Sales agreement (Sales agreement)
This is the contract that specifies the terms of the business transaction between the supplier (i.e., the Chinese manufacturing company or wholesaler) and the importer.
AQL (Acceptance Quality Limit)
This is a method that, based on statistics, determines what percentage of defective products is to be considered acceptable.
Manufacturing company or manufacturer
A company that produces goods using its own production line rather than subcontracting the work to a third party company (as in the case of wholesale exporters).
Alibaba.com
The leading B2B trade exchange platform. Alibaba does not directly deal with the manufacturing or export process; rather, it provides appropriate visibility and communication tools to various manufacturing companies, wholesale export companies, and importers.
B2B (business to business)
It can be translated into Italian as “intercompany commerce” and denotes electronic business transactions that occur between two businesses (rather than between a business and retail consumer, or business-to-consumer, B2C).
B2C (business to consumer)
It can be translated into Italian as “retail” and denotes electronic business transactions that occur between a business and a retail consumer (rather than between two businesses, i.e., business-to-business, B2B).
Production capacity
Ability possessed by a given supplier in manufacturing a product that meets the required specifications, certification and quality standards. It will depend on the ability to access quality raw materials and components, machinery possessed, and experience, which can vary both in terms of years in business and number of foreign customers.
Preliminary product samples
These are the product samples made before you sign the sales agreement with materials and components that are different from those that will be used during the manufacture of your goods. These samples should not be confused with product samples (batch samples), which are instead made from the same materials and components that will be used to manufacture the entirety of the goods you are purchasing.
Product samples (Batch samples)
These are the product samples made during the production phase, that is, using the materials and components that will be used to manufacture the entirety of the goods you are purchasing. These samples should not be confused with preliminary samples, which are instead made before you sign the sales agreement with materials and components different from those that will be used during the production of your goods.
Share capital (Registered capital)
Share capital is the amount paid in by shareholders at the incorporation of the company (or during any subsequent capital increase). It is also called venture capital because, in the event of bankruptcy or cessation of business, it is used to repay debts accumulated by the company.
Bank account certificate
This is a document issued by the provider’s bank that contains useful information to prevent possible fraud.
Offshore company
Legal entity, usually established in a tax haven (e.g., Hong Kong or Singapore), that operates outside the jurisdiction of the country where the owners conduct most of their business (e.g., China).
Wholesale Exporter (Wholesaler)
This is a company that acts as an intermediary between the Chinese manufacturing company and the foreign importer.
Proforma invoice (PI)
It is a document, issued before payment occurs, that specifies the type of product, the name of the seller and buyer, the amount to be paid, delivery terms, and so on. The pro forma invoice can be considered somewhat like a “pre-contract” and has no legal value.
FCL (Full Container Load)
FCL stands for “Full Container Load.” It is an ISO international standard; it indicates that you intend to rent a full 20- or 40-foot container to ship your goods to the importing country.
Supplier
This may be a manufacturing company that produces the goods using its own production line or, conversely, a wholesale exporter that only acts as an intermediary between the manufacturing company and the importer.
Qualified supplier
Supplier that passed your selection. The selection criteria will vary depending on the stage you are in and can range from the price or minimum order quantity offered by a given supplier (regarding the selection that occurs during Phase B of the import process) to the validity or non-validity of key documents such as commercial license or product testing (during the final supplier selection that occurs at the beginning of Phase C).
Incoterms
International trade terms that represent a set of codes designed to regulate the responsibilities of the various parties involved during an international trade transition (import/export). Specifically, Incoterms specify when and how responsibility for the transportation of goods passes from the supplier to the importer.
Operative address (Operative address)
This is the registered office of the company.
ISO9001
This is one of the ISO9000 quality standards governing quality management systems.
Quality inspection (or control)
The purpose of a quality inspection is to verify that the goods meet the required product specifications and that the defect rate is less than that specified in the sales agreement. It should be performed before the final balance is paid, that is, before the goods are shipped from China.
Business license
A business license (“business license” in English) is an authorization issued by the Chinese Commercial and Industrial Bureau that allows a business to be operated legally in China.
LCL
LCL stands for “Less than Container Load.” It is an ISO international standard; it indicates that you intend to use a container shared by multiple importers who intend to ship their goods to the same destination port.
Sourcing process
The process from product definition to product purchase and receipt.
Minimum order quantity (MOQ)
Specifies the minimum quantity of goods that a supplier will agree to sell to you for each order. If the importer cannot meet this constraint (for example, because he does not have enough capital to invest) the supplier will not accept the order.
Legal representative of a company
The only employee of a Chinese company who has the right to sign a sales agreement on behalf of that company (usually corresponds to the owner of the company).
Escrow (or guarantee down payment) service
This is a company, Alipay for example, that acts as an intermediary between the buyer and in seller for the purpose of ensuring the security of the transaction. The buyer deposits the payment at the escrow service, which informs the seller that the money has arrived. In order to receive the money, however, the seller must comply with the terms of the contract (the sales agreement in your case).
Choice of law
In the case of international transactions, it is necessary, when signing a sales agreement, to specify the jurisdiction in which any dispute is to be resolved. In the case of import/export with China, the best choice is to choose a Chinese permanent court of arbitration (CPA), for example, the Shanghai Court of Financial Arbitration (SCFA).
SKU or product ID
It means “Stock Keeping Unit.” It is a string of alphanumeric characters that uniquely identifies a product.
Product specifications.
They include all the information that defines the design, quality, and functionality of the product to be imported such as materials, components, dimensions, weight, colors, and so on.
Certification standards
They aim to ensure consumer safety and the quality of the product sold in a given market. The European Union is considered the macro-market with the most stringent standards, followed by the United States of America.
Quality management system (QMS)
This is a protocol that specifies how the quality of products is monitored, starting with the inspection of raw materials and components, through skimming defective samples during the production phase, to their repair or remanufacturing, and finally to the quality inspection that precedes the packaging of goods.
Product testing
The objective of a test is generally to verify that a given product meets the required certification standards (CE, RoHS, REACH, and so on). You can also request a custom test in case your company’s standards are higher than those required by the European Union.
Virtual office (Virtual office)
This is a service that provides a mailing and telephone address while reducing the maintenance costs involved with an office (rent, staff, etc.). Using a virtual office as a registered office is a common practice of offshore companies.