the real "delivered to you" cost.
| Term | Definition |
|---|---|
| Landed cost | Total cost of an item delivered to your warehouse: unit price + freight + insurance + duty + tax + handling. The only figure that sets your margin. Compute it with the landed-cost calculator. |
| CBM (cubic meter) | The volume of a carton or pallet in m³ (length × width × height in meters). Used to allocate freight and fill the container. Use the CBM calculator. |
| HS code | The 6-digit international customs code published by the World Customs Organization (HS 2022 edition), extended to 8–10 digits per country, that classifies a product and sets its duty rate. See import duties & HS codes. |
| Duty | Import tax charged as a % of the customs value (often the CIF value), based on the HS code and country of origin. |
| VAT / import tax | Value-added tax collected at entry, calculated on (customs value + duty + freight); usually recoverable if you're VAT-registered. |
Full method in landed cost and China import costs.
Logistics and ocean freight
Once the order is placed, the vocabulary becomes that of the forwarder and the port.
| Term | Definition |
|---|---|
| FCL (Full Container Load) | You book a whole container for yourself alone. Cost-effective once volume approaches a container's capacity. |
| LCL (Less than Container Load) | Consolidation: your goods share a container with other importers, billed by CBM. Suits small volumes. Compare in FCL vs LCL. |
| 20' / 40' / 40'HC container | Standard units. Approximate usable capacity: ~28–33 CBM (20'), ~58–68 CBM (40'), ~68–76 CBM (40' High Cube). Weight can cap you before volume does. |
| Freight forwarder | The provider organizing end-to-end transport (booking, customs, documents). Your main logistics contact. |
| B/L (Bill of Lading) | The transport title issued by the shipping line — at once a contract, a receipt and a document of title to the goods. |
| THC (Terminal Handling Charges) | Port handling fees (loading/unloading the container), billed at each end and often outside the quoted freight price. |
| Demurrage / detention | Penalties when a container sits too long at the port (demurrage) or off-dock with you unreturned (detention). Plan ahead. |
Quality and inspection
The vocabulary that protects your order between "production OK" and loading.
| Term | Definition |
|---|---|
| AQL (Acceptance Quality Limit) | The maximum percentage of defects tolerated in a lot, defined by the ISO 2859-1 standard. An AQL of 2.5% means a lot with ≤ 2.5% defects is accepted. |
| PSI (Pre-Shipment Inspection) | Inspection of a sample from the finished lot (≥ 80% produced and packed) before loading. The most common check. |
| DUPRO (During Production) | Inspection while production runs (10–30% made) to catch a systematic defect before the whole lot is built. |
| Golden sample | An approved unit, signed by both parties, that serves as the single reference for judging production conformity. |
| QC (Quality Control) | The whole set of product/process checks. See quality control & inspection. |
FAQ
What do MOQ, FOB and CBM mean?
MOQ is the minimum order quantity the factory imposes. FOB (Free On Board) is an Incoterm where the supplier delivers and loads the goods on board the vessel at the Chinese port, with freight then on you. CBM is the volume in cubic meters of a carton or pallet, used to calculate freight and container fill.
What's the difference between OEM and ODM?
Under OEM, you bring your own design and the factory builds it to your brand. Under ODM, the factory starts from a product it already designed and customizes it (logo, color, packaging). OEM gives more control and differentiation; ODM is faster and cheaper because the molds and development already exist.
FOB, CIF or DDP: which should I choose?
FOB is the standard benchmark: you control freight and compare on a clean base. CIF adds seller-paid freight and minimum insurance, convenient but light on detail. DDP is "all-in to your door," comfortable but often opaque on cost and margin breakdown. To compare suppliers, bring everything back to FOB, then compute landed cost.
What is an HS code and why does it matter?
The HS code is a 6-digit international customs identifier (HS 2022, extended to 8–10 digits by country) that classifies each product. It sets the duty rate and any restrictions. A wrong code means a wrong landed cost and a risk of customs reassessment.
AQL, PSI, DUPRO: what are they for?
These are the quality-control tools. AQL sets the tolerated defect threshold per the ISO 2859-1 standard. DUPRO inspects during production to catch a defect early; PSI checks the finished lot before loading. Together they cut the risk of receiving a non-conforming container.
At a Canton Fair booth or in the Yiwu market, these terms fly past fast. Fairloop helps you capture each supplier in under 15 seconds (photo, price, MOQ, Incoterm) offline, then compare quotes and compute landed cost back home — without losing the thread of the vocabulary.