China sourcing glossary
What Is MOQ (Minimum Order Quantity)? Per Order, per Colour or per Year?
What does MOQ mean?
MOQ is a commercial term. It reflects costs that don't shrink with a small order: setting up a machine, buying raw material in minimum lots, printing packaging. A supplier may set it per order, per model, per colour or size, or per material batch. It binds you only as far as your contract makes it a term.
Which level does the MOQ apply to?
Ask before you split an order. The same number can mean very different things:
| Level | What it means | What to ask |
|---|---|---|
| Per order | The whole order must reach the number | Can I mix models or colours to reach it? |
| Per model or colour | Each model or colour must reach it | Which cost needs this: material, dyeing, printing, machine set-up? |
| Per material batch | The supplier buys material in minimum lots | Can leftover material go into other orders? Who owns it? |
| Yearly | A total you promise to buy over a year | Is it a price tier or a promise to buy? What if you fall short? |
If you don't intend a yearly commitment, keep words like "annual minimum" out of the contract, or say that the figure sets only the price tier. If the contract doesn't say which level applies, the gap is filled by later agreement, the rest of the contract or trade practice (art. 510).
These examples are based on matters I have handled. Names, products, places, dates, amounts and other identifying details have been removed or changed. They show the kind of work involved. They don't promise any result.
Acting for a buyer
The total met the MOQ, but the supplier wanted it per colour
A buyer thought its total order met the MOQ, but the supplier wanted the minimum reached for each colour, explaining that its raw material purchases and the minimum run on some processes would not shrink with a smaller order. I asked it to separate real purchasing limits from its usual quoting practice, and to say for each limit which material it concerned, whether that material could go into other orders and who would own any surplus. The buyer reworked its sales plan colour by colour and stopped keeping every style just to make up the numbers. When cancellation came up, the main dispute was whether special material could be charged in full, so I had the purchase approval, the costs already incurred and the reusable material recorded separately; the supplier's word that material was "already stocked" was not a basis for settling. In the end the buyer cut its colour range, the supplier accepted the new quantities and material plan, and the order went ahead at the adjusted price.
Who pays for MOQ material if the order is cancelled?
First, the contract. If it lets you cancel and says what you pay, that governs. If you cancel without a right to, the supplier can claim its loss (art. 584). That claim has limits. The supplier must take reasonable steps to stop the loss growing (art. 591). And a court can deduct what the supplier saved or gained because of the breach, such as the value of material it reuses or sells (SPC Interpretation on the General Part of Contracts in the Civil Code, art. 63).
So check five things before you agree a figure:
- Approval. Did you approve the purchase in writing, with the type, quantity and cost?
- Proof of cost. The supplier's purchase invoices and payment records for that material.
- Reuse. Whether the material fits other orders or other customers' products.
- Ownership. If you pay for material in full, agree that it becomes yours and when it is shipped or handed over.
- Disposal. If the supplier sells or reuses it, that value comes off what you pay.
A clause can settle this before production starts:
MOQ and special materials. The MOQ for this order is [number] units per [order / model / colour]. It sets the unit price and is not a commitment to buy in later orders. The Supplier may buy materials specific to this order only with the Buyer's written approval of type, quantity and cost. If the order is cancelled, the Buyer pays only the documented cost of approved materials that the Supplier cannot reasonably use elsewhere, less any amount the Supplier recovers by using or selling them. Materials the Buyer has paid for in full belong to the Buyer.
Questions from overseas buyers
Can I mix colours or sizes to reach the MOQ?
Only if the supplier agrees. Ask before you split the order, and write the rule into the PO or contract, for example "MOQ [number] units per order, any mix of colours, at least [number] per colour".
Does an MOQ in my contract mean I must keep ordering that amount?
Not by itself. A minimum for one order is different from a promise to buy that amount each time. Whether you have a continuing duty to buy depends on the wording, so read any "annual", "forecast" or "commitment" language closely.
I draft manufacturing agreements that set MOQ, forecasts and cancellation costs →
Sources and translations
- Civil Code of the PRC (2020), arts. 510, 584 and 591.
- SPC Interpretation on the General Part of Contracts in the Civil Code (2023), art. 63.
Translations are mine and unofficial.
Official texts cited in this article.
- Civil Code of the PRC (2020) npc.gov.cn
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