Ask an experienced apparel importer where their margin disappeared and the answer is rarely "the factory". It is duty calculated on the wrong value, an Incoterm that quietly moved risk to the buyer, or a shipment held because one declaration did not match the invoice. Shirt orders are especially exposed: they are light, so freight is a small share of the cost and duty is a large one.
This guide is written from the buyer's side of the transaction. It covers the commercial terms, the tariff logic, and the paperwork sequence for shirt imports from China.
Start with the Incoterm, not the price
Four terms (Incoterms 2020) account for almost every shirt order. Comparing quotes without normalising the term is the most common way buyers mis-rank suppliers.
- EXW (Ex Works) — the supplier's obligation ends at their loading dock. You pay inland trucking, export clearance, origin handling, freight, destination charges, duty and final delivery. Cheapest to quote, most work for you.
- FOB (Free On Board) — the supplier delivers to the named port and clears export. Risk transfers when the goods are on board. This is the default for most independent buyers because the freight is transparent and you control the forwarder.
- CIF (Cost, Insurance, Freight) — the supplier pays freight and insurance to your destination port, but risk still transfers at the origin port. Many buyers assume CIF means "delivered"; it does not. You still own the goods in transit and you still clear customs.
- DDP (Delivered Duty Paid) — the supplier handles everything to your door, including duty. Convenient, but you lose visibility of the duty actually paid, and some markets (the EU in particular) treat a foreign seller as the importer of record, which creates VAT registration questions for you.
Practical rule: quote every candidate FOB to the same port, then add your own freight and duty model on top. If a supplier only quotes DDP, ask them to break the price into goods value, freight and duty. Refusing is informative.
Classify the product before you negotiate
Shirts do not sit in one tariff line. The difference between two plausible classifications can be several percentage points of duty, and the classification follows the garment, not the invoice description.
- Woven men's shirts are typically classified in the 6205 heading family, with sub-headings by fibre: cotton, synthetic, silk, wool and so on. Knitted shirts fall in the 6105 family instead.
- Women's woven shirts, blouses and shirt-blouses sit in the 6206 family; knitted versions in 6106.
- A polo shirt made from knitted fabric is a knitted garment even if it has a collar, placket and woven-looking finish. Fibre content and knit/woven construction decide the line, not the styling.
Two implications for buyers. First, your tech pack should state fibre composition by percentage and the construction method, because that is what the declaration is built from. Second, never let a supplier choose the HS code for you without checking it against the actual spec sheet — a "helpful" lower classification is your liability, not theirs.
How duty and tax actually stack
There are three separate charges and they compute differently.
- Customs duty is charged on the customs value. Most markets use transaction value — the price actually paid or payable, adjusted for freight and insurance depending on the valuation basis used nationally. Duty is a percentage of that number.
- Import VAT or sales tax is usually charged on customs value plus duty plus, in many markets, the freight and insurance. This means duty you pay increases the VAT base.
- Destination charges — terminal handling, documentation, customs broker fees, delivery order fees. Small per shipment, meaningful per unit on a light product like shirts.
Because shirts are light, freight as a percentage of value is low while duty as a percentage of value is fixed by tariff. That is exactly why a 20-cent difference in landed duty per shirt can be larger than a 20-cent difference in the FOB price. Build the duty line before you accept the quote.
Check whether your destination has a preferential rate for your origin. Several markets apply reduced or zero rates under trade agreements or unilateral preference schemes for developing-country origin. Eligibility depends on origin rules — where the fabric was woven, where the garment was cut and sewn — not on where the goods were shipped from.
The China side: export rebate and supplier status
China refunds a portion of domestically collected VAT on exported goods. The rebate rate varies by product category, and it is claimed by the exporting entity, not by you. Two things matter for a buyer:
- A supplier with proper export documentation and a rebate entitlement is usually more competitive than one quoting through a third party, because the rebate is already priced into their quote.
- A supplier with messy export paperwork will produce messy documents for you. If they cannot explain their rebate category, assume your declaration will need extra work.
Confirm the supplier is registered to export in their own name, that the bank account matches the legal entity, and that the commercial invoice will be issued by the same entity that appears on the bill of lading.
Documents: the short list that decides clearance
- Commercial invoice — goods description in tariff language, HS code, unit price, Incoterm, currency.
- Packing list — cartons, quantities, gross and net weight, dimensions. Must reconcile with the invoice.
- Bill of lading or airway bill — consignee must match the importer of record.
- Certificate of origin — required for preferential duty and often requested by customs for verification.
- Test or compliance reports — fibre content labelling, flammability, azo dye or formaldehyde limits depending on market and product.
The most frequent clearance failure in apparel is a mismatch between these documents: a fibre percentage on the invoice that does not match the test report, or a quantity that does not match the packing list. Customs does not need a reason to inspect; an inconsistency is enough.
Where buyers actually lose money
- Comparing an EXW quote against a DDP quote and concluding the EXW supplier is cheaper.
- Declaring a knitted polo as a woven shirt because it looks like one.
- Forgetting that duty raises the VAT base, and under-provisioning cash at import.
- Assuming CIF means delivered, then discovering the goods are stuck at the destination port with demurrage accruing.
- Letting the supplier pick the HS code to "keep it simple".
A workable pre-order checklist
- Normalise every quote to FOB, one named port, one currency.
- Classify the garment from the tech pack, not from the product title.
- Confirm origin eligibility before you count on a preferential rate.
- Model landed cost including duty, VAT base effect and destination charges.
- Agree in writing who issues which document, and in whose name.
- Do a dry run on the first shipment with a broker before the peak season, not during it.
If you are building a shirt program and want the commercial documents to line up with the production spec from the first order, talk to the SEEWEED team. We manufacture woven and knitted shirts and fabrics in-house, and we quote FOB with the full specification attached.