So you’re about to sign an agreement with a Chinese company. Isn’t it frightening? No, there are only a few aspects to consider when dealing with any kind of supplier, as well as some cultural differences to be mindful of. This will be addressed at a later time. For the time being, let’s focus on negotiating with Chinese factories and how to persuade certain suppliers into believing that you are an expert even though you aren’t.
This article will cover the following topics:
- Tips Amazon sellers need for negotiating with Chinese factories
- Visit the factory you intend to use or get someone you trust to check it
- Sign a clear and well-drafted contract
- Negotiate
- Understand the supplier’s cost structure
- Quality Control
- Conclusion
Negotiating with Chinese suppliers: What Amazon sellers need to know
When negotiating with Chinese vendors, you’ll almost always have to haggle over the price of the items you want to buy. As in every negotiation, it’s important to understand the past of the culture you’re dealing with and how it influences their negotiation style. If you have a clear understanding of society and its history, you can be a more effective negotiator and reach a solution that is acceptable to all parties more quickly.
While you must be aware of and adhere to Chinese etiquette rules, this is just one aspect of the negotiation process. The values of Chinese culture affect their negotiation style. Some of the cultural origins that have shaped Chinese values include agrarianism, morality, a pictographic language, and a fear of outsiders.
Visit the factory you intend to use or get someone you trust to check it.
Regardless of which supplier you use, make sure the factory they use is capable of producing the product you want. That’s not to say they’re lying to you; in most cases, manufacturers will outsource a portion of their production to factories that aren’t associated with them, usually because their volume capacity isn’t big enough to handle all of their client’s orders.
It could cost you more in the long run if you don’t fully understand your supplier’s operations and background. In most cases, you want to cut out the middleman as much as possible. In China, doing business face to face is the most convenient choice. There are agents and inspection companies that will help you if you are unable to visit China in person.
It will cost you more money upfront, but in the long run, it will be worth it. To ensure quality control, visit the factory or have someone you trust visit the factory before and during production.
Sign a clear and well-drafted contract
Regardless of nationality, this is simply good business practice for any organization. Ascertain that both parties are aware of the payment conditions, product specifications, delivery times/dates, and quality control procedures.
It is possible to be very versatile in all of these areas, but before signing on the dotted line, make sure that both you and the supplier understand what everyone needs to do and that these commitments are written down. Here’s where cultural differences start to show up. Every now and then, you’ll hear a Chinese person say “I can’t.”
If you think you’re asking too much of them, back off a little, but make sure the contract clearly states what you expect.
Negotiate
Negotiation is one of China’s favorite pastimes. you need to dedicate yourself to the skill of negotiating with Chinese factories. Expect more haggling, particularly on price, from whichever supplier you choose. Many suppliers will put a time limit on the quote they give you because the prices of many manufacturing goods fluctuate.
Have a clause in the contract banning price increases if the supplier comes back to you asking for more money. Price isn’t the only topic that could come up in the future, so be prepared to bargain.
Understanding the supplier’s cost structure
Often double-check the prices of various manufacturing elements, such as the cost of individual goods, labor employ, and the product’s markup. Also keep in mind that China is a large country, and the price for one aspect will differ if you choose a supplier from another region. If you have the time, do some homework on the product and how it’s made before approaching suppliers so you know what they’ll need to do (and so you sound like you know what you’re doing when negotiations begin). You must consider more than just the manufacturing process. If you want to sell the product in your own country, you’ll have to think about distribution, taxation, and packaging. Additionally, if you are importing the commodity, you must ensure that it complies with the laws of your country. Only Chinese rules and regulations would affect the supplier.
Quality control
Excellent quality, excellent quality, excellent quality, excellent quality, excellent quality, excellent quality, excellent This relates to the first argument about visiting the plant or making a trusted client do it on your behalf, as well as having a decent contract. Keep in mind that if you’re a small company and the provider has a lot of customers, they’ll have a lot of them. One client’s idea of what constitutes a high-quality product can vary from yours.
If you can, deal directly with the supplier, or hire a good agent who can. Also, be very clear in the contract about the quality you expect from this product, leaving no space for error. Some regions of China, as well as some industries, do not meet international standards.
You may believe you’ve found the ideal supplier for your commodity, but they may not share your concept of quality. That doesn’t necessarily mean you need a new supplier; it may simply mean you need to tell them exactly what you want. Make a note of it. Request that they give you as many samples as you like. Again, this may cost more up front ($80 for sending a small sample via DHL), but it will save you money in the long run.
Conclusion
At the end of the day, there’s no better suggestion than this: Investigate! Examine as many vendors as possible. Have you received input from other companies on the ones you’re interested in? Make sure you understand the product and what you require. And if you only want to appear as if you know what you’re talking about, some research will help. There are some helpful hints for persuading Chinese suppliers that you’re an expert, but there are plenty more. It will make all the difference if you keep these things in mind and learn as you go to help you in negotiating with Chinese factories.