The beginning is always the hardest. You’re trying to work out a deal with an overseas supplier. A wrong move leaves a bitter taste in your mouth. You emerge wiser but wish you had started on the right note.
As a beginner seller, you need to be aware, informed and alert while establishing relationships with Chinese suppliers. Here are a few pointers to help you along the way.
Negotiating with Chinese factories
You may have heard grumblings about how Chinese products cannot match the quality of their Western counterparts. This is partly true and is usually a result of importers’ tendency to be penny-pinchers because Chinese factories can make their product ‘at any price’.
There is also a known factor that some Chinese suppliers use unethical ways to trap buyers. Usually, beginners are easy to dupe as they are overly permissive and don’t come prepared with the right questions. It is easy to get lured in by a suppliers’ promises.
Informed and prepared buyers are wary of this and evaluate suppliers’ declarations critically. They focus on finding a supplier that can serve them for the long term. Here’s a look at some mistakes to avoid as a newbie seller sourcing from Chinese suppliers.
Overstating your order volume
A large order can be a bargaining chip for a lower price, but inflating it just for a price advantage never bodes well for a long-term relationship. Sure, factories will be more interested in working with importers that need thousands of units versus a few hundred. However, baiting a manufacturer with a tall promise is a bad idea. Any deception in greatly misstating the initial order volume may create misgivings later on.
When it comes to setting expectations, it is better to be close to on target than to significantly overestimate product quantities. A Chinese factory receives several inquiries from foreign importers. Losing your business might ot affect them much. On the other hand, finding a new supplier is a hassle you don’t want after you’ve set up shop.
It is better to start with a trial order to get a feel for the factory’s quality and service. If you wish to proceed you can then discuss a realistic order quantity.
Driving a hard bargain
Not negotiating a lower price with a Chinese manufacturer may seem counterintuitive. Manufacturers are open to discounts on large volume orders and the assurance of a long-term relationship. As long as you get the desired quality for the price, you have nothing to worry about.
The trouble starts when you want to push the price down to a level that affects quality. The manufacturer may agree to your price but they’ll make adjustments and quality will suffer. That means substandard raw materials and other concessions that become apparent in product reviews.
Another risk is a delay in lead times. As you drove a hard bargain, you’re not a priority any more. The factory will place their focus on the importer that hasn’t given them a tough time at the negotiating table.
Unfortunately, there are sellers who are fine with retailing cheap ware– another reason why products from China have acquired a global reputation for questionable quality. It may not be a reflection of the production processes but is actually tied to driving the price down considerably. Ultimately, you get what you pay for.
Explaining requirements in broad terms
The factory manager may not know about your target market. Fill them in on the details as well as your plan to grow your business. By telling your supplier that you’re a serious seller, you can gain a few advantages. This could include a lower price per unit, attentive care to product quality, and consistent on-time deliveries.
While established factories may not have a problem fulfilling their customers inventory, they are taking a chance with every importer. If they’re convinced that business can flow both ways, they will regard you as a valued customer.
Speaking to the factory’s junior staff
Factories in China will have an English-speaking employee to engage with their foreign customers. Often, the employee is a younger member of their team and doesn’t have bargaining or decision-making power. Getting your requirements relayed to a senior manager via a younger staff member can create confusions and misunderstandings. It’s also possible that the person may misrepresent terms to make them more acceptable to you. The risk here is that you may buy into something that has been embellished and doesn’t represent the full truth.
