FOB vs EXW vs DDP - the three terms that show up on glove quotes from China. Picking the wrong one can shave 8% off your margin or add three weeks to lead time. Here is the call we would make for each buyer size, written from the factory side.
Incoterms 101 for Importers
Incoterms (International Commercial Terms) define who pays for what in the shipping chain - inland freight, port handling, ocean freight, customs duties, last-mile delivery. The 2020 edition has 11 terms; for China-to-USA/EU glove shipments, you'll mostly encounter EXW, FOB, CIF, and DDP.
EXW - Ex Works
Cheapest factory price (you pay everything beyond the factory loading dock). Risk transfers at factory gate. You arrange Chinese export customs, inland trucking to port, ocean freight, destination customs and last-mile. Best for: high-volume buyers with their own China freight forwarder and customs broker.
FOB - Free On Board
Most common term for first-time importers. Factory delivers to the seaport, clears Chinese export customs, loads onto vessel. You take over at the rail of the ship. Quote includes inland China handling - one less thing to coordinate. Standard for orders above $5,000.
CIF - Cost, Insurance, Freight
Factory pays ocean freight and minimum cargo insurance to your destination port (CIF Long Beach, CIF Rotterdam, etc.). You take over at destination port. Convenient but factories add 10 to 15 percent margin for freight services - not always competitive.
DDP - Delivered Duty Paid
Factory handles everything including destination duties, taxes and last-mile delivery to your warehouse. Highest price, lowest hassle. Risk: some 'cheap DDP' offers from Chinese forwarders skirt customs - your goods can be seized. Verify duties are actually paid via destination customs records.
Sample Cost Breakdown - 1,000 Pairs Gloves to Los Angeles
Factory price: $5.00 x 1000 = $5,000. Inland China trucking: $180. China port handling: $220. Ocean freight FCL share: $620. US port handling: $310. US customs duty (estimated 13.2 percent for gloves): $677. US trucking to your warehouse: $420. Total landed: $7,427. So FOB = $5,400. CIF = $6,170. DDP delivered = $7,427.
Choosing the Right Term
If you ship under $5,000 per shipment: DDP for simplicity. $5,000 to $50,000: FOB for transparency. $50,000+: EXW or FCA if you have a freight forwarder you trust. Always insure cargo separately (0.15 to 0.3 percent of value) - factory CIF insurance is usually minimum coverage and excludes many risks.
Hidden Fees to Watch
BAF (bunker adjustment), CAF (currency adjustment), THC (terminal handling), ISF (importer security filing fee), customs bond fees, demurrage if you don't pick up on time. A good FOB quote includes all China-side fees. A bad one surprises you with $400 in 'origin charges' at booking time.
The 'Too-Cheap DDP' Trap
DDP is appealing - one price, door to door, no customs to handle - but a suspiciously cheap DDP quote from a Chinese forwarder is one of the most dangerous things in importing. Some 'cheap DDP' operations hit the low price by under-declaring value or misclassifying goods to dodge duty - and when customs catches it, your goods are seized and the liability is yours as importer of record, not the forwarder's. The savings vanish into fines and lost stock. If you use DDP, use a reputable forwarder and verify that duties were genuinely paid (you can check destination customs records). A DDP price well below the real landed cost of FOB-plus-duty is not a bargain; it is a declaration you do not want your name on.
Cargo Insurance Is Not Optional
Buyers routinely skip cargo insurance to save a fraction of a percent, then discover that the factory's CIF 'insurance' is minimum coverage that excludes most real-world losses. Marine cargo insurance costs roughly 0.15 to 0.3 percent of cargo value and covers the container going overboard, water damage, theft, and general average (a centuries-old rule that can make you pay a share of a ship-wide loss even if your goods are fine). For a container of gloves worth tens of thousands of dollars, that is trivial money against a real risk. Buy your own all-risks policy rather than relying on a seller's minimum CIF cover - the day you need it, the difference is the whole shipment.
Our Honest Recommendation by Buyer Size
From the factory side, here is the straight call. If you ship under ~USD 5,000 per shipment and have no forwarder, DDP from a reputable operator buys simplicity worth the premium. From ~USD 5,000 to 50,000, FOB is the sweet spot - we handle the China side cleanly, you control the freight and see every cost transparently. Above ~USD 50,000 or once you have a freight forwarder you trust, EXW or FCA gives you the most control and the best rates. Whatever the term, insure the cargo yourself and never chase a DDP price that only fraud could produce. We quote FOB by default because it is the most honest split of responsibility for most of our buyers - and we will tell you when your size argues for a different term.
Coming to Yiwu or Hangzhou?
We host roughly 40-60 buyer visits a year. Workshop A & B run Mon-Sat; Workshop C (cut-resistant) Mon-Fri. Book a slot two weeks ahead and we can pull random samples from any active production line for you to inspect.
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