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5 tips to increase my bargaining power in front of Chinese suppliers

China is well known to be among the leading manufacturing countries on the globe. According to Forbes, China has put some effort into moving to a more market-oriented plan from a closed, centrally planned system since the 1970s, which is a fact that has allowed China to play a major role globally. Additionally, CNN Money portrays China as having great economic growth rate and says that many recovering western countries envy it. This makes the country one of the best regions in the world to trade in. If you won’t sell in China, you can always buy from China.

tips to increase my bargaining power in front of Chinese suppliers

As a retailer who is dealing with Chinese private label manufacturers or wholesalers for the first time, bargaining can mean all the difference between making profitable sales and making peanuts from your business. So, you need to be well-equipped. Below are some tips to help you improve your bargaining power with Chinese suppliers.

Bargain face to face

Sometimes, seeing the person you are bargaining with could be very important, a fact that’s particularly true in the Chinese culture. If you have sufficient funds to meet your supplier physically, then don’t hesitate. You could even take such a trip as an opportunity to help you unwind. The good thing about face to face bargaining is that it establishes a sense of trust between you and your supplier.

Also read: What is a Niche Market? – How to Find a Niche Market

Thanks to advancing technology, negotiations can now easily be done online. In case traveling costs might be a bit steep, you could always use video chatting platforms like Skype, Facetime, IMO, and so on. So, now that you’ve seen your supplier how do you go about it?

  • Stay calm– Suppliers are not your enemy. Just relax and haggle. Hear them out as you state your counter offer and then proceed from there. Don’t rush and avoid being angered by any negative behavior. 
  • Be friendly– Business doesn’t have to be too serious. When dealing with your supplier, adopt a friendly and understanding tone. This will also enable you to build a better and healthy relationship with them that will work in your favor in the future, especially in terms of credit.
  • Develop a ‘ready to walk’ attitude– If the negotiation gets too tough, act like you are going to buy from someone else. This always gets suppliers running for their money. Try it.
my bargaining power in front of Chinese suppliers

Think beyond price

The American Genius puts it, “A negotiator should observe everything. You must be part Sherlock Holmes, part Sigmund Freud.” Bargaining is not just about the price of the commodity you intend to purchase. It is about everything associated with that price.

When dealing with your supplier, one way to increase your haggling power is by using your ability to leverage, especially if negotiations reach a stalemate. Ask yourself what else you can use to lower the effect of your supplier’s price. You might try asking for a volume discount whereby you are charged less for buying more or given a certain number of items for free due to bulk purchase.

Additionally, you could also negotiate for after-sale services like deliveries, free maintenance and repairs. Check out the commonly used sourcing terms by Chinese suppliers. Although you may not be able to lower the commodity price to your desired level, such services will still help reduce your overall cost of getting your products to the shelf.

Learn some Chinese

In order to increase your bargaining power, you will have to understand how the Chinese think and operate. Learn a little Chinese. It won’t hurt. According to The Business Insider, Chinese is among the most difficult languages to learn and could take up to 2200 class hours to reach literal proficiency. You can, therefore, rest assured that your suppliers will appreciate the effort. 

However, you don’t have to go through with all that. You could just familiarize yourself with a few basic phrases and quotes that you can use in your negotiations. Such phrases will help ease that irritating cultural awkwardness that arises when foreigners interact and create a much more comfortable environment. It will also smoothen the bargaining process and perhaps even fetch you better prices. Since you are majorly concerned with reducing costs, speaking on your own will also relieve you of translation charges. 

Draft a solid contract

The sad fact is that many Chinese suppliers can prove to be untrustworthy the moment you let your guard down. It is therefore imperative that you sign a very well-drafted contract with a Chinese supplier before committing to any form of business relationship. The contact should clearly specify all the obligations and duties (delivery times, payment terms, quality control etc.) required by the parties involved to avoid any confusion and misunderstanding. 

Furthermore, the contact should be legally enforceable in the event that any of the terms stated are broken. While the contract won’t guarantee a perfect relationship with your supplier, it can be a great help whenever disputes arise. For help on what to include in your contract, check out 6 tips for agreements with contract manufacturers in China by James Lu.

Therefore, always enter negotiations with a solid contract in hand. You’ll often find that suppliers unwilling or reluctant to sign a contract for no specified reason aren’t the ones you’d like to work with in the first place. So other than give you some bargaining power, a contract is pretty handy in weeding out the undesirables.

Research cost structure

According to Forbes top 100 quotes, money often costs too much. Any penny you can save matters. That’s why you need to know every cost that goes into producing your commodity. This includes labor, materials, mark-up, opportunity cost, time, and so on.

Research all these costs prior to bargaining. Once you have all of them, the game of numbers will now be in your hands. In business, the numbers are what counts, so learn how to use them to your advantage. This will make you seem more authoritative and informed about the commodity, thus shifting the tables in your favor. 

As long as the supplier thinks that you have great expertise in your niche, exploiting you will no longer seem feasible. Also, by properly understanding the costs that go into the production process, you can appropriately deal with any unexpected price increase demands later on. That means you can approve valid requests and forestall unnecessary price hikes.

| About the Guest Author:

Guest Author
Sarah Kaiser is a digital marketing manager at casino global sourcing, a French retailer’s sourcing division. She’s in charge of godirek.com, the digital product catalog of casino global sourcing, which offers helps and handles enquiries about private label and profitable product sourcing. See how further your private label business can grow by having a free enquiry on their online catalog, godirek.com or follow @Godirek on twitter.

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