FOB vs DDP vs EXW — Which Incoterm for Your First China Order?

If you are sourcing solar panels, inverters, or battery racks from China for the first time, one of the first decisions you will make is not the price — it is the Incoterm. FOB, DDP, and EXW look like three letters on a quote, but they change who carries risk, who pays for freight, and who owns the goods at each step.

EXW — Ex Works

The seller makes the goods available at their factory. Everything after that — trucking to the port, export customs, ocean freight, insurance, import clearance — is yours. Pros: lowest quoted price, maximum control. Cons: you are now a freight forwarder, customs broker, and logistics manager. If you have never exported from China, EXW is the highest-risk option for a first order.

FOB — Free on Board

The seller delivers the goods onto the vessel at the port of shipment (typically Shenzhen, Shanghai, or Ningbo). They handle inland transport and export customs; you take over from the ship. FOB is the most common Incoterm for China sourcing and gives a clean split of responsibilities. Pros: you control freight cost and carriers; the supplier has an incentive to get goods to the port on time. Cons: you still need a freight forwarder, and the port side — loading, stuffing, export declaration — is where documentation errors most often happen.

DDP — Delivered Duty Paid

The seller is responsible for everything until the goods are delivered to your door, including import duty and clearance. Pros: one price, one party to blame, lowest management effort. Cons: the supplier (or their agent) controls the shipping — you see the total price but not the breakdown, and problems are harder to trace. For first-time importers, DDP feels safest, but it hides freight and duty margins inside the price.

How to choose for your first order

If you have a freight forwarder and a clear destination port — FOB is the balance of control and cost. If you want a single landed-cost price and will accept less visibility — DDP. If you have a local agent who can handle China-side logistics — EXW can work, but do not try it alone.

The rule that applies to all three

Put the Incoterm, the named place, and the split of costs into the sales contract in writing — and ask for a cost breakdown at each handover point. Evidence-led sourcing starts with knowing exactly where your responsibility begins. A verbal handshake does not survive a damaged container.

Don't choose the Incoterm that looks cheapest — choose the one whose risk you can actually manage.

Planning your first China solar or storage order? I help buyers choose the right terms, verify suppliers, and avoid the hidden costs. Start with the guides at Insights or book a single-project verification report.

Use this as a procurement framework, not as engineering, legal or tax advice. Always confirm supplier identity, product specs and payment terms in writing.