Price negotiation with suppliers
We have already reached the halfway point of this Manual for Importing from China and we have come across something that is constantly talked about and that is of interest to every importer: price negotiation. negotiation of prices and conditions of purchase.
Why is there so much talk about price negotiation for imports from China? Basically because the cultural differences between China and the West are enormous and it is at this point in the operation that the big clash occurs. These are some of the things to keep in mind when negotiating:
– Bring a reliable translation service as the Chinese do not usually negotiate in English even if they know the language.
– It is very common for the supplier to try to pay commissions to translators, purchasing agents and other intermediaries to get better deals, something that is not frowned upon in China. Therefore, we must be careful with whoever is going to negotiate on our behalf, because they may end up collecting more money from our supplier than from us and hurt our deal.
– In China, the personal relationship is liked. If you can afford it, it is preferable to go to China in person with an interpreter rather than negotiate at a distance or leave it in other hands.
– If any product is to be manufactured, it is likely that the supplier will be willing to lower the price almost indefinitely. Watch out! What we are actually doing is lowering the quality of the product, probably in the materials. Then come the surprises.
– Volume and regularity make the difference. Many suppliers in China have no more demand than supply, which gives them great bargaining power. The best way to get good prices with consistent quality is to order regularly and in large volumes. If our company only represents 1% of that supplier’s sales, sooner or later a larger customer will come along and we will be left out.
– Do not give too much importance to written contracts. Basically in China they are a dead letter and will only become the subject of discussion. A customer who goes contract first is seen as someone who wants to cheat and is not trustworthy. However, exclusivity contracts and confidentiality agreements are respected to a large extent.
– You have to negotiate shorter lead times than you really need. Productions are delayed and can play a trick on us.
– Beware of Chinese New Year because the whole country stops for 3 weeks. Industry shuts down completely and the ports become saturated. Normally no one accepts orders for those dates, if someone offers production in February it is impossible for them to deliver on time.
We hope you have learned about some important negotiation practices in China. In the next installment we will discuss quality control, another key to success in importing from China.
Other entries in the Handbook for Importing from China:
– How much does it cost to import from China? (A practical example)
If you want to import from China, do not hesitate to contact us without obligation.
