Doing Business in China

Doing business in China List of common shipping Terms

Pro-forma invoice (PFI) - A quote from a seller to a buyer. Shows you what the invoice will look like and sets out the seller's terms. Often used to obtain financing for large quantity orders.

Purchase order (PO) - Document to purchase goods or services from a supplier. Contains the name and description of the goods you are buying, quantity, price, payment, and delivery terms.

Commercial invoice (CI) - Bill for goods delivered or about to be delivered. Specifies exactly the product, quantity, value, and a list of any special charges such as handling, packing, one-time set-up fees, etc.

Free on board (FOB) - The price that includes all costs up to the shipment stage. This excludes the costs of shipping your goods through international borders, import duties, etc.

Letter of credit (LOC or L/C) - An agreement between your bank and your supplier's bank to release payment only on certain delivery conditions, like successfully clearing customs or successful loading. Usually used for large transactions.

Minimum opening order (MOO) - Some suppliers expect your first order to be of a certain minimum before allowing future orders in smaller amounts. A future order under this term is termed RO (reorder).

Force majeure - A French legal term translated as "greater force". This contract clause removes liability for natural and unexpected events that affect the transaction, like natural disasters, transport mishaps, or union strikes. Many buyers get insurance for such situations. The main types of insurance are marine cargo insurance, freight forwarding insurance and cargo insurance.