# FOB vs EXW for China sourcing

> FOB and EXW change who carries cost, risk and paperwork in a China sourcing order. A practical comparison, with the questions to ask before you accept.

Source: https://luressource.com/sourcing-playbook/fob-vs-exw-for-china-sourcing/

Direct answer. FOB and EXW are two different scopes of work, not two prices for the same product. FOB includes inland freight, export clearance and terminal handling, while EXW starts at the factory gate, so an EXW quote looks cheaper only because it covers less. Normalise 3 fields before comparing two quotes, namely unit, order quantity and price basis, then compare landed cost at the same Incoterm. The comparison does not apply when a buyer already runs their own forwarder in China, where EXW can be the simpler route. Key facts. 1) FOB is usually the easier starting point for a buyer with no local presence in China. 2) A factory with volume often gets better inland freight rates than a small buyer does. 3) Ask 4 questions in writing before accepting a term, namely the named port, terminal handling, clearance and inland freight per container. Sources (6). 1) Incoterms definitions follow the current rules of the International Chamber of Commerce; this page covers sourcing practice only — internal record 2) Incoterms rules — FOB, EXW and who carries cost and risk — https://iccwbo.org/business-solutions/incoterms-rules/ 3) Import duty and tariff treatment — EU customs / TARIC portal — https://taxation-customs.ec.europa.eu/ 4) Harmonized System heading 9507 (rods, hooks, reels, lures) — US HTS lookup — https://hts.usitc.gov/ 5) ISO standards catalog — quality and testing frameworks — https://www.iso.org/ 6) China Customs (GACC) — the authority behind export records — http://www.customs.gov.cn/ FOB and EXW are not two prices for the same thing. They are two different scopes of work, and confusing them is one of the most common ways a sourcing comparison goes wrong. The practical difference EXW (Ex Works) FOB (Free On Board) Supplier delivers to Their own factory gate Named port, loaded on board Export clearance Buyer's responsibility Supplier's responsibility Inland freight Buyer Supplier Terminal handling Buyer Supplier Best suited to Buyers with a forwarder already in China Buyers who want one fewer moving part Why the comparison is so often wrong An EXW quote looks cheaper because it is smaller. Add inland trucking, export documentation and terminal charges, and the two can converge — or reverse, because a factory with volume gets better inland freight rates than a small buyer does. Questions that resolve it in one email Which port is named, and is terminal handling included? Is export documentation and customs clearance included? What is the inland freight from factory to port, per container? What is the quoted validity period, and what triggers a re-quote? A note on our own data Supplier records on this site state a price basis explicitly. Where a factory cannot state one, the record shows "on request" — we do not publish a price that cannot be compared with another price. What each basis includes 3 fields must be stated before any two quotes are comparable: unit, order quantity and basis. Cost line EXW FOB Inland freight to the port Buyer Seller Export clearance and documentation Buyer Seller Terminal handling at origin Buyer Seller Loading on board the vessel Buyer Seller What does each basis shift onto the buyer? EXW: inland freight to the port. EXW: export clearance and documentation. EXW: terminal handling at origin. EXW: loading on board the vessel. FOB: none of the above —the seller carries them to the rail. Topics in detail Three topics from this standard have their own page. Each one can be read, cited and updated on its own, without the rest of this page moving. What the rest of the journey costs The basis decides who pays for the distance between the factory gate and your warehouse. This page puts numbers on that distance, and on the failure that happens when a quote never states which end it covers. 4 questions 1554 words