Negotiating
How to Successfully Negotiate In China
When dealing with China you’ll quickly learn negotiations are an ongoing process – not a one-time event.
The First Rule of Negotiating
The first rule of negotiating in China is this. Only negotiate with people who have the authority to make decisions.
China is extremely hierarchical. Generally there are only a few people within the factory with the power to make important decisions. And usually they won’t speak any English at all.
So just because you’re talking to the best English speaking person in the factory – doesn’t mean they have any power to fix problems. English speaking sales staff are often used as a shield to deflect blame and stifle your attempts to figure out the real story behind an issue.
As in all places the higher up the food chain you go, the better. The factory owner or lead engineer is usually best. Easy Imex has the most success when dealing with factories repeatedly and we get to know the factory owners and lead engineers very well.
Easy Imex account manager Morin Xiao, negotiating on behalf of Alex Bray during a textile factory tour. One of the benefits of using Easy Imex is your Account Manager acts as an interpreter – not just a translator. This is important because an interpreter gives the meaning behind the words – not just a direct translation of the words alone.
When Problems arise, there’s a real story and a cover story
Most Westerners take too many things at face value in China. When problems arise be aware that there is a real story and a cover story.
Say you’ve visited a factory, inspected its facilities, you’ve performed on site quality control. It all looks great. Yet problems are occurring with a particular part of your product.
The real story might be that the factory has outsourced some component to another less capable supplier. Even though they deny it!
The factory will never tell you the real reason for the problems. Excuses will be made. You’ll scratch your head wondering, why can’t the factory do this? Even though you’ve inspected their facilities on site and they should be able to.
We found lots of interesting ideas online but turning that into the reality of an order was where we needed Easy Imex’s help. Easy Imex was able to negotiate lower minimum order quantities and co-ordinate the whole process.
We sourced our items from a range of manufacturers in China, it was fantastic to let Easy Imex put all of our orders from a number of suppliers together, check the packing and ship all together to Australia. Easy Imex dealt with all the importing requirements – making it hassle free!
Steve Klein, Dilibag, Adelaide, Australia
Price Negotiation Tips
Generally there are two strategies to ensure you’re getting the best available price.
The first is when importing smaller quantities of goods. The second is when purchasing large quantities. They require different strategies.
If importing small quantities you have limited bargaining power. However you still want to ensure you’re getting the best value for money.
This means shopping around and getting several quotes. You will end up with a mixture: really low prices, really high prices and something in between.
Here’s where you need to be really careful...
You might have 3 quotes (it wouldn’t unusual if three quotes, from three different factories have the same picture!)
How do you know which supplier has the best mix of price/quality/reliability? You need to ensure you’re comparing apples with apples.
Ask as many questions as you can to the factory:
- What’s the thickness of the material?
- What’s the grade of steel?
- How many layers of paint etc?
All these little details need to be put in writing.
A price that may seem really cheap could, in reality, be expensive rubbish. Make sure the price you’re getting is right. And ensure the quality of what you’re buying is suitable. If the price seems incredibly low, beware! If it’s too good to be true – it usually is.
Importing Larger Quantities
If importing substantial quantities of goods you’ll need to have an estimate of the production costs of the factory properly negotiate the price. To do this, you need to have an understanding of:
- Material costs
- Labours costs and production capacities
- And, the tax back system in China.
First you need to know the cost of every material that is used to make you product: metals, plastics, cotton etc. You need to know the price per ton, cubic meter gram, etc.
Secondly, you need to understand what the labour costs are wherever the factory is, and also, how many units that factory is capable of producing per day, week, or month.
Finally, when a factory in China exports goods they can claim tax back. This varies for different products – know what it is for yours!
Once you have a good handle on these costs, you can then work out the true cost to manufacture the product.
Obviously the factory needs to make a margin, but once you know the real costs, only then can you negotiate the best possible price!
During my initial conversation with Adam I soon realised that I would be dealing with a professional and someone very experienced in the field of sourcing and exporting from China. The fact that he actually lives in Shanghai and employs locals, fluent in English, as his Account Managers pleased me immensely because it meant that when it came to conveying my needs to my suppliers I would be in safe hands.
Sharon Sprenger, Belle and Rose, Brisbane, Australia
Typical Negotiation Example
Say you’ve recently agreed to a deal with a factory. Prices, timelines, contracts etc have been signed and agreed to. Or so you think!
A few weeks into the production the factory comes to you and says "the price of the moulds is going up 100% because our costs increased".
What do you do then?
Sometimes the request for money may be legitimate. You’ll need judgement to know whether it’s likely to be true – or not.
The vast majority of the time this is simply a request for more money. Perhaps the factory thought it would be cheaper and easier than it was?
If you say yes, the factory will continue trying to extract more and more money!
Here’s how we’d handle it. We’d politely tell the factory that we have a contract that they agreed to, however, if they can’t do this that’s fine. We’ll have our product made somewhere else.
Essentially we call their bluff and walk away.
In the vast majority if cases the factory will come back in a few days having magically "fixed most of the problem" and try to extract a smaller price increase.
Obviously this is a simplified example, but such negotiations are common. This is why it pays to understand "how the game is played".
“EASY IMEX ARE A TRUSTWORTHY, EFFICIENT COMPANY...WITH GOOD KNOWLEDGE OF THE CHINESE MARKETPLACE”
Easy Imex are a trustworthy, efficient company. They are easy to deal with, very friendly and with good knowledge of the Chinese marketplace. They helped me in many ways:-
- Saving money. My previous agent was very greedy and secretive.
- No headaches with stock that is not “quite right”. No “quality fade”. This saves so much time…and money.
- Their direct contact with the manufacturer keeps the quality compliant with the TGA (therapeutic goods association). Everything is checked very carefully. I receive detailed emails which allow me to check everything before it leaves the factory.
- They support me to maintain my good reputation, which, being a small business, is very valuable to me.
Adam is just so nice to deal with. A great, caring communicator. He is also very accommodating when I want some changes made. Nothing is a hassle. I feel confident that he will fulfil my needs in the future as he has done in the past.
Barbara Elkins, Wisdom for Living, Central Coast, Australia
"I FEEL SECURITY KNOWING THAT EVEN THOUGH YOU MAY BE SENDING LARGE AMOUNTS OF MONEY HALFWAY AROUND THE WORLD, YOU ARE GOING TO GET THE PRODUCT THAT YOU REQUESTED"
On one of our container shipments, we had some product damaged due to loading errors. When we received the product we unloaded it and took pictures and contacted Adam with the managed results. He credited us for the damage and also made changes in the loading procedure so this would not happen again. Everyone makes mistakes, it’s how you handle the mistakes with your customers that installs confidence.
I feel security in knowing that even though you may be sending large amounts of money halfway around the world, you are going to get the product that you requested.”
Jerry Tauzier, Lee Medical, Los Angeles, USA
“EASY IMEX IS NOW A VITAL PART OF MY BUSINESS”
Easy Imex is now a vital part of my business. I no longer look at Easy Imex as my exporting agent but as my business partner and office in Shanghai. Adam and the team at Easy Imex not only source items but they arrange for samples, arrange any modifications I require and quality control all of my orders. They have the facilities to combine several orders into one container and ship directly to my warehouse. I no longer have to worry about working with shipping companies, customs and log painful paperwork. Easy Imex offers a factory to door service. Please feel free to contact me as a reference for Easy Imex and I wish you good trading in the future
Chris Slingsby-Smith, Freeze Beverages, Australia
“EASY IMEX DO A BRILLIANT JOB AND TRULY EARN EVERY CENT OF THEIR FEES”
When we first started on our “china experiment” as we call it we knew right away it would be naive to think we could do it all ourselves. We found Easy Imex online and quickly related to the no nonsense, factual approach they offer.
Adam and Tom (in Australia) were quick to respond to our needs and guided us through the minefield sourcing and negotiating from the other side of the world can be. When we visited Shanghai we were met at the airport - chauffeured and taken care of wonderfully for our entire trip. We learnt and continue to learn so much from Adam and his team.
Our account manager is fantastic and we would never have been able to achieve what we have thus far without her help. We think it’s imperative to have an agent like Easy Imex on your side – the language and cultural barriers alone demand an on the ground Chinese speaking agent not to mention the logistics of it all. Easy Imex do a brilliant job and truly earn every cent of their fees.
Kellie Simkin, Art From the Heart, Gold Coast, Australia
Easy Imex is incredibly helpful. They’ve been a huge lifesaver for my business! I started out only doing small mixed container loads and now ordering full containers. They deal with every little detail of the importing process. Now I have more time to run my business instead of trying to communicate with Chinese suppliers! Huge help, I definitely recommend using them!
Sourcing and importing products from China is a complicated task so I’m very grateful to have professionals doing it for me. Thank you so much for all your help!
Cheryl Anderson, My Simple Savers, Sydney, Australia
I have used Easy Imex for over 3 years – and done seven 40 Foot HQ containers in this time. Easy Imex are trustworthy, easy to communicate with and like old friends. They’re like a family run company – not some faceless corporate.
I was very pleased with their ability to source product and act on my behalf to obtain compensation when I received faulty goods.
I highly value the personal one to one contact with Adam and Jin. Adam wants me to succeed and gives his all to help.
Richard Whitley, Bangor UK
It was so very simple. I was given an account manager Morin who answered all our questions. Of course we were a little worried to bank transfer money to a company in China. Also of course worried when the goods came the quality wouldn’t be up to scratch.
Both worries were unfounded. The goods arrived (200 items). All were packaged so well we could send them all out as we sold as they were. The quality was superb. We started from scratch and we sold all of our products in 7 weeks with a mark up of around 50-60%.We could of got more but so happy were we with the products and also Easy Imex we wanted to re-order and add new products.
We have 100% feedback on Ebay and we got Top rated Seller status in 11 weeks. Every bit of feedback mentioned the quality of the goods and the value. Put simply without Easy Imex we would still be scratching our heads. With Easy Imex we now have a profitable business running that will only grow. All I need to do is see a product I like/want, email Morin, get a landed quote to my front door, pay and relax.
It’s so very simple, meaning I can spend my time selling the goods. Anyone, large or small thinking about importing from China or even already importing Easy Imex has to be your first choice. You will not find a better way to import.
I’ve even had other companies phone me and offer to import. When I got the prices they can’t even get them on the boat for the price Easy Imex get them to my door.I have no doubt my business will grow very quickly. I also have no doubt I will only ever use one company to source our goods and handle everything. Adam and the team at EasyImex.
They handle everything. It really is as simple as choose what you want, get the FOB and landed at your front door price, pay and that’s it. They do what they say they’ll do, it’s as simple as that.
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