Top 7 Wholesale Terms Used By China Manufacturers

Whenever you buy from a wholesaler online, whether the source is from China, Korea or any other countries, you may come across a trade term that you are unfamiliar with. You may have felt unsure or uncertain on what your supplier really means. There are 7 wholesale terms that are frequently used by wholesalers and manufacturers alike. Just understanding these 7 wholesale terms will get you by when dealing with Asia wholesalers.

OEM

OEM stands for original equipment manufacturer. It refers to manufacturers or wholesalers who make and produce goods and products, for other companies to repackage and sell. When a China wholesaler offers OEM service, it means that the company provides private labeling, and may even repackaged the product using your own packaging. Wholesalers that offer OEM service for its customers, however, require a minimum order amount per unit.

ODM

ODM stands for original design manufacturer. Similar to OEM, it refers to a company which manufacturers a product for other sellers to sell under their own brand. Normally when a China manufacturer offers a ODM service, it means that the company can produce products (such as garments) with your own desired designs. These china companies have their own in house design team that won’t have any problems recreating the style or product that you have in mind.

MOQ

MOQ is a short term for minimum order quantity. All genuine wholesalers will normally require a minimum order quantity for the buyers to make a purchase from them. Generally speaking, there are three types of MOQ used by wholesalers:

• Based on the total amount
• Based on per unit
• Based on total amount and unit

Most wholesalers in China will use the second and third type of MOQ. For example, they may require a minimum order amount of 60 pcs per style/color/size and a minimum order of USD$2000 per order. If you do not reach their minimum order amount they may cancel your order, or treat is as samples order, and add a surcharge to the total.

CNF

CNF stands for cost and freight. Like the name suggests, the term CNF refers to sellers who are responsible to pay for all the costs of merchandise and shipping expense for the goods to arrive at the buyers destination.

CIF

CIF stands for cost, insurance and freight. CIF is similar to CNF, with the exception that the seller now has to pay for insurance as agreed to by the buyer.

Commercial Invoice

A commercial invoice is a trade document which is prepared by the wholesaler or manufacturer for the buyer, specifically for custom purposes. Some wholesalers will under declare the value of the items in the commercial invoice, so buyers won’t have to pay too much in taxes when goods arrive in ones country.

FOB

FOB stands for free on board. It refers to sellers who are required to deliver the goods and products on board the ship at the point named at his own expense. Normally a buyer who uses FOB, has employed a third party to handle the shipment. Some use a third party shipper, as they can combine the goods ordered from various manufacturers, and ship it together (this technique also saves on shipping costs).

T/T

T/T stands for telegraphic transfer. It also means cash in advance. This is the most common payment method accepted by wholesale manufacturers in China. There are of course other ways for you to transfer money to your wholesaler such as letter of credit (L/C), bank drafts, and an open account. However, T/T is most preferred by China manufacturers as the money that you have transferred from you bank account will get credited to their bank account directly. The following information are needed to ensure a successful transfer of your money to the recipient’s account:

• Bank Name
• Account number
• Bank Code
• Brance Code
• Swift Code
• Branch Name
• Seller’s Name
• Seller’s Tel No

Conclusion

Many wholesalers (and manufacturers) use these wholesale terms for easy understanding between them and their buyers. However, first time buyers who are unfamiliar with such trade terms may be at a lost. If you would like a complete and longer list of trade terms you can have a look at exportbureau.

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