How to Negotiate with Chinese Suppliers?
Building a relationship with a Chinese supplier is more complicated than building a relationship with a domestic supplier.
When you find Chinese suppliers and want to buy from them, you need to negotiate with them. Negotiating with Chinese suppliers is not easy, especially in different countries.
Also, Chinese suppliers may not take your IP seriously. That's probably not good manufacturing workmanship.
Most Chinese suppliers are unwilling to negotiate. They will quote you a target price based on the unit price.
Chinese suppliers are more willing to discount if the order is large enough. This article will explain the negotiation process and techniques with Chinese suppliers.
Top 10 Negotiation Strategies with Chinese Suppliers
Before you start negotiating with a Chinese supplier, be sure to lay down the ground rules. True price negotiation should create a win-win relationship and avoid ensuring quality assurance.
Learn about the cultural differences between China and your home country.
Listen to your suppliers, take your time, and don't make a hasty decision - some negotiating skills you need when negotiating with Chinese manufacturers.
1. Don't Get Caught Up in Small Talk.
In China, you will find it difficult to start a business without an initial offer. Don't get bogged down in Chinese "compassion".
Doing business with Chinese suppliers is not a ritual, but a game of strategy. Consider your Chinese suppliers as partners to get favorable results.
The best way to avoid any surprises with a new supplier is to create a win-win relationship.
2. Choose the Best Target Price to Negotiate.
You don't change a supplier's mind about lower prices overnight. It's better to convince them with a reasonable price or the best price.
Knowing your Chinese suppliers will determine production costs based on the target price you set for them.
If you choose a target price that is too low, you could lose money. There may be low-quality products, canceled orders, and delayed shipments.
3. Be Sure to Bring a Translator
Never sign an agreement without first reading the payment terms. Too many deals have stalled because a foreigner thought the content of the agreement was acceptable.
But it was later discovered that things were not as agreed. The problem is you don't speak Chinese, or the new supplier doesn't speak English.
Then there will be misunderstandings and conflicts in the negotiation process with many suppliers.
4. Formulate Product Quality Standards
Always negotiate product quality standards with the plant's multiple suppliers. You can agree on premium standard quality with your supplier.
Plus, you can have a different supplier recommend one to you. Low-quality products can ruin your good customer reputation. Therefore, the highest quality standards are set together with the suppliers.
5. Always Check Raw Material Costs
Upstream markets change quickly, especially for metals and polymers. Therefore, it would be wise for you to check these raw material cost changes during negotiations.
Suppliers may be concerned about gradual fluctuations in raw material prices. This affects their bottom line and competitive advantage.
It is an acceptable way to use it as a negotiating tactic. It lets you monitor product costs, especially if your suppliers are not forthright.
6. Set the Unit Price According to the Quantity
Things are simple when you set unit costs on a quantity basis. Now you can get even lower prices by buying more units.
In most supplier price negotiations, your unit cost will decrease as your quantity increases. This strategy is suitable when you pass on discounts from suppliers to dealers to increase cash flow.
This way, your resellers can lower their new prices to sell more of your product.
7. Present Yourself As an Organization
Suppliers in China are more likely to negotiate with organizations than individuals. They believe organizations will be more receptive to their terms.
But more professional in payment. Your initial impressions will help build confidence and trust.
Even if there is a price difference, the rest of the negotiation will be much easier. Negotiating prices with Chinese suppliers requires both patience and negotiating skills.
8. Find Suppliers for a Better Experience
Always focus and be able to understand every element in the final price.
In order to have a better negotiation experience with Chinese suppliers, you need to try new reliable and multiple suppliers. Yours doesn't seem to work You better start doing research on both suppliers.
It is essential to conduct market research to obtain supplier quotations at the outset.
9. Don't Argue with Chinese Manufacturers for Reasonable Prices.
A good supplier will never lower his profit, so don't argue with them. It's a little risky if the potential supplier has significantly lower profit margins.
The lower output will cause factory management to lower the quality of product specifications. Ask other suppliers for the best prices in price negotiations.
On a quality basis, a better price can be much better than a cheaper one. If your quality requirements are higher, it is better to increase the price.
10. Select Sea Freight
Always choose the sea shipping method instead of air shipping because air shipping will cost you higher price. Try to save money during the import process.
Always do this during price negotiations, as some suppliers may not mention this in their final pricing. A factory manager also raised higher labor costs in price negotiations.
Standard Terms to Keep when Negotiating.
Before final price negotiations, there are some basic terms you should use.
1. Total Time from Order to Delivery
Lead time is the most commonly used term when negotiating. Here, you ask the supplier the following questions:
During which months do you have more time and are not busy with other manufacturing processes?
How many days do you need to ship if approved for production?
2. Property Rights (if Your Product is Unique)
Always register your unique products to avoid copyright issues. Always make it clear with suppliers not to share your confidential information with anyone outside the facility.
3. Quality Standards and Certifications
Always prioritize your quality standards over price. The actual price increase of suppliers can be negotiated through bulk purchases. For better pricing, tell them your realistic target price.
4. Hire Business Negotiation Experts
RND has a team of experts to help you navigate the maze of Chinese suppliers, and we can make critical recommendations to ensure the best deal for your business.
Work out good raw material price terms for future business deals. The same raw material should be used to get a better product price.
5. Enter the Manufacturing Facility
Always make sure in price negotiations that factories should only be approved factories. If they order smaller industries to manufacture, it should be in writing.
This strategy will result in a better quality of your product. Allow your representatives in writing to visit the factory at any time for quality control.
6. Payment Terms and Conditions.
Always choose a better payment method with reasonable terms. If the supplier's payment terms are installment payments, then go for it.
If the supplier offers you this payment method by installment, please do not ask the supplier to reduce the price.
How to Maintain a Win-win Relationship with Chinese Suppliers?
- You can choose from a wide variety of products when dealing with Chinese suppliers. The best price needs to be chosen from the very beginning to create a continuous win-win relationship.
- You can find Chinese suppliers who share your values and help you grow your business at a better price.
- It would help if you never stopped evaluating your suppliers and developing new or better ones.
- Keep your hands on the pulse of your supplier base to get better prices at all times.
- For a reliable procurement plan, you must first reap the low-hanging fruit as early as possible and find and develop your secondary suppliers as soon as possible.
- Always understand what you and your suppliers need when it comes to price negotiations.
- Establishing a reliable supplier management system and managing suppliers is beneficial to all parties involved.
The above has introduced the skills of negotiating with Chinese suppliers for you. If you are looking for a Chinese purchasing agent to help you understand Chinese suppliers and help you purchase products, please contact us.
RND is a professional Chinese purchasing agent. Located in Yiwu, China, the largest international wholesale market in the world. Every year, thousands of buyers come to Yiwu Market to purchase. 6 years ago, we started working with Amazon and Shopify sellers, involving product sourcing, development, bundling, packaging, manufacturing, supplier management, FBA shipping, etc. With our help, more and more of their products become Amazon's top choice and best sellers.
