How to read a Chinese proforma invoice: line by line

The proforma invoice, often abbreviated as PI, is a provisional invoice. It describes the order before production: product, quantities, unit prices, delivery terms, payment terms. It serves to trigger the down payment, open a bank file or letter of credit, sometimes to build an import file. It does not record any sale and does not enter any accounting.

Nor is it the customs document: the customs declaration relies on the commercial invoice issued at the time of shipment. The proforma stands as a firm offer until signed and sealed by the seller. The right reflex is to treat it as a contract in miniature: it sets what you buy, at what price, and under what conditions.

The first check is not on prices but on names. The seller must appear under its full legal name, that of its business license, with its address and registration number. A header that does not match the email sending the document, a trading company posing as a factory, a missing number: each discrepancy must be verified before any transfer.

Bank details demand the same rigor. The beneficiary must be the seller's company, never an individual or another business. Fraudsters intercept emails and resend a proforma with a different account: the payment goes out, then the factory claims its due a second time. Confirm the account through an independent channel, called from a number you find yourself, never from the one printed in the email containing the bank details.

Each product line bears a reference, description, quantity, unit price, and amount. A price only makes sense when accompanied by its currency and its incoterm. "FOB Ningbo" means the seller delivers the goods on board the vessel at the port of Ningbo: freight, insurance, and onward transport remain your responsibility. Under EXW, the price covers the goods made available at the factory; loading, inland transport, and export customs clearance are added afterwards.

The applicable terms are the Incoterms 2020, published by the International Chamber of Commerce, and their eleven definitions allocate costs and risks differently. The named port is part of the price: a proforma that writes "FOB China" without a port does not fix any port; ask for the exact name of the port of loading. Finally, check the currency: invoicing is often in US dollars, sometimes in euros or yuan, and the conversion at payment is negotiable.

The terms block reads like a schedule. The common pattern remains a deposit at order placement to start production, then a balance before shipment or against a copy of the transport document. The decisive point is the event that triggers the balance: against a pre-loading inspection, against a copy of the bill of lading, upon arrival? The earlier the balance is paid, the less leverage you have if the goods disappoint.

The proforma carries a validity date: after that term, the price may change, as it follows raw materials, components, and exchange rates. A validity of a few days to a few weeks is common. The production lead time, on the other hand, starts from receipt of the deposit, and it does not cover shipping or customs clearance. Before paying, note three dates: the price expiration, the balance trigger, and the estimated shipment.

Most unpleasant surprises come from a missing line, rarely from a wrong line. Tooling costs for a customized product, your brand packaging, certificates and tests, quantity tolerance: anything not written is not included. A short one-page quote may not be complete for all that.

Upon receipt of the commercial invoice, a discrepancy with the proforma may appear: adjusted actual quantity, added costs, recalculated price. The remedy is a reconciliation: before paying the balance, compare both documents line by line, quantities, unit prices, and ancillary costs. Any unexplained discrepancy must be resolved before the container leaves, never after.

Our brokerage and sourcing house reviews proformas every day. Our Chinese-speaking team in Guangzhou checks the legal entity behind the letterhead, verifies bank details, and goes over the terms line by line: incoterm, named port, tolerances, tooling costs, payment schedule. We do not speak Chinese ourselves, and that is precisely why this team exists: it communicates directly with the factory, without loss of nuance, and tightens the terms before signature.

In most cases, you do not pay any fees: you open a file, we negotiate the goods for you, and we take a commission on their ex-factory value. The review of the quote, the seller verification, and the pre-shipment inspection are part of the standard process, from the first proforma to the commercial invoice.