Delivery terms are a critical part of international trade. They define who is responsible for transportation, customs payments, insurance, and other costs. To avoid misunderstandings, it is essential to understand what Incoterms are and how to negotiate effectively with Chinese suppliers.
What are Incoterms?
Incoterms (International Commercial Terms) are internationally recognized trade terms created by the International Chamber of Commerce. They establish clear rules for the division of responsibilities between the buyer and the seller.
Key terms:
- EXW (Ex Works): The buyer picks up goods at the supplier’s factory.
- FOB (Free on Board): The supplier delivers goods to the ship.
- CIF (Cost, Insurance, Freight): The supplier pays for delivery and insurance to the destination port.
- DAP (Delivered at Place): The supplier delivers goods to the specified location.
How to Negotiate with Suppliers?
- Define your needs: calculate delivery costs and choose the optimal term.
- Ask for details: clarify what is included in the price.
- Verify documents: ensure the supplier provides certificates and invoices.
- Discuss risks: agree on who is responsible for damages or loss.
- Document conditions: ensure all details are stated in the contract.
Why is it important to know Incoterms?
- Cost savings: avoids unexpected expenses.
- Risk reduction: clear division of responsibilities.
- Transparent agreements: understanding all costs and liabilities.
