So, you’re thinking about sourcing from China? Awesome choice! China is a global manufacturing powerhouse, offering endless opportunities for businesses big and small.

But if you’re new to this game, you might come across a bunch of unfamiliar terms that can make the whole process feel like learning a new language. No worries—we’ve got you covered!

Here’s a breakdown of essential terms you must know to navigate the world of China sourcing like a pro.

1. MOQ (Minimum Order Quantity)

Ever wondered why suppliers sometimes require you to buy hundreds of units? That’s because of MOQ. It’s the smallest number of units a supplier is willing to produce per order. The bigger your order, the better your price per unit. If you’re just starting out, try negotiating a lower MOQ to test the waters. Always negotiate, but be realistic—factories won’t run machines for just a few pieces unless you’re paying a premium.

Pro Tip: If the MOQ is too high, ask if they can lower it for a slightly higher price per unit.

2. OEM (Original Equipment Manufacturer)

If you want a factory to manufacture a product specifically for you, using your design or specs, this is what you’re looking for. OEM is great if you want a unique product with no competitors selling the exact same thing.

Pro Tip: Protect your designs by asking the supplier to sign an NNN (Non-Disclosure, Non-Use, and Non-Circumvention Agreement.

3. ODM (Original Design Manufacturer)

Unlike OEM, this is when the factory has ready-made products that you can brand as your own. It’s a quicker and cheaper option than OEM because you’re not starting from scratch.

Pro Tip: If you’re just starting out, ODM is a great way to test the market without heavy upfront investment.

4. FOB (Free on Board)

FOB means the supplier covers the cost of getting your goods to the nearest port. But once it’s on the ship? You’re responsible for everything—shipping, insurance, customs, and final delivery. FOB is a good balance between cost and convenience.

Pro Tip: FOB is preferred by many Amazon sellers because it simplifies the shipping process while keeping costs reasonable.

5. EXW (Ex Works)

This means the supplier is only responsible for making the product. You, as the buyer, are responsible for EVERYTHING else—shipping, taxes, customs, and delivery to your warehouse. EXW pricing is usually the lowest, but it requires you to handle logistics.

Pro Tip: If you don’t have experience in shipping, work with a freight forwarder to handle this part for you.

6. CIF (Cost, Insurance, and Freight)

Here, the supplier covers the cost of shipping to your port, plus basic insurance. Sounds great, right? Not always—sometimes suppliers inflate shipping fees, so it’s worth comparing with other freight forwarders.

Pro Tip: Always ask for a separate breakdown of product and shipping costs so you can compare prices.

7. Lead Time

This is the total time it takes from order placement to product completion. It includes manufacturing time, quality checks, and packaging but doesn’t always include shipping. Lead times vary based on the complexity of the product and the supplier’s production schedule. Always confirm this before placing an order, especially if you’re working with a strict launch deadline.

Pro Tip: Always add buffer time, especially during Chinese holidays like the Chinese New Year, when factories shut down.

8. Payment Terms (TT, LC, PayPal, Alibaba Trade Assurance)

  • TT (Telegraphic Transfer): A direct bank transfer, often requiring a 30% deposit upfront and 70% after production.
  • LC (Letter of Credit): A secure method where your bank guarantees payment to the supplier once specific conditions are met.
  • PayPal: Safer for small transactions but has high fees.not commonly used for bulk orders.
  • Alibaba Trade Assurance: Protects buyers by holding payment until products meet the order requirements.

Pro Tip: Never pay 100% upfront. Stick to the 30/70 rule to keep suppliers accountable.

9. Inspection & Quality Control

Never, and we mean NEVER, skip quality control! Don’t assume everything will be perfect just because the supplier says so. Always arrange for product inspections: Third-party inspection services from a trusted China sourcing company like Zignify Global Product Sourcing can conduct quality inspections on your behalf before they leave China.

  • Pre-Production Inspection (PPI) – Checks raw materials before production starts.
  • During Production Inspection (DPI) – Ensures quality is maintained while manufacturing is ongoing.
  • Pre-Shipment Inspection (PSI) – The final check before products leave the factory.

10. HS Code (Harmonized System Code)

A classification code used for customs purposes. Knowing your product’s HS Code helps in determining import duties and ensuring smooth customs clearance.

Pro Tip: Check the correct HS code before shipping to avoid unexpected customs charges.

11. NDA (Non-Disclosure Agreement) & NNN (Non-Use, Non-Disclosure, Non-Circumvention Agreement)

  • NDA: Prevents the supplier from sharing your product details with others.
  • NNN: A stronger agreement that ensures the supplier won’t steal your idea, copy your product, or bypass you to sell directly to customers.

Pro Tip: If you have a unique product, an NNN agreement is a must before sharing designs.

12. Chinese New Year (CNY) & Other Holidays

China practically shuts down for 2-3 weeks during Chinese New Year (late January/February). Factories close, and shipments get delayed.

Other holidays, like Golden Week (October) and the Dragon Boat Festival (June), can also affect production.

Pro Tip: Plan orders 2-3 months ahead of major holidays to avoid getting stuck with delays.

13. Tariffs & Import Duties

Sourcing from China? Then you must understand tariffs and import duties, or you could be in for a nasty surprise when your shipment arrives.

Each country has different import taxes on Chinese goods, and they can vary by product category, material, and trade policies. Some industries (like electronics and textiles) may face higher tariffs than others.

The ongoing U.S.-China trade policies—like the Trump tariffs and potential new regulations—have led to increased import costs on many Chinese goods.

Pro-trip: Check the Harmonized System (HS) code for your product to see applicable duties. Also, Research your local customs website for the most up-to-date rates.

14. Freight Forwarder

These are logistics experts who help arrange shipping, customs clearance, and delivery to your warehouse. If international shipping sounds overwhelming, a freight forwarder is your best friend.

15. Incoterms (International Commercial Terms)

These terms define who is responsible for shipping, insurance, and customs duties. Common ones include:

  • FOB (Supplier covers costs up to the departure port)
  • EXW (Buyer handles everything from factory pickup)
  • DDP (Delivered Duty Paid) – Supplier takes care of everything, including customs and delivery to your door.

16. Private Label vs. White Label

  • Private Label: Private labeling means you create a unique product that is manufactured exclusively for your brand. You control the product’s design, specifications, features, and packaging.

🔹 Example: You design a special ergonomic office chair with unique lumbar support and have a factory produce it just for your brand.

  • White Label: White labeling means you take a pre-existing product and simply add your brand name or logo. Multiple businesses can sell the exact same product under different brand names.

🔹 Example: A factory produces generic water bottles, and you slap your brand’s logo on them without changing the design.

17. Sample Order

Before committing to a large order with a Chinese supplier, you’ll want to request a sample order—also known as a golden sample.

A golden sample is the perfect prototype of your product. It serves as the quality benchmark for mass production, meaning the supplier must match it when producing your full order.

🔹 Example: You order a sample of a leather wallet. You check the stitching, material, and finishing. Once approved, this exact sample becomes the reference for production.

Pro tip: Even after approving the golden sample, ALWAYS conduct a quality inspection during mass production. Why? Because what you approved is just one sample—things can change when production scales up. Factories might use different materials, adjust processes, or cut corners to save costs.

18: RFQ (Request for Quotation)

When sourcing from China, you don’t just ask, “How much for this?”—you send an RFQ (Request for Quotation) to get detailed pricing and terms from multiple suppliers.

An RFQ is a formal request where you ask suppliers for pricing, production timelines, minimum order quantities (MOQs), payment terms, and customization options for a product.

🔹 Example: You want to source 5,000 custom-designed phone cases. Instead of guessing the cost, you send an RFQ to several manufacturers to compare offers.

Pro-tip: When sending an RFQ, be as specific as possible—clear details lead to more accurate quotes. Always reach out to multiple suppliers to compare pricing, lead times, and quality. Don’t accept the first offer—use competing quotes as leverage to negotiate better terms and pricing.

19: Quotation

A quotation from a Chinese supplier outlines key details like unit price, minimum order quantity (MOQ), lead time, payment terms, and shipping conditions.

Pro Tip: Never accept the first quotation! Always compare multiple quotes, clarify what’s included, and negotiate for better pricing, lower MOQs, or faster lead times. Also, beware of hidden costs—some suppliers may quote low to attract buyers but add extra charges later!

20. SKU

An SKU (Stock Keeping Unit) is a unique code assigned to each product variation to help with inventory management, tracking, and organization. Unlike barcodes, SKUs are custom-created by sellers to identify specific products, sizes, colors, or styles.

21:Carrier

A carrier is the logistics company responsible for transporting your goods from the supplier to your destination. Common international carriers include DHL, FedEx, UPS, and freight forwarders handling sea, air, and rail shipments. The right carrier depends on factors like shipping speed, cost, reliability, and customs clearance services. In the sea transportation from China to the United States, shipping companies such as Maersk are common carriers.

22: Container

A container is a standardized metal box used for transporting goods in bulk via sea, rail, or truck freight. The most common sizes are 20-foot and 40-foot containers, with variations like high cube (HC) for extra space and reefer containers for temperature-sensitive products.

Pro Tip: Choosing the right container size is crucial to optimize shipping costs. If your cargo doesn’t fill a full container, consider LCL (Less than Container Load) shipping to share space with others and save money. For large shipments, FCL (Full Container Load) ensures better security, faster transit, and lower cost per unit!

23: Bill of Lading (BOL)

A Bill of Lading (BOL) is a critical shipping document issued by the carrier, acting as a contract, receipt, and proof of ownership of the goods being transported. It contains details like shipment origin and destination, consignee information, product description, and shipping terms (FOB, CIF, etc.).

Pro Tip: Always double-check your BOL before shipment to ensure all details are correct—any errors can lead to customs delays or extra fees. If using a Letter of Credit (LC) for payment, the BOL is crucial for releasing funds. Keep it safe, as it’s needed to claim your goods upon arrival!

24: Landed Cost

This is the total expense of getting your product from the supplier to your warehouse. It includes the product cost, shipping fees, import duties, customs clearance, taxes, insurance, and any additional logistics costs. Simply put, it’s the real cost per unit after all expenses.

💡 Pro Tip: Always calculate landed cost before pricing your product to ensure you’re making a profit. Use landed cost calculators or work with a freight forwarder to factor in hidden fees like port charges, inspection fees, and last-mile delivery costs.

25: Warehouse

A warehouse is a storage facility where your products are kept before being shipped to customers or retail locations. Warehouses can be self-owned, third-party (3PL), or fulfillment centers like Amazon FBA. The right warehouse depends on your inventory size, order volume, and shipping needs.

26: Anti-dumping

The United States implements measures to prevent Chinese exporters from selling products in the U.S. market at prices lower than their fair market value, including the imposition of anti-dumping duties. Chinese photovoltaic products have been subject to anti-dumping investigations, leading to significant duties on certain items. These tariffs have impacted the procurement costs and supply chains of U.S. buyers.

27: ISO standards (International Organization for Standardization Standards)

ISO standards are recognized guidelines that ensure quality, safety, and efficiency across various industries. When sourcing from China, suppliers may claim to meet ISO standards like ISO 9001 (Quality Management), ISO 14001 (Environmental Management), or ISO 13485 (Medical Devices).

Pro Tip: Always verify your Chinese supplier’s ISO certification—request documentation and check its validity with the issuing body. Compliance with ISO standards reduces quality risks, improves product reliability, and ensures smoother international trade!

28: Intellectual Property (IP)

Intellectual Property (IP) refers to trademarks, patents, copyrights, and trade secrets that protect unique products, designs, and brand identity. When sourcing from China, IP risks include counterfeiting, design theft, and unauthorized reproductions.

Pro Tip: Protect your IP by registering trademarks in China, using NDA (Non-Disclosure Agreements) and NNN (Non-Use, Non-Disclosure, Non-Circumvention) contracts with suppliers. If developing a custom product, separate manufacturing across multiple factories to prevent replication. Always work with reliable, vetted suppliers to safeguard your brand and product designs!

29: ISS( Inspection Specification Sheet)

An Inspection Specification Sheet (ISS) is a detailed document outlining the quality standards, product specifications, and testing criteria that a supplier must follow during production and inspection. It ensures that the final product meets your required dimensions, materials, functions, packaging, and compliance standards before shipment.

30: PSI

PSI (Production, Sales, and Inventory report) is a key business metric that compares the planned production rate to actual sales and inventory levels. This report helps businesses optimize production planning, stock management, and sales forecasting to prevent overproduction or stockouts.

31: Waybill

A waybill is a shipping document that provides details about a shipment, including the sender, receiver, origin, destination, and tracking number. Unlike a Bill of Lading (BOL), a waybill does not serve as a document of title, meaning the goods can be delivered without requiring the consignee to present the original copy.

Final Thoughts

Sourcing from China can feel overwhelming at first, but once you get familiar with these key terms, you’ll navigate the process with confidence. Whether you’re launching your first product or scaling your e-commerce empire, understanding these terms will help you avoid costly mistakes, secure better deals, and streamline your supply chain.

But let’s be real—finding the right supplier, negotiating fair terms, and ensuring top-notch quality isn’t always easy. That’s where working with a trusted China sourcing agent can make all the difference. If you’re looking for the best China sourcing company to help with finding the right China suppliers and manufacturers, price negotiation, quality control,  logistics to mention but a few, we are always a phone call away!

Now, go forth and source smart! And if you need expert guidance, don’t hesitate to reach out.

Happy China Sourcing!