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. You can also try Uniway Sourcing to find out suppliers in China.
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.
- 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.
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.
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.
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.
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.
| About the 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.