During watching some offers and during negotiations with your potential Chinese partners, you will encounter abbreviations that may confuse you. Here are the explanations of the trade abbreviations.

OEM - Original Equipment Manufacturer - manufacturer who resell another company's product under his own name and branding. OEM refers specifically to the act of a company rebranding a product to its own name and offering its own warranty, support and licensing of the product. The term is really a misnomer because OEMs are not the original manufacturers; they are the resellers.

ODM - Original Design Manufacturer - this term is similar to OEM. The only difference is that ODM points to design.

T/T - Telegraphic Transfer - simply wire transfer. It's the simplest and easiest payment method to use. T/T payment in advance is usually used when the sample and small quantity shipments are transported by air. The reason why is that the documents like air waybill, commercial invoice and packing list will be sent to you along with the shipment by the same plane. As soon as the shipment arrives, you can clear the customs and pick up the goods with the documents. As it's acknowledged, T/T payment in advance presents risk to the importer if the supplier is not an honest one.

L/C - Letter of Credit - this payment method offers a lot of protection to the parties. A letter of credit is a letter written by the importer's bank to the exporter. It verifies that the payment will be guaranteed when the bank is presented with the concrete documents (bill of lading, and freight documents). Most letters of credit are "irrevocable" once the importer has had them sent. The L/C payment procedure is usually as follows: the importer applies to open the L/C to the seller through a bank who can open the L/C in importer's country. The opening bank will inform The Bank of China that the L/C has been opened. The Bank of China will inform the seller that the L/C has been established. After the goods are loaded onto the ship without any damage, the captain will issue proper document. The seller submits the documents to The Bank of China to gather the payment. The Bank of China will send the documents to importer's bank. Then importer goes to the bank to make the payment, to get the documents. With all of them, the importer picks up the goods, after the goods arrive on the destination sea port. L/C is used for the larger quantity order shipped by sea.

R&D - Research and Development - most of manufacturers have a department which is responsible for research and development, design new products and innovate the current products

LCL - Less than Container Load - sometimes it appears in the order description and means that the exporter sells smaller parts of products, the whole container is not neccessary


INCOTERMS - International Commercial Terms - have existed since 1936 and regulated the trade terms. Here are some of them:

EXW, FCA, FAS, FOB, CFR, CIF, CPT, CIP, DES, DEQ, DDU, DDP, DAF

The explanation of their meaning can be found
here.