How do I negotiate with my Chinese supplier?

Many of us have enjoyed bartering for goods at markets in Asian countries. Here the vendor starts high, you negotiate them down, and it can be a lot of fun.

Did you know that in business to business dealings in China, the opposite usually occurs?

Suppliers will generally quote low initially to attract your interest, then impose price increases over time.

Many western business people weaken relationships, receive poor treatment, or get sub-standard goods because they went in guns blazing on a price negotiation at the beginning of a relationship, often before they've even seen a sample to determine if it's actually a suitable product!

The bottom line... In business to business negotiations, get at least six quotes to determine fair market price, and if your preferred supplier is around the mark, rather than negotiate for reduced price, negotiate for things like better quality materials, shorter production times or added features.

Purchase Order

$697 USD Purchase Order Agreement

Once you have selected a supplier, are satisfied they are reputable, are happy with the price of the product, and the sample you received was up to standard, the next step is to draw up and negotiate the Purchase Order (PO) with the selected supplier.

Most suppliers prefer loose arrangements to supply the product because it minimizes their risk and liability.

It is recommended that you minimize your risk as the importer by utilising a properly drafted Purchase Order.

The Purchase Order will need to include clauses covering the following areas:

• Quality control procedures
• Terms of payment
• Moulds ownership
• Packaging requirements
• Penalties for quality issues and delivery delays
• Any other additional clauses defined by individual project

Having an established Purchase Order document creates efficient and effective production and importing processes.

The Purchase Order template we use at ChinaDirect Sourcing is a tried and proven document to get the correct product delivered to the correct location at the correct time.

Get your copy here.

Next: Should I get a sample from the Chinese supplier?