Negotiating with your Chinese supplier is one of the most important parts in the process of importing products from China . For example, the negotiation depends on the capital that we will need to start importing, the cost of the product and other factors that are essential for our import business.
Like many of us involved in Chinese import companies , I always recommend negotiating with your Chinese supplier . Forever. From a good negotiation we can obtain advantages and benefits that can drastically change production and our profit margin.
On the other hand, the culture of negotiation is deeply rooted in China. Thus you should not be afraid to negotiate with your Chinese supplier the characteristics of the production that will be carried out in their factory.
You may be more shy about negotiating with your Chinese supplier if you are starting an import business from China , they have never brought a container with products and you are learning how the whole import process works.
But this is the real fact: you are going to be their customer and you have the right to negotiate prices and quantities. Also I tell you, if you import electric toothbrushes, your electric toothbrush suppliers in China knows perfectly what their margins are and where is the negotiation line that they will never cross. If you change quantities and prices for your benefit, do not doubt that you will continue to earn with our production.
Although I always recommend negotiating, you also have to take into account the size of the supplier and the type of production that we are negotiating. Today's article is about this. There are things that you will not be able to negotiate with your Chinese supplier if you are a small company or a freelancer starting an import business.
Why can't you negotiate certain things with your Chinese supplier ? The answer is very simple and logical. There are providers that have hundreds or thousands of clients. You can see it on their Alibaba profiles .
They will probably have some clients who will request productions that may exceed 100,000 euros. So if our production is 10,000 (for example) the Chinese supplier will prioritize its manpower and resources on the clients that will bring it the most benefits. Like any other company that is governed by commercial logic. We are going to see some things that you will not be able to negotiate if your Chinese supplier is big enough or our production too small.
As we have already seen in many Import from China items , most of the Chinese suppliers will ask us to pay 30% of the total price of our production to start manufacturing our products.
If we are a small business or this is our first time working with such a provider, I am more than sure that you will not be able to negotiate the payment terms. As I have said many times, this is a general rule of thumb for most Chinese suppliers .
Your Chinese supplier may change the payment terms and offer more facilities to start production to large importers or fixed customers. Even if we continue to work with this provider in the future, it may give us more options to negotiate payments.
However, if our production is small or we have never worked with this supplier, we will have our hands tied in this part of the negotiation. So we will have to pay yes or yes 30% before production and the other 70% when passing the quality inspection or before shipping our products.
It is true that most Chinese suppliers will respond to any defect or damage in production that is found during a prior quality control before full payment of the import .
However, the problem is compounded if we find defective products when our merchandise is already in our warehouses or has already been sold to our customers. This can happen because our quality inspection is based on a production probability sample, since it is practically impossible to check each and every product before shipping.
Many large importing companies often negotiate warranties and liabilities for their products with the supplier in advance. Then the Chinese company would take care of all the products that have manufacturing defects.
However, if you are a small importer, negotiating these guarantees and responsibilities with your Chinese supplier will be very complicated. The supplier will only want to be responsible for manufacturing defects that we see with the quality inspection before the merchandise is shipped (and before the last payment, of course). What happens to the products afterwards will be entirely our responsibility.
Many of Alibaba's Chinese suppliers often provide detailed information about their factories and companies. Transparency is the most used way by small Chinese suppliers and factories to attract customers. They want to show their future clients that their installations are professional and comply with all regulations.
However, for large suppliers, detailing all the information on production costs and their facilities is counterproductive and unnecessary, since in this way they control the real prices that they can offer to their different customers, small and large.
Do not expect to negotiate with your Chinese supplier information on material costs, number of operators working in our production, worker salaries, etc. If you are a small importer, it is our task to inform us of the real costs of production and to compare the competition of our supplier to see if they are offering us a correct price.
I always recommend that you try to negotiate with your Chinese supplier . There are essential things to negotiate, such as the minimum order number, delivery dates, quality controls etc. However, we must bear in mind that there are certain things that you will not be able to negotiate with your Chinese supplier if you are a small importer or you are starting in the import world. Sometimes trying to negotiate certain insignificant aspects can cause the production and import process to be delayed or the supplier lose interest in working with us.
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