Glossary

Sourcing and import terms, explained simply

Plain definitions of the words you meet when you buy from China and import into the European Union.

Acceptance quality limit (AQL): A sampling standard (ISO 2859-1) that sets how many units to inspect and how many defects are allowed before a batch fails.
Article 23 licence: A Dutch licence that lets a VAT-registered importer declare import VAT in its VAT return instead of paying it at the border. Several other EU countries have similar schemes.
Bill of lading and air waybill: The transport document issued by the carrier, a bill of lading for sea freight and an air waybill for air freight.
Bill of materials (BOM): The full list of parts and quantities needed to build one unit.
CE marking: The mark that shows a product meets the EU laws that apply to it, such as those for electronics and toys. For most products it is a self-declaration backed by a technical file, not an approval from an authority.CE marking for small electronics
Commercial invoice: The seller's invoice for the shipment. Customs use it to value the goods.
Customs broker: The agent who files the import declaration for you, often arranged by the freight forwarder.
Customs duty: A tax on imported goods set by product code and origin, charged as a percentage of the customs value. Many electronics are at 0 percent, clothing is often 12 percent.Import VAT and duty on a first order
Customs value: The amount duty is charged on, usually the price of the goods plus transport and insurance to the EU border.
Delivered at Place (DAP): The seller delivers to the named place. You handle import clearance, duty and VAT.
Delivered Duty Paid (DDP): The seller delivers to your door and pays import duty and VAT as importer. Equilinq quotes run to your door but you stay the importer, so they are not DDP.
Design for manufacturing (DFM): Reviewing a design so it can be made reliably and at a good cost before tooling is paid for.Design for manufacturing
Economic Operators Registration and Identification (EORI) number: The EU registration number every business needs to import or export goods. You get it from customs in your own EU country.
Electronics manufacturing services (EMS): A contract manufacturer that assembles and tests electronics for other brands.Electronics manufacturing services for founders
EU declaration of conformity: A signed document that lists the EU laws and standards a product meets and names who takes responsibility for it.
EU responsible person: A company established in the EU that must be named on the product or packaging for goods from outside the EU. Usually the importer or an authorised representative. Equilinq does not take this role.The GPSR responsible person
EUR 3 parcel duty: A flat EUR 3 customs duty per item type on goods worth EUR 150 or less imported into the EU from outside, since 1 July 2026. A consolidated bulk order already pays normal duty and is not affected.The EUR 3 EU parcel charge
Ex Works (EXW): You collect the goods at the factory and pay for everything after that.
Factory verification: Checking a supplier's business licence, real address, capacity and trading history before you order.How we verify factories
Free On Board (FOB): The seller pays to get the goods onto the ship at the named Chinese port. You pay sea freight and everything after. Used for sea freight only.
General Product Safety Regulation (GPSR): The EU rules, in force since 13 December 2024, on safety, labelling and traceability for consumer products sold in the EU, including online.The GPSR responsible person
Golden sample: The approved sample both sides keep as the reference for bulk production.Sample approval checklist
Harmonised System code (HS code): The six-digit product code customs use worldwide. The EU adds digits to set the exact duty rate.
Import value added tax (import VAT): VAT charged at import on the customs value plus duty, at the rate of the country where goods are released. A VAT-registered business can usually reclaim it.Import VAT and duty on a first order
Importer of record: The person or company named on the import declaration. It is responsible for duty, VAT and product compliance. With Equilinq the client stays importer of record.
Incoterms: Standard trade terms from the International Chamber of Commerce that say who pays for and carries the risk of each part of a shipment. The current version is Incoterms 2020.
Integrated Tariff of the European Union (TARIC): The EU tariff database that shows the duty rate and rules for each product code.TARIC database
Landed cost: Everything you pay to get goods to your door: goods, purchasing, freight, service fee, customs duty and import VAT.Landed cost calculator
Minimum order quantity (MOQ): The smallest order a factory accepts for one product, colour or size. It can often be lowered for a first order at a higher unit price.Minimum orders for custom apparel
New product introduction (NPI): The steps from a frozen design to the first production run: tooling, first article and pilot run.New product introduction
Not recommended for new designs (NRND): A flag a chip maker puts on a part it plans to phase out.Not recommended for new design parts
Original design manufacturing (ODM): The factory sells you its own existing design, adapted and branded for you.OEM and ODM
Original equipment manufacturing (OEM): The factory makes a product to your design under your brand.OEM and ODM
Packing list: A list of cartons, contents, weights and sizes that travels with the shipment.
Pre-shipment inspection: A check of finished goods before they leave China, against the approved sample and the order. Equilinq checks every order in its warehouse in China, with photos.Quality control
Proforma invoice: The draft invoice a factory issues before payment, setting out price, quantity and terms.
Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH): The EU chemicals regulation. For imported goods it mainly restricts listed substances and requires you to disclose substances of very high concern above 0.1 percent by weight.
Restriction of Hazardous Substances (RoHS): The EU directive that limits hazardous substances such as lead and mercury in electrical and electronic equipment.
Technical file: The design, test and risk documents behind a CE mark. It is kept for ten years and shown to authorities on request.
Tooling: The custom steel or aluminium mould used to make plastic or metal parts. It is paid once; write down in the contract who owns it.Rapid injection moulding
Unit price: The factory price for one piece at a given quantity. It usually falls as quantity rises.How to read a China quote
Waste Electrical and Electronic Equipment (WEEE): The EU directive on waste electrical and electronic equipment. Sellers of electronics register with a national scheme and show the crossed-out bin symbol.