Essential Terms and Jargon in Chinese Procurement

Navigating the Chinese procurement landscape can be daunting for international buyers, especially when encountering industry - specific terms and cultural nuances. Here’s a breakdown of essential jargon to help you communicate effectively with suppliers and avoid misunderstandings:

1. Trade Terms

• FOB (Free on Board): A shipping term where the seller covers costs until goods are loaded onto the vessel. The buyer assumes responsibility afterward, including freight and insurance.
• EXW (Ex Works): The buyer handles all logistics and costs from the seller’s factory gate. Ideal for experienced importers with established shipping networks.
• MOQ (Minimum Order Quantity): The smallest quantity a supplier is willing to produce. Chinese factories often set high MOQs to maintain profitability.
• OEM/ODM:
  • OEM (Original Equipment Manufacturing): Production using your designs/specifications.
  • ODM (Original Design Manufacturing): The supplier provides both design and manufacturing.

2. Payment - Related Vocabulary

• TT (Telegraphic Transfer): A common payment method where funds are wired directly to the supplier’s bank account. Often split into deposits (30 - 50%) and balance payments.
• LC (Letter of Credit): A bank - guaranteed payment method reducing risk for both parties. Requires strict compliance with documentary terms.
• Alibaba Trade Assurance: A platform - backed protection plan ensuring quality and delivery compliance (mentioning this as an example of escrow services without naming specific providers).

3. Quality Control Terms

• QC (Quality Control): Inspections conducted during production (DUPRO) or pre - shipment (PSI) to verify product standards.
• AQL (Acceptable Quality Level): A sampling standard defining the maximum defective rate tolerated (e.g., 1.5% for general consumer goods).
• Golden Sample: A pre - approved prototype used as a quality benchmark for bulk orders.

4. Logistics and Shipping

• ETD (Estimated Time of Departure): When goods leave the origin port.
• ETA (Estimated Time of Arrival): When goods are expected at the destination port.
• LCL (Less Than Container Load): Shared container shipping for smaller orders.
• DDP (Delivered Duty Paid): The supplier manages all logistics, including customs clearance and duties.

5. Contract and Legal Terms

• Force Majeure: Clauses covering unforeseen events (e.g., natural disasters, strikes) that delay fulfillment.
• PI (Proforma Invoice): A preliminary bill outlining payment terms, product specs, and delivery details before finalizing the order.
• Non - Disclosure Agreement (NDA): Protects intellectual property when sharing designs or business information.

6. Cultural and Practical Phrases

• “Tòngxíng” (同行价): Literally “peer price” – a discount rate offered to industry insiders. Politely ask if this applies to your order.
• “Kěyǐ fùyìng” (可以复样): “Can reproduce the sample” – confirm if the supplier can replicate your prototype.
• “Bāo zhuāng” (包装): Packaging specifications. Always clarify whether packaging costs are included in FOB quotes.

Key Tips for Success

• Always request a PI before paying deposits.
• Clarify whether prices are FOB, EXW, or DDP to avoid hidden costs.
• Use AQL 2.5 for non - critical items and AQL 1.0 for high - value goods during inspections.
• Build rapport by learning basic Mandarin phrases like “Xièxie” (谢谢 – Thank you) or “Wǒmen kěyǐ tǎolùn zhè ge jiàgé ma?” (我们可以讨论这个价格吗？ – Can we discuss the price?).

By mastering these terms, you’ll streamline negotiations, reduce risks, and build stronger partnerships with Chinese suppliers. Always double - check definitions in contracts, as interpretations may vary between regions.