Most jewelry importers first encounter Incoterms on a proforma invoice that lists 'FOB Shenzhen' or 'EXW factory' and they accept it without thinking about what it means. For low-value fashion jewelry the difference is small. For a consignment of 14k gold rings or IGI-certified lab grown diamonds worth tens of thousands of dollars, the Incoterm on the PO decides who pays if the shipment is lost, stolen or delayed. This is what the common terms actually mean in practice.

The four terms most jewelry importers see

Term	Risk transfers	Who arranges export	Who handles import customs	Who buys insurance
EXW (Ex Works)	At factory gate	Buyer	Buyer	Buyer
FOB (Free on Board)	When goods loaded on vessel / handed to carrier	Seller	Buyer	Buyer (seller usually buys to port)
CIF (Cost, Insurance, Freight)	At loading on vessel	Seller	Buyer	Seller (minimum cover only)
DDP (Delivered Duty Paid)	At your door	Seller	Seller	Seller

EXW: cheapest price, most control - and most risk

EXW means the factory makes the goods available at their door and you, the buyer, arrange everything from that point on: trucking to the port, export clearance, ocean or air freight, insurance, import clearance, duties, and last-mile delivery. The unit price looks lowest because the factory has not built logistics cost into the quote. But you need to be an experienced shipper to make EXW work, and you bear the risk of the goods sitting in a Chinese container yard that burns down or is stolen.

For first-time importers, EXW looks attractive on the quote and becomes a headache by week two. It is a reasonable choice once you have a trusted freight forwarder and a standing customs broker relationship.

FOB: the default for most buyers

FOB Shenzhen (or Yantian, or Guangzhou) means the factory handles export clearance and delivers the goods to the port and loads them onto the vessel. Risk transfers to you the moment the goods are on board. From that point, you arrange the ocean freight, insurance and import clearance. This is the most common term for jewelry wholesale because it splits the work sensibly: the factory knows Chinese export procedures, and you know your own import procedures.

One subtle point: FOB on an express shipment (DHL/FedEx) works a little differently because the 'vessel' is a courier aircraft. Ask the factory to specify whether FOB means delivered to the local courier depot or delivered to the airport. For small consignments, the courier depot version is usually what you want.

CIF and why minimum insurance is a problem

CIF means the factory pays for freight and a minimum insurance cover to the destination port. The catch is that the minimum cover under Incoterms 2020 is 110% of the invoice value, in a named Institute Cargo Clauses (C) - which excludes a lot of risks. For high-value jewelry, that cover is not enough. If you ship CIF, upgrade the insurance to All Risks (ICC-A) on your own policy and do not rely on the seller's minimum cover.

CIF is also only valid for sea and inland waterway transport. Do not accept CIF on an air freight or express quote; it is the wrong term for that mode and will confuse the paperwork.

DDP: the premium term, and when it is worth it

DDP means the factory delivers the goods to your door, handles export and import clearance, pays duties and taxes, and carries the risk all the way. The unit price is higher - usually 8-15% above FOB - but you do not need a customs broker, you do not deal with paperwork, and the landed cost is known up front.

DDP is worth it when: you are a first-time importer, your order is small enough that a customs broker's minimum fee would dominate, or you are shipping into a market with complex duties (EU VAT, UK hallmarking). It is not worth it on large, regular orders where you have built a broker relationship and can clear goods cheaper yourself. Also be aware that some factories advertise 'DDP' but mean DAP (delivered at your door, duties unpaid). Confirm in writing that DDP includes duties and taxes paid.

Insurance: the line buyers skip and regret

Jewelry is one of the most cargo-theft-prone categories. A container that would otherwise be ordinary freight becomes a target once the consignee knows it contains gold or diamonds. Two practical rules:

Always insure the shipment for at least 110% of invoice value, under ICC-A All Risks, and list the goods generically on the shipping documents (e.g. 'metal accessories') rather than 'gold jewelry'.
For consignments over $20,000, use a specialist jewelry cargo insurer (Lloyd's underwriters, H. Sieger, Jewelers Mutual) rather than the generic cargo policy that comes with the freight forwarder.
Take photos and a packing list at the factory before shipment, and keep them with the insurance file.

What to write on the PO

Specify the Incoterm (with the exact place, e.g. 'FOB Shenzhen Yantian port'), the insurance cover level, the declared value, and the freight forwarder you will use. If you accept the factory's forwarder, ask for their FMC or NVOCC registration number and get a bill of lading issued in your name. We ship on FOB for most wholesale orders and DDP for first-time buyers who want a landed price; the comparison is on our logistics page. The principle is simple: pick the term that matches your own shipping experience, and do not let the Incoterm be a box you tick without reading.

Authoritative References

For buyers who need to verify the technical and regulatory basis of this guide, the following independent institutions publish authoritative reference data:

eCFR Title 19 - U.S. Customs regulations for tariff classification and import documentation.
European Commission - EU customs, tariffs and trade compliance resources.