Avoid this mistake when purchasing directly from China!

As it will save you a lot of money

 

Asking for FOB price- Many buyers who ask suppliers in China to quote on products are asking them to quote “Free On Board” prices.  When exporting from China, the FOB costs are usually somewhere between 2%-4%. In reality, the Chinese suppliers can’t know in advance the accurate FOB costs they will need to pay, as this is not a fixed cost. The supplier wants to make sure he will not lose money so he will usually add 4-5% to the cost of the products.

In conclusion – when you are asking for the product price to include the FOB cost you might pay 2-3% more than you could pay if the supplier will not need to give you the FOB cost ahead.

 

So, what should we do?

When you ask the supplier to quote ask them for the Ex-Factory/Ex-Work price- in this case, the price doesn’t include any shipping, delivery, and tax costs. Assuming you need to prepare your budget in advance, on getting the quotation from the supplier make sure to put aside an additional 4-5% for the FOB costs. Once the suppliers have finished production and they have the accurate number of cartons, weights, and dimensions, ask them/ the shipping company to quote for the FOB costs separately. This way you can be sure to pay the exact FOB costs you should be paying, and not more.