You can always get a better price in China, even it is below the cost of the product. Be careful don’t push the supplier too much. There are more things you need to know than just cost.
We are all human, we all need profit just as you do. If you push them too hard, you will probably get cheated or there is something hidden while you don’t know. This will be very risky for your business. Before you start the negotiation, keep in mind what is the price you want. You can’t be too greedy.
Understand Your Supplier
Before you start your negotiation, make sure you really understand who you are talking with. Do you know where is their factory? Have you ever seen a photo of their factory? I heard once an US client work with a Chinese supplier for 3 years. But never saw a photo of the factory, don’t know where is the factory. When this client talks to supplier that he wants to talk to their factory boss, supplier replied their boss cannot speak English. Talk to her is enough. So finally he only know one person from this company. In this video, I share with you how to check a real Chinese factory. https://youtu.be/3tdB4TuIUEQ
-Ask them for photos of factory and key machines.
-Do they make clothes together electronics?
-Ask where are they from. For example, generally good electronics factory are from Shenzhen.
-Ask when they start business.
-Ask do they have customer reference in your country.
Build Your Company Image High
When you are doing business with Chinese, you need to understand the rules in China. When the suppliers get your email, they will first have an impression of you. They will think you are big or small, or even they don’t believe what you said. There are a lot of reason they do it this way, but if you do it well, it will save you a lot of energy to get good deals. For example, you need a professional website, a great name and you are not using Gmail to send emails. You may think it is ridiculous, but it is true.
Understand How to Produce It
If you buy a lot, you really need to understand how the product is produced. You need to study the key components of the product, and how much it cost. For example, for a watch, the movement is the key, and the cost will take 20% of the watch cost. If you don’t understand the movement differences and the cost, you won’t get good deals. And it is not difficult to find the cost of the movement. A lot of factories in China now are only assembly. They outsource all the materials. You can do it also. Check where and how you can buy these key components.
If you are powerful enough, ask the factory to show you their BOM. Talk to them you are transparent and you will add reasonable profit to their BOM.
Consider the Defective Rate
If you don’t consider the defectives, the business could be sad. But when you ask factory about their defective rate, they won’t tell you the truth. Ask the supplier for the client reference. Or place your orders slowly at the beginning.
Be careful if you are dealing with a very new solution, that always means not stable. Though the new solution will bring much lower price and better result. If you are not sure of it, consult your Chinese agent.
Understand Chinese Culture
Understand Chinese culture if you plan to do a face-to-face negotiation. This will help you succeed. For example, Chinese prefer to make friends before making business.
I personally recommend reading the Art of War. For more tips to negotiate with Chinese supplier. Check this link: