Working with Chinese suppliers means swimming in abbreviations: MOQ, FOB, PI, AQL, HS Code. Miss one and you could overpay, miss a shipping cutoff, or clear customs at the wrong duty rate. This glossary collects 50 terms every importer meets in the first year, grouped by topic, so you can decode a quote, a proforma invoice or a bill of lading in seconds. It is a dictionary, not a tutorial, and deeper guides are linked at the end.
Pricing, Quotes and Payment Terms
These are the words you meet in the very first email and every proforma invoice that follows.
- MOQ (Minimum Order Quantity) – the smallest batch a factory will run in one production cycle, commonly 500 to 1,000 units for consumer goods.
- Unit price – the per-piece factory price, usually quoted FOB and dropping as order volume rises.
- Landed cost – the true cost per unit after product price, freight, duty, insurance and handling are all added.
- Quotation / quote – a supplier’s written price offer, normally valid for 30 days.
- Proforma Invoice (PI) – the supplier’s draft invoice confirming price, quantity and terms; you pay against it.
- Purchase Order (PO) – your official order to the supplier, legally binding once accepted in writing.
- T/T (Telegraphic Transfer) – the standard bank wire, normally split as 30% deposit and 70% before shipment.
- Deposit / down payment – the upfront portion, typically 30%, that unlocks material purchase and production.
- Balance payment – the remaining 70% due before the goods leave the factory.
- L/C (Letter of Credit) – a bank-guaranteed payment instrument, common for large orders above USD 50,000.
- Trade Assurance – Alibaba’s escrow-style protection covering quality and delivery on platform orders.
Shipping and Trade Terms
Incoterms decide who pays freight, insurance and risk at each handover point. For a full tutorial see our linked guide; here are the one-line versions you need on a quote.
- Incoterms – ICC standard rules defining buyer and seller responsibilities under EXW, FOB, CIF and DDP.
- EXW (Ex Works) – you collect goods from the factory door and handle everything after that.
- FOB (Free On Board) – seller covers export clearance and freight to the departure port; you take over at the ship’s rail.
- CIF (Cost, Insurance, Freight) – seller pays freight and insurance to your destination port; you handle import duty and onward trucking.
- DDP (Delivered Duty Paid) – seller handles everything, including import duty, door to door.
- FCL (Full Container Load) – you rent a whole 20ft or 40ft container, the cheapest option for large shipments.
- LCL (Less than Container Load) – your goods share a container with other shippers, suited to small orders under 15 CBM.
- Bill of Lading (B/L) – the carrier’s receipt and ownership document; you need the original to take delivery.
- HS Code – the 6 to 10 digit product classification that sets your import duty rate.
- Customs clearance – the process of filing documents and paying duty to release goods at the border.
- Demurrage / detention – fines charged when containers sit too long at the port or with the consignee.
- Lead time – production time, usually 25 to 45 days after deposit for custom goods.
- TEU / FEU – twenty-foot equivalent unit and forty-foot equivalent unit, the standard container sizes.
Manufacturing and Quality Terms
These words decide what you actually receive on the pallet, not what the catalogue photo promised.
- OEM (Original Equipment Manufacturer) – factory makes your designed product under your brand.
- ODM (Original Design Manufacturer) – factory supplies its own design, you just rebrand it.
- White label – a generic off-the-shelf product you brand with your own logo and packaging.
- Private label – a product made exclusively for your brand, often with custom design changes.
- Sample / prototype – a pre-production unit sent for approval, usually costing USD 50 to 300.
- Mass production – full-scale manufacturing after the sample is approved in writing.
- Pre-production sample – the first official sample locked before the bulk run begins.
- Pre-Shipment Inspection (PSI) – a third-party check of finished goods before they leave China.
- AQL (Acceptable Quality Limit) – the defect threshold, commonly 2.5 for general consumer goods.
- Defect rate – the share of faulty units, usually negotiated under 2 to 3%.
- Tolerance – allowed deviation in size, weight or color, for example plus or minus 2mm.
- Tooling / mold fee – one-off cost for custom molds, from USD 500 for simple items to tens of thousands for complex plastic parts.
- DFM (Design for Manufacturing) – reviewing your design to cut production cost and defect risk before tooling.
Documents, Compliance and Logistics Admin
Paperwork errors cause more delayed shipments than factory errors, so learn these early.
- Commercial Invoice – the official customs invoice showing value, buyer and seller details.
- Packing List – box-by-box weight, dimensions and quantity list attached to each shipment.
- Certificate of Origin (CO) – document proving where goods were made, can lower duty under trade deals.
- Fapiao – China’s official VAT invoice, needed for factory tax records and audit trails.
- CE marking – mandatory conformity mark for products sold in the EU.
- FCC / RoHS – US electromagnetic and EU restricted-substance compliance marks for electronics.
- FDA registration – required for food-contact, medical and cosmetic imports into the US.
- Customs broker – local agent who files your import entry and pays duty on your behalf.
- Import duty / tariff – border tax, often 0 to 25% of product value depending on the HS Code.
- SKU – your internal stock-keeping code for tracking product variants.
- UPC / EAN barcode – retail barcode required by Amazon, Walmart and most Western retailers.
- RMA (Return Merchandise Authorization) – the process code for returning defective goods to the supplier.
- NDA (Non-Disclosure Agreement) – confidentiality agreement protecting your design before tooling starts.
- 3PL (Third-Party Logistics) – outsourced warehouse and shipping partner, common for Amazon FBA sellers.
Next Steps
A glossary only clicks once you apply it to a real quote. Read our guide on how to evaluate Chinese factory quotes to spot hidden costs, and our deep dive on Incoterms explained: EXW vs FOB vs CIF vs DDP to lock in the right shipping term before you pay the deposit.
If you would like someone to decode a PI or a supplier email for you, contact us – we help importers source from China without the vocabulary traps.