Reference

China sourcing and UK import glossary

The terms that appear on a supplier's quote, a freight invoice and a customs declaration, defined in plain English — each one linked to the guide that covers it properly.

Customs and tax

EORI number: The identifier a business needs to import into Great Britain. It starts with GB and is issued by HMRC. Read more
Commodity code: The classification number that decides your duty rate and any controls. The first six digits are internationally harmonised; the UK adds more. Read more
Customs value: The value duty and import VAT are charged on. It is not simply the invoice: freight and insurance to the UK border, and buyer-supplied tooling, belong in it. Read more
Transaction value (Method 1): The usual way of arriving at the customs value: the price actually paid for the goods, with the required additions made. Read more
Assists: Things you supply to the factory for free or cheaply — moulds, tooling, materials, designs. Their cost is apportioned across the goods and added to the customs value. Read more
Buying commission: A fee paid to someone for representing you in buying the goods. It can be left out of the customs value only if it is shown separately from the price of the goods. Read more
Import VAT: VAT charged when goods enter the UK, on the customs value plus duty plus costs to the first destination. A VAT-registered business can normally recover it. Read more
Postponed VAT accounting (PVA): Accounting for import VAT on your VAT return instead of paying it at the border. No approval is needed, but you must be VAT registered. Read more
C79 certificate: HMRC's monthly statement of the import VAT you have paid. It is the evidence used to reclaim that VAT. Read more
Importer of record: Whoever is named as the importer on the customs declaration, and so carries the legal responsibility for it. It decides who can reclaim the import VAT. Read more
Duty deferment account: An HMRC account that lets you pay duty once a month by Direct Debit instead of per consignment. Read more
Anti-dumping duty: An extra duty charged on top of the normal rate on specified goods from specified countries. It can be many times the standard rate. Read more
Rules of origin: The tests that decide whether goods count as originating in a country for a trade agreement. Final assembly of Chinese parts elsewhere usually does not qualify. Read more
Customs Declaration Service (CDS): The HMRC system UK customs declarations are filed through. It replaced the older CHIEF system. Read more
Direct and indirect representation: How a customs agent acts for you. Under indirect representation the agent and you are jointly liable for the customs debt; under direct representation it usually stays with you. Read more

Trade terms and shipping

Incoterms®: The ICC rules that allocate cost and risk between seller and buyer. They do not decide ownership, or who can reclaim import VAT. Read more
EXW (Ex Works): The buyer takes over at the factory gate and handles everything after it, including Chinese export clearance. Read more
FOB (Free on Board): Sea and inland waterway only. The seller clears for export and loads the vessel; cost and risk pass to you once the goods are on board. Read more
FCA (Free Carrier): The seller clears for export and hands the goods to your carrier at an agreed place. ICC describes it as well suited to container transport. Read more
CIF (Cost, Insurance and Freight): Sea only. The seller pays freight and insures, but risk passes on loading in China, and the required cover is the minimum level unless you agree more. Read more
DDP (Delivered Duty Paid): The seller delivers with UK duty and import VAT paid. The catch is that you are then usually not the importer of record, so that VAT is not recoverable by you. Read more
Landed price: What one sellable unit costs by the time it is in your warehouse: goods, freight, duty, clearance and delivery, with tooling spread across the run. Read more
LCL and FCL: Less than container load shares a container with other shippers; full container load takes the whole box. LCL carries fixed charges that do not shrink with your volume. Read more
CBM (cubic metre): The volume measure sea freight is quoted on: length times width times height in metres. Read more
Chargeable weight: What air freight is billed on: the greater of actual weight and volumetric weight, so light bulky goods are charged on the space they take. Read more
Demurrage and detention: Charges that start when a container sits too long at the port, or when you keep the box too long after collection. Read more
Bill of lading: The sea carrier's document for the shipment: receipt for the goods, evidence of the contract of carriage, and often a document of title. Read more
Air waybill: The air equivalent of a bill of lading. Unlike a bill of lading it is not a document of title. Read more
ISPM 15: The international standard for treating solid wood packaging — pallets, crates, dunnage — which must be met and marked. Read more

Suppliers and production

Trading company: A business that buys from factories and resells. Not inherently worse than a factory, but you are paying a margin and are a step further from the line. Read more
MOQ (minimum order quantity): The smallest run a factory will make. What drives it — tooling, a dye lot, a print plate — decides whether it can move. Read more
Tooling cost: The one-off cost of moulds, dies or print plates for your product. Paying it separately often unlocks a much smaller run. Read more
OEM: The factory builds your design to your specification. Read more
ODM: The factory already owns the design and puts your brand on it. Faster and cheaper, but the design is not exclusively yours. Read more
Golden sample: The approved physical reference both sides sign off. Production is judged against it rather than against a description. Read more
AQL: The sampling standard an inspection uses: how many units are checked and how many defects of each class are allowed before the lot fails. Read more
Pre-shipment inspection: An inspection done while the goods are still in the factory and still the factory's problem, not after they arrive. Read more
NNN agreement: A non-disclosure, non-use and non-circumvention agreement drafted for China, in Chinese and enforceable there. Read more
First to file: China registers trade marks to whoever files first, not to whoever used the name first. A UK registration does not protect you there. Read more

UK compliance

UKCA and CE marking: Conformity markings for goods placed on the GB market. The mark is the manufacturer's claim; the evidence behind it is the technical file. Read more
Declaration of conformity: The manufacturer's signed statement that the product meets the applicable law. Ask for the test report behind it, not just the declaration. Read more
Own-brand manufacturer: Selling a product under your own name or trade mark normally makes you the manufacturer in UK law, with the manufacturer's duties. Read more
Packaging EPR: Extended producer responsibility: importing packaged goods can make you a packaging producer, with data reporting and disposal fees. Read more
Plastic Packaging Tax: A UK tax on plastic packaging with less than 30% recycled content, once you manufacture or import 10 tonnes or more in twelve months. Read more
WEEE: Producer responsibility for electrical goods. Importing electricals makes you a producer, with registration obligations. Read more
UK REACH: The chemicals regime for Great Britain. It reaches substances in articles, not only chemicals sold as chemicals. Read more
PSTI: Security rules for consumer products that connect to the internet or another device. A statement of compliance must accompany the product. Read more
General product safety duty: The standing obligation not to place an unsafe product on the market, which applies even where no specific regime names your product. Read more

Paying and getting paid

T/T (telegraphic transfer): A bank transfer, the usual way of paying Chinese suppliers. Commonly split into a deposit and a balance against inspection. Read more
Letter of credit: A bank undertaking to pay against documents. Strong protection for larger orders, at the cost of paperwork and bank fees. Read more
HMRC exchange rate: The rate published for customs purposes. Customs declarations use it, not the rate your bank gave you. Read more

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