The main difference between FOB and EXW in China.

If you ask anyone a question about the difference between FOB y EXW, most people will tell you that at EXW the supplier delivers the goods to you in their factory and, whatever happens to you from then on is your responsibility; and at FOB, the supplier delivers to the port and there is a change of responsibility.
That´s is the definition of the book, but the reality is another thing. FOB and EXW are concepts that say who is going to keep with the tax refund. If you buy FOB, taxes will be for the supplier. On the contrary, when it is EXW, the taxes are for you (who will receive them in local currency through your friendly exporting company).

That´s why many times you ask for an EXW and FOB quote, and the price of EXW is notoriously higher than the FOB price. This is not logical, because in FOB the supplier has to pay, among other expenses, the export documents and the transport from the factory to the port, which implies that the FOB should be, for one reason, more expensive than EXW: to dissuade us from taking that option.

We do not place as an option the one that would seem obvious: “the Chinese when losing the tax refund reflect that loss on the price”, because the price difference between FOB and EXW doesn´t go hand in hand with the tax refund.

In conclusion, we recommend that you find a company that helps you keep the “Tax Rebate” and, thus improve your percentage of profit from your international businesses with China.