EXW vs FOB vs DDP: What Your Chinese Supplier’s Price Actually Includes

You ask three suppliers in China for a price on the same product. One comes back at $2.00, another at $2.10, a third at $3.60. Same product, same quantity.

Before you pick the cheapest one, look at what each number actually covers. In most cases they are not three prices for the same thing — they are three different stopping points. The $2.00 quote stops at the factory gate. The $3.60 quote may be the only one that gets the goods to your warehouse.

This is the single most common reason buyers think a Chinese supplier is “cheap” in January and expensive in March.

The four terms you will actually see

EXW (Ex Works) — the price ends at the factory. You pay for loading, inland transport to the port, export clearance, freight, insurance, duty and delivery. On paper it is the cheapest number you will ever see.

FOB [port] — the price ends at the port of loading, after the goods are on board. The supplier handles inland transport and export customs in China; you pay ocean or air freight onward, insurance, import duty and final delivery. This is the most common basis for Chinese export quotes.

CIF [port] — the price includes freight and insurance to your destination port. You still pay import duty, customs clearance at your end, and delivery from the port to your door.

DDP (Delivered Duty Paid) — the price includes everything to your address, duty paid. It looks the simplest and is usually the most inflated, because you are buying freight, insurance and duty from a supplier whose core skill is manufacturing — not shipping.

(You may also see FCA, which is technically the correct term when goods travel by air, and DAP, which is like DDP but you pay the duty. Suppliers often say “FOB” for air shipments out of habit.)

One note for buyers new to China: EXW rarely works as expected

EXW sounds appealing because the number is lowest, but in China it is often impractical. For the supplier to claim its VAT rebate on export, it usually has to be the exporter of record — meaning it must handle export clearance regardless. If you insist on EXW, you will often end up paying a “local charges” invoice anyway.

Practical rule: ask for FOB (sea) or FCA (air). It is a fairer split and it keeps the export paperwork where it belongs.

The costs that live between the lines

When you move from one basis to the next, these are the line items that appear:

• Inland transport and port handling in China (often priced by CBM and by weight)
• Export documentation and customs clearance
• Freight, priced on chargeable weight — for air this is the greater of actual weight and volumetric weight (length × width × height in cm ÷ 6000). A light, bulky product can cost far more to fly than its weight suggests
• Cargo insurance — typically a fraction of a percent of CIF value, and cheap relative to the risk
• Import duty and VAT/sales tax in your country. Rates depend on the HS code and on trade measures in force at the time — never assume last year’s rate still applies
• Customs broker, bond and documentation fees at destination
• Destination charges — terminal handling, release fees, storage if you are slow to collect
• Last-mile delivery, and a surcharge if your address is outside a metro area

Why a quote can be “wrong” in both directions

Two failure modes show up constantly.

The cheap quote that grows. A supplier quotes EXW or “FOB” but leaves port charges, documentation and terminal handling out. By the time the goods clear, the invoice has grown by 15–25% — and the goods are already made, so you have no leverage.

The DDP quote that quietly assumes something. DDP only works if the duty assumption is correct. If the quote was built on an under-declared value, the risk sits with whoever is named as importer of record. Ask directly: who is the importer of record? If the answer is not you, then warranty claims, returns, marketplace requirements and insurance may all become harder to handle — and you may not be able to fix a customs problem yourself.

There is also a timing trap: a DDP number quoted today was probably built on a freight rate from weeks ago. When rates move, someone asks for a surcharge — usually after your deposit has been paid.

A worked example

Say you are buying 1,000 units, packed in cartons totalling 250 kg gross and 1.5 CBM. These figures are illustrative, but the structure is what matters.

Stage	What it adds	Running total
Factory quote (EXW)	$2.00/pc	$2,000
Export clearance + inland + port charges in China	~$120	$2,120
Air freight, 250 kg chargeable at ~$5.50/kg	~$1,375	$3,495
Cargo insurance	~$10	$3,505
Import duty at 5% on goods value	~$106	$3,611
Broker, documentation, delivery	~$150	$3,761

Landed cost: about $3.76 per unit — against a headline price of $2.00.

Nothing here is unusual. The gap between a factory price and a landed price is routinely 60–90%, and on heavy or bulky goods it can be more than double. If your margin calculation starts from the factory price, it is not a margin calculation.

Five questions to ask before you accept any quote

• What exactly does this price include? Get it in writing, line by line, not just the Incoterm.
• Is the freight built in at today’s rate? If yes, what happens if it moves before shipment?
• Who is the importer of record?
• What HS code and duty rate did you use?
• Is the freight priced on actual or volumetric weight?

A supplier who answers all five without hesitation is a supplier who has done this properly before.

How to compare quotes that look nothing alike

Do not compare EXW to DDP. Convert everything to the same basis first.

The easiest method: ask every supplier for FOB [port], then get one freight quote of your own for the same volume and route. That gives you an apples-to-apples comparison of the goods themselves, and a separate, clear view of the logistics cost — which you can then re-quote next time without renegotiating the product.

And once you have a landed cost per unit, do one more thing before you send a deposit: run the supplier through the checks in How to Vet a Chinese Supplier. Price and trust are separate questions, and a good price from the wrong supplier is the most expensive outcome there is.

  Need a landed-cost figure before you commit to an order? Send us the product, quantity and destination, and we will break the whole thing down — goods, freight, duty and delivery — before you pay anyone. Get in touch.