How to Read a Chinese Supplier's Quotation

Reading this as a manufacturer? → Read the other side: Why Your Quotation Makes Buyers Go Quiet

A quotation from a Chinese supplier often reads as if it were written for someone who already knew the answer. Three lines of specification, one number, a payment term expressed as a fraction, and a signature. If you mostly buy domestically, the first reaction is suspicion — what are they not telling me?

Usually, they are telling you everything they think you need. The gap is not concealment; it is a different idea of what a quotation is for. Export quotations from China tend to be written as a record of a conversation that has not happened yet — short, because the remaining details are expected to be settled verbally. Quotations in North America and Europe tend to be written as standalone documents — long, because they are meant to be read without anyone present to explain them.

Once you know which parts are convention and which parts are genuine choices, a Chinese quotation becomes readable. And the handful of things that are actually worth worrying about start to stand out clearly.

Start with the Incoterm — it moves the number more than anything else

Before you compare two prices, find the three or four letters next to them. Those letters, not the number, decide what you are actually being quoted.

EXW (Ex Works) means the price covers the goods at the factory gate. Loading, inland transport, export clearance, ocean freight, insurance — all of it is yours. A supplier quoting EXW is not being difficult; they may simply not have a freight forwarder relationship they trust.

FOB (Free On Board) means the price includes getting the goods to and loaded onto the vessel, plus export documentation. Everything after the ship leaves is yours.

CIF (Cost, Insurance, Freight) means the price also includes ocean freight and insurance to your destination port. Your responsibility starts at the port of arrival.

These are not small differences. On a container of bulky goods, moving from EXW to CIF can change the price by a double-digit percentage — without the supplier changing their margin at all.

So when one supplier is 18% cheaper and another is 18% more expensive, check whether they are quoting on the same terms before you draw any conclusion. This single step resolves more confusion than everything else in this article combined.

If the term is missing entirely, ask for it in writing. It is a completely normal question and the answer will be immediate.

The payment terms line, decoded

Chinese export quotations express payment as two fractions. A typical line reads T/T 30% deposit, 70% against B/L copy.

The first fraction is what you pay before production begins. The second is what you pay after the goods are on the water, usually once you are shown the bill of lading — the document that proves the goods have shipped.

The most common variants you will see:

30/70 with balance against B/L copy — the standard for most first orders

50/50 — common for custom or made-to-order production

100% before shipment — normal for small orders, and reasonable for them

L/C at sight — used for larger orders; adds bank cost to both sides but protects both sides

Two things are worth understanding here. First, the deposit percentage is usually a reflection of working capital, not of trust. A factory buying raw material for your order has to fund it before you pay. Second, payment terms are the most negotiable line in the document, and they are easiest to change on a second order, once both sides have a track record.

What you should calmly push back on: a request for the full amount before production on a first order of any size. That is not standard, and a supplier who will not discuss it at all is telling you something about how they handle disagreement generally.

Reading the specification

Chinese quotations often list materials and processes rather than describing a finished product. Q235B steel, 60 micron powder coat, galvanised to EN ISO 1461 is a specification. High quality durable frame is not — but it appears too, and it is the line to treat as unfinished.

The useful test is simple: can you verify this line yourself, or would you need to ask? A coating thickness in microns and a named standard are verifiable. "Export standard" is not a specification; it is a promise to decide later.

One thing that surprises first-time buyers: specifications often get more precise, not less, after you ask. Asking is expected. Sending a drawing with your own tolerances marked is even better, and it is the single fastest way to get a supplier to quote against your actual requirement instead of a generic one.

Lead time and validity

Two short lines that carry disproportionate weight.

Lead time in a Chinese quotation is usually counted from deposit receipt or from drawing confirmation — not from the date of the email. If the anchor is not stated, ask. The difference between those two anchors is often a week or more, and it matters when you are planning a site installation.

Validity matters because raw material and freight prices move. A quotation with a stated validity period is not a sales tactic; it is an admission that input costs move. A quotation with no validity period at all is the one to be cautious about, because you cannot tell whether the number will still exist in three weeks.

Differences between suppliers that are completely normal

A large share of the variation between quotes has nothing to do with quality. Before you read anything into a gap, rule these out:

Different Incoterms, as above

Different certification tiers — one supplier quotes with third-party test reports included, another treats them as an extra

Different production methods — a factory with newer equipment can quote lower on some items and higher on others, depending on the process

Distance to port — inland factories carry real inland freight cost that coastal ones do not

Order size assumed — a quote built around one container of a single item will usually beat one built around mixed items

Currency and exchange assumptions, especially where the quote is in USD but costs are in RMB

Payment terms — a supplier asking for a larger deposit can often quote lower on price, because their financing cost is smaller

None of these is a red flag. All of them are reasons to normalise the numbers before comparing them.

Signals that are worth paying attention to

These are different in kind. Each one is a question waiting to be asked, not a reason to walk away on its own.

A price far below every other quote, with no explanation of how. Very occasionally this is a genuine efficiency. More often it is a different specification, a different grade of material, or a quote that will be revised once you commit.

Refusal to explain what is included in the price. A supplier who can break the price into material, process and packing tells you they know their own costs. One who cannot, or will not, is a planning risk.

A quotation that cannot be traced to a specific factory. Ask for the production address, not the office address, and ask to see the production line over video if a visit is not possible. A supplier who finds this request strange is worth a second conversation.

No mention of inspection or testing. For a first order, third-party inspection is normal and expected. A supplier who has never heard the question may be new to exporting.

Specification that quietly differs from what you asked for. Compare line by line against your own requirement. A substitution that was not flagged is more informative than the price.

Notice what is not on this list: a missing brochure, imperfect English, a short document, or a slow reply during a holiday period. Those are common and they correlate with nothing.

A five-step way to compare three quotes

When you have quotes from three suppliers and they are all shaped differently, do this in order:

Normalise the Incoterm. Convert each quote to the same term — usually FOB — so you are comparing like with like.

List the exclusions. Write down what each quote does not include. This column is often more revealing than the price column.

Match the specification. Put the three specifications side by side and mark every line where they differ in kind, not just in wording.

Check the payment terms and lead time anchors are stated, and by which event.

Only then look at the numbers — and ask the two questions you now have, in writing, to the supplier who looks strongest.

This process takes under an hour and it changes the decision more often than any further negotiation would.

The point of all of this

A Chinese quotation is not a closed document. It is the first half of a conversation, written in a shorthand that assumes the second half will happen.

You do not need to decode it perfectly. You need to know which lines are conventions, which differences are ordinary, and which few signals deserve a direct question. Ask those questions in writing, keep the answers, and you will be comparing suppliers on the things that actually decide whether an order goes well.

If you are the one writing the quotation rather than reading it, the same list works in reverse — Why Your Quotation Makes Buyers Go Quiet walks through it from the factory's side.

I write about cross-border B2B from inside a Chinese manufacturer — get in touch if you would like to compare notes.