Incoterms Explained for Bangladeshi Importers: EXW, FOB, CIF and DDP

When a supplier quotes a price, that price means very little until you know the Incoterm attached to it. Incoterms are standard trade terms that define who pays for shipping, who carries the risk, and at what point responsibility passes from seller to buyer. Two suppliers quoting the “same” price under different Incoterms can mean very different actual costs — here are the four you will meet most often when importing machinery or products from China.

EXW (Ex Works)

With EXW, the supplier only makes the goods available at their factory. You arrange and pay for everything after that — local transport in China, export clearance, freight and import. It offers the most control but also the most work, and mistakes in unfamiliar territory (Chinese export documentation) can cost you.

FOB (Free on Board)

With FOB, the supplier delivers the goods, cleared for export, onto the vessel at the Chinese port. From there the cost and risk are yours. FOB is the most popular term for importing from China because it gives you control over the main freight while leaving local Chinese handling — where you have the least visibility — to the supplier.

CIF (Cost, Insurance and Freight)

With CIF, the supplier arranges and pays for sea freight and insurance to the destination port. It looks convenient, but you have less control over the shipping line and can face inflated local charges at arrival, so compare it carefully against FOB before assuming it’s the easier or cheaper option.

DDP (Delivered Duty Paid)

With DDP, the supplier delivers the goods to your door with all freight, duty and clearance paid. It is the simplest for the buyer, but the all-in price can hide high margins, and you depend entirely on the seller’s logistics with little visibility into what you’re actually being charged for each component.

Comparing the Four Terms

Term	Who Handles Freight	Your Control	Best For
EXW	You, from the factory gate	Highest	Experienced importers wanting full cost control
FOB	You, from the Chinese port	High	Most importers — good balance of control and simplicity
CIF	Supplier, to your port	Lower	Buyers wanting less coordination, willing to trade some cost visibility
DDP	Supplier, to your door	Lowest	First-time or very hands-off buyers, at a cost premium

Which Term Should You Choose

For most importers, FOB strikes the best balance of control and value, letting you manage your own freight from China to Bangladesh. Whichever term you pick, always compare it on a full landed-cost basis — a lower quoted price under one Incoterm isn’t necessarily a lower total cost.

Common Mistakes with Incoterms

1. Comparing quotes without checking they use the same Incoterm. An EXW quote and a DDP quote for the “same” price aren’t comparable at all — one excludes almost everything, the other includes almost everything.
2. Choosing DDP for simplicity without checking what’s actually included. Ask exactly what duty rate and freight method the supplier is using in their DDP calculation.
3. Taking on EXW without export experience. Chinese export documentation and local transport coordination has real complexity — this term rewards experience.
4. Not confirming who arranges insurance — this is easy to overlook and expensive to discover missing after a shipment is damaged.

Questions to Ask Your Supplier

• What Incoterm is this quote based on, exactly?
• If DDP, what freight method and duty rate are assumed in the price?
• Is cargo insurance included, and at what coverage level?
• Who is responsible if goods are damaged during Chinese inland transport (relevant for EXW)?

DE International helps you negotiate the right terms and manages freight and customs on your behalf, regardless of which Incoterm your supplier quotes. Get in touch for advice on your next order.

Frequently Asked Questions

Which Incoterm is best for importing machinery from China?

FOB is the most common choice for most importers — it gives good cost control over the main freight leg without requiring you to manage Chinese export logistics directly, which is the hardest part to coordinate remotely.

Is DDP always more expensive than FOB?

Not necessarily on paper, but the all-in price can hide margin you can’t see. Compare the DDP quote against an independently calculated FOB landed cost before assuming either is genuinely cheaper.

Can I negotiate the Incoterm with my supplier?

Yes, Incoterms are negotiable and suppliers will typically quote whichever term you request, sometimes with a price adjustment. Ask for a quote under your preferred term rather than accepting whatever they default to.

Who arranges customs clearance under FOB terms?

You do, as the buyer, once goods are on the vessel at the Chinese port. This is exactly the kind of coordination a China import support service handles on your behalf.