China sourcing glossary: negotiating, ordering and paying a factory

Terms 1 to E

1688

A wholesale buying platform reserved for the Chinese domestic market, in Chinese, with prices often lower than on Alibaba. A European importer rarely accesses it alone and generally goes through an agent or broker who translates and secures the order.Read next Sourcing platforms in China: Alibaba, 1688, Made-in-China

Deposit

A sum paid on ordering, generally a fraction of the total amount, which commits the factory to start production. The balance is settled later, often before shipment or against the shipping documents.Read next Factory payment terms in China: deposit, balance, L/C

Sourcing agent

A professional paid to find, compare and follow up factories on the importer's behalf, without buying the goods in its own name. Its pay comes from a commission or a flat fee, not from a hidden markup on the product price.Read next Sourcing agent or broker: who does what, and who pays whom

Alibaba

An export-oriented online marketplace where factories and trading companies present their products in English with indicative prices. Badges such as Gold Supplier or Trade Assurance help with initial screening, without replacing independent verification.Read next Sourcing platforms in China: Alibaba, 1688, Made-in-China · Sourcing scams in China: how to spot and avoid them

Factory audit

A visit or documentary check that verifies the reality of the workshop, its production capacity and its working conditions. It helps distinguish a real factory from a simple intermediary that subcontracts without saying so.Read next Factory audit in China: points to check and documents to request

Buyer badge

Accreditation issued to professionals to enter trade shows such as the Canton Fair, generally upon presentation of a company document. Without this badge, access to the halls reserved for buyers is refused or limited.Read next Canton Fair user guide: dates, phases, and buyer badge in Guangzhou

Purchase order

A document by which the importer formally confirms an order, reference, quantity, price, lead time, after accepting the quote. It serves as evidence in the event of a dispute, even in the absence of a detailed contract.Read next Purchase contract with a Chinese supplier: clauses and value

Purchasing office

A structure, in-house or outsourced, responsible for managing purchasing in China on behalf of a foreign company, with a permanent local presence. It goes further than a one-off agent by ensuring ongoing supplier follow-up.Read next Sourcing agent or broker: who does what, and who pays whom

Specification sheet

A document that precisely describes what the factory must produce: materials, dimensions, tolerances, expected tests. The more detailed it is, the less room it leaves for an interpretation unfavorable to the importer.Read next Product specification: the tech pack the factory follows

Canton Fair

An import-export fair held twice a year in Guangzhou, organized in phases by product family. It allows you to meet many suppliers in a short time and compare samples on the spot.Read next Canton Fair user guide: dates, phases, and buyer badge in Guangzhou

Production capacity

The volume a factory can actually manufacture in a given time, taking into account its lines, its staff and its other clients. Capacity overestimated by the factory is a frequent cause of delivery delays.Read next Verify a Chinese Factory: License, Capital, and Visit

Supplier catalog

A document or digital medium listing the references a factory or agent offers, with photos and sometimes indicative prices. It serves as a starting point for selection, but the prices shown must always be reconfirmed with a quote.Read next Finding a reliable Chinese supplier: method and verification

Unified Social Credit Code

An official 18-character identifier that appears on every Chinese business license and allows the legal existence of a company to be verified. Checking it online avoids dealing with a shell or an inactive company.Read next Verify a Chinese Factory: License, Capital, and Visit

Sourcing commission

The agent's or broker's pay, generally calculated as a percentage of the order amount. It must be known and discussed before the order to avoid any ambiguity about what it covers.Read next Sourcing commission: rate, basis and how it works

Purchase contract

A document that sets out the mutual commitments, price, quantity, lead time, quality, penalties, beyond what the proforma states. It is the strongest document in the event of a disagreement with the supplier.Read next Purchase contract with a Chinese supplier: clauses and value

Broker

An intermediary who connects the importer and the factory and can, depending on the case, negotiate, secure payment or follow production. Its role and pay must be clarified from the start to avoid any confusion with a simple translator.Read next Sourcing agent or broker: who does what, and who pays whom

Production lead time

The time the factory needs to manufacture the order once the deposit is received, excluding transport. It must be set in writing with a clear start date, otherwise it remains difficult to enforce.Read next Negotiating with a Chinese factory: price, deadlines, terms

Quote

A price proposal for a given quantity and specification, sent before the firm order. Comparing several quotes only makes sense if the exact scope, Incoterm, packaging, quality control, is identical.Read next Requesting a quote from a Chinese factory: the well-made RFQ · Comparing two factory quotes on equal terms, without misreading the price

Sample

A physical unit of the product sent before the order to validate feasibility, appearance or quality. Keeping it allows a conformity dispute to be settled once production has started.Read next China factory sample: golden sample and pre-series

Escrow

A payment mechanism in which funds are held by a third party and released to the supplier only after delivery or shipment is confirmed. It reduces the risk of paying without receiving anything, particularly with a new supplier.Read next Paying a Chinese Supplier: Wire Transfer, Letter of Credit

Terms E to N

Labeling

The set of mandatory or commercial statements affixed to the product or its packaging, which vary according to the product category and destination market. Specifying it in the specification sheet avoids a customs rejection or a return to the factory.Read next Labelling Textiles Imported from China: Composition, Care, Origin

Exclusivity

A clause that reserves for the importer, for a given zone or period, the marketing of a product made specifically for them. It only has value if it is written and backed by a penalty in the event of non-compliance.Read next Protect your molds, designs and trademark in China

Commercial invoice

The final billing document issued by the supplier, which forms the basis for customs clearance and differs from the proforma sent before payment. Its amounts and description of the goods must correspond exactly to what was ordered.Read next How to read a Chinese proforma invoice: line by line

Technical data sheet

A document detailing a product's characteristics: materials, dimensions, performance, sometimes test results. It complements the specification sheet and serves as a reference in the event of a conformity dispute.Read next Product technical documentation: what the importer must hold

Trade fair

An event that brings together suppliers and buyers from a sector, in China or elsewhere, to present products and make contacts. It remains an effective way to compare several factories in a short time and judge their seriousness on the spot.Read next Canton Fair user guide: dates, phases, and buyer badge in Guangzhou

Contractual warranty

A supplier's commitment, written into the contract, to repair, replace or compensate in the event of a defect found after delivery. Its scope and duration must be negotiated before the order, as few factories grant it spontaneously.Read next Purchase contract with a Chinese supplier: clauses and value

Golden sample

A sample approved and signed by both parties that becomes the official quality reference for the entire production run. In the event of a dispute, it is against this unit that the delivered goods are compared.Read next Golden sample: the reference sample that settles disputes

Golden Week

A national holiday week in early October in China, during which most factories and carriers shut down. Accounting for it in the schedule avoids a several-day standstill in the middle of production or shipping.

Incoterm

An international rule that splits between buyer and seller the costs, risks and formalities of transport, for example EXW, FOB or DDP. The choice of Incoterm directly changes the comparable price from one quote to another.Read next Incoterms for import from China: EXW, FOB, DDP, which Incoterm to choose

Letter of credit

A payment commitment issued by the importer's bank in favor of the supplier, triggered against the presentation of compliant documents. It secures both parties but remains heavier to set up than a wire transfer for a small order.Read next Paying a Chinese Supplier: Wire Transfer, Letter of Credit · Factory payment terms in China: deposit, balance, L/C

Business license

An official Chinese document (yingye zhizhao) certifying that a company legally exists and specifying its authorized business scope. Checking it confirms that the supplier has the right to manufacture or sell what it offers.Read next Verify a Chinese Factory: License, Capital, and Visit

Made-in-China

A platform connecting Chinese suppliers and foreign buyers, comparable to Alibaba but with a partly different positioning and supplier base. Cross-checking it with other sources helps confirm the seriousness of a supplier found elsewhere.Read next Sourcing platforms in China: Alibaba, 1688, Made-in-China

Mandate

A contract by which the importer gives an agent or broker the power to act in its name for all or part of the sourcing. It specifies the extent of the powers granted and prevents an intermediary from committing the importer beyond what was agreed.Read next Sourcing agent or broker: who does what, and who pays whom

White label

The practice of having an existing product from the factory's catalog made under the importer's brand, without specific development. It costs less and goes faster than custom development, at the cost of weaker differentiation.Read next White Label and Private Label in China: Steps and Contracts

MOQ

The minimum quantity a factory agrees to produce for a given reference, below which it refuses the order or charges a surcharge. It is often negotiable, especially for a first trial or a commitment across several orders.Read next MOQ China: understand and negotiate the minimum order quantity

Mold

A manufacturing tool, generally metal, needed for the series production of a plastic or metal part. Its cost is separate from the product's unit price, and its ownership must be formally set out in writing to avoid it remaining stuck at the factory.Read next Protect your molds, designs and trademark in China

NDA

A confidentiality agreement that prohibits the supplier from disclosing or reusing information provided by the importer: drawings, specifications, designs. Its real scope in China remains limited compared with an NNN agreement, which is better suited to the local context.Read next Protect your molds, designs and trademark in China

Negotiation

An exchange aimed at adjusting price, lead time, MOQ or payment terms before the order, based on concrete elements: volume, long-term commitment, comparison with other quotes. It rarely concerns price alone and benefits from bringing quality and lead time into the discussion.Read next Negotiating with a Chinese factory: price, deadlines, terms

NNN

A type of contract, non-use, non-disclosure, non-circumvention, drafted under Chinese law to protect a design or product against copying or circumvention by the supplier. It is more effective in China than a standard NDA, because it can be invoked before a local court.Read next Protect your molds, designs and trademark in China

Chinese New Year

The longest holiday period of the year in China, generally in late January or February, during which factories and carriers close for several weeks. Any order that must be delivered within this window needs to be scheduled several months in advance.Read next Chinese New Year 2027: factory calendar and import timeline

Terms O to Y

ODM

A production mode in which the factory designs the product itself from an existing base and customizes it for the importer: brand, colors, small variations. It requires less development investment than OEM but leaves less control over the final design.Read next White Label and Private Label in China: Steps and Contracts

OEM

A production mode in which the factory manufactures a product according to the plans and specifications provided by the importer, under its brand. It allows for stronger differentiation than white label, with development costs and MOQs that are often higher.Read next White Label and Private Label in China: Steps and Contracts

Tooling

The set of molds, jigs and specific settings needed to manufacture a custom product. Its cost, often billed separately, must be clarified before the order, as must the question of its ownership at the end of the relationship.Read next Protect your molds, designs and trademark in China

Packaging

The product's individual or transport packaging, which meets both commercial requirements (presentation, branding) and logistics requirements (strength, stackability). Specifying it in the specification sheet avoids generic packaging unsuited to the destination market.Read next Importing packaging from China: boxes, cartons, printing

Late delivery penalty

A contractual clause providing for compensation, generally financial, if the factory delivers after the agreed date. It only has a real deterrent effect if its amount and calculation method are set before the order.Read next Purchase contract with a Chinese supplier: clauses and value

Pilot run

A small quantity produced on the factory's actual lines before full production launches, to validate process and quality under real industrial conditions. It allows a defect to be corrected before it repeats across thousands of units.Read next China factory sample: golden sample and pre-series

FOB price

The price of the product loaded on board the ship or aircraft at the Chinese port or airport, excluding international freight and insurance. It is the most common basis for comparison between quotes from different factories, provided the loading point is the same.Read next Incoterms for import from China: EXW, FOB, DDP, which Incoterm to choose

Proforma invoice

A provisional invoice issued by the supplier before payment, detailing the price, quantity and terms of the upcoming order. It serves as the basis for the deposit but does not have the legal standing of a final commercial invoice.Read next How to read a Chinese proforma invoice: line by line

Intellectual property

The set of rights, trademark, design, patent, that protect a product or design against copying. In China, its protection relies mainly on a local filing and an NNN agreement, more than on rights held in Europe alone.Read next Protect your molds, designs and trademark in China

Discount

A price reduction granted by the factory, generally linked to volume, order regularity or faster payment. It negotiates better with concrete arguments than with a simple request for a lower price.Read next Negotiating with a Chinese factory: price, deadlines, terms

Currency risk

The financial exposure linked to fluctuations between the euro and the billing currency, most often the dollar or the yuan. Knowing it before setting a sale price prevents an exchange rate move from wiping out the planned margin.Read next Paying in Dollars or Yuan: Exchange Rates and Hedging

Trade show

An event, notably the Canton Fair but also sector-specific trade shows, where suppliers present their ranges to buyers. It allows new factories to be spotted and the perceived quality of a sample to be judged firsthand before any commitment.Read next Canton Fair user guide: dates, phases, and buyer badge in Guangzhou

Balance payment

The last payment owed to the supplier, generally settled before shipment or against the shipping documents, once the deposit has been paid upfront. Linking it to documentary proof, photos, inspection, reduces the risk of paying for goods that are not ready or not compliant.Read next Factory payment terms in China: deposit, balance, L/C

Subcontracting

The practice by which a factory has all or part of an order manufactured by another production unit, without always informing the importer. Spotting it during an audit or a visit helps avoid losing control over the product's actual quality.Read next Verify a Chinese Factory: License, Capital, and Visit

T/T (telegraphic transfer)

An international bank transfer, the most common payment method to China, generally paid in two stages, deposit then balance. It is fast but irrevocable once sent, which is why it helps to combine it with safeguards, such as an inspection before the balance payment.Read next Paying a Chinese Supplier: Wire Transfer, Letter of Credit

Trade Assurance

A service offered by Alibaba that protects part of the payment in the event of non-conformity or non-delivery, for orders placed through its platform. It provides a useful safety net for a first purchase, without replacing independent verification of the supplier.Read next Sourcing platforms in China: Alibaba, 1688, Made-in-China

Trading company

A trading company that buys from factories and resells for export, without manufacturing itself. It eases access to several factories and to small quantities, generally at the cost of a markup and less transparency about the actual manufacturer.Read next Sourcing agent or broker: who does what, and who pays whom

Factory

A production unit that actually manufactures the goods, as opposed to an intermediary that resells without producing. Checking that a supplier is truly a factory, and not a trading company in disguise, avoids a hidden markup and clarifies liability in the event of a defect.Read next Verify a Chinese Factory: License, Capital, and Visit

Supplier verification

The set of checks, business license, history, client references, actual capacity, carried out before committing to a supplier. It reduces the risk of dealing with an inactive company, a shell, or an undeclared intermediary.Read next Finding a reliable Chinese supplier: method and verification · Verify a Chinese Factory: License, Capital, and Visit

Yiwu

A Chinese city built around a giant wholesale market, specializing in small items and low-cost mass production. It suits volume orders on simple products, more than custom development.

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