An Incoterms rule: the seller makes the goods available at its own premises and does nothing more.
Under EXW the risk is yours from the factory gate, including the truck to the port, and so is export clearance. A foreign buyer cannot normally act as the exporter in China, so in practice the forwarder or the factory does it anyway.
Our view: for a first order with a new supplier, FOB is usually the cleaner choice, because the supplier stays responsible for the goods until they are loaded.
What the lower price buys you
A common situation: the buyer accepts EXW because the unit price is lower, then the goods are damaged on the truck to the port, or the export declaration is filed under a name the buyer has never seen. Under EXW the factory has done its part once the goods are ready at its gate. Who exported the goods, and under whose name, is left to a forwarder you may have dealt with once.
There is a quieter cost. Under EXW the forwarder often collects straight from the factory with no one checking the cartons against the order. If inspection is not done before collection, there is no clean point at which a defect can be tied to the factory rather than to transport.
If you do agree EXW
Keep the price, but move the loading and the documents back to the factory:
“Delivery: EXW [factory address], Incoterms 2020, except that the Supplier shall load the goods onto the collecting vehicle at its own risk and cost and provide all documents required for export clearance. The Supplier shall not release the goods to the carrier until the Buyer’s inspection report has been issued.”
That “except” matters. Under plain EXW the seller does not even load the truck.
Related terms
- FOB (Free On Board)
- Business licence and unified social credit code
- Golden sample (sealed sample, 封样)
- All twelve terms
Read next
- Visiting a Chinese Factory Before Your First Order? Sign the NNN First, Then Match Four Names
- Chinese Supplier Breached the Contract: What Can a Foreign Buyer Do?
Sources
- ICC, Incoterms 2020
- Translations are mine and unofficial.
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