You may have heard of many American companies sourcing their product ingredients or complete products from China. You may have also shopped on websites such as Ali Express and considered starting a business selling low-cost goods in your own country.
However, have you ever thought, how those prices are kept so low, and also how can you start your own business by selling these low-priced items?
China has now emerged as the best global sourcing destination in Asia and globally. As China has so many innovative product sourcing companies, it can be difficult to navigate and choose the right China product sourcing company for your product inventory.
It is, however, no secret that today, China is the largest manufacturer in the world, and that title is well-deserved. This is due to the efforts of the Chinese government to make sure that foreign investors import and source products from Chinese suppliers. Such policies would help the economy of China while also benefiting a variety of companies and businesses.
However, people are skeptical because they have heard negative stories regarding product sourcing in China. While it is acceptable to have second thoughts, the success of your business is dependent on a variety of factors. A few of these factors also include negotiating skills, seller knowledge, product niche, and so on.
Excellent negotiation expertise is one of the most important factors to consider while sourcing any products from China. Here are a few expert tips to do a good negotiation when doing any China product sourcing:
Conduct a thorough background check on suppliers
A preliminary unofficial type of research is conducted, much like when shopping for a product. Similarly, finding Chinese suppliers also necessitates extensive market research.
This research must now be conducted not only for suppliers alone but also know what is the demand for that product that you are planning to source in the region and where you intend to sell it.
Hire a trustworthy Chinese sourcing agent
To do proper negotiation, a trustworthy Chinese sourcing agent must be on your side, who is fully aware of the Chinese market and business culture. His inputs can be extremely valuable to clinch a proper deal with any of the Chinese suppliers.
Prepare data for negotiations
Have you ever been in a condition where you did not want to buy something, however, could not help because all of the facts were laid out in front of you?
That is what you must use to your advantage when dealing with suppliers. Preparing data to share with suppliers, which is one of the common practices for any kind of negotiation process. This is as simple as creating a comparison table.
Understand the price of the products
Understanding product prices is essential for negotiating the best deals. It is best to solicit proposals from at least 5 different vendors. The average price is then evaluated and used in negotiations.
Knowing or having an overview of market prices will help you better understand how to negotiate with the Chinese market. Also, how any Chinese supplier can be compelled to match a price.
Purchase in bulk quantities
Naturally, the greater the quantity purchased, the greater the discount you get. If you understand the price, you will be able to negotiate a good discount quickly, if you purchase in high demand. If you are only purchasing a few items, you can still bargain for a lower price.
Furthermore, if your yearly estimate is large enough, you can force your supplier to cooperate with you.
Project yourself as a big buyer
If you want to get proper attention from a China product sourcing company, then you must project yourself as a bulk buyer. If the supplier comes to know that your requirement is low then not only you will lose your negotiation power but also lose their attention.
Earn the supplier’s trust
Suppliers will trust you and also take you seriously if you communicate effectively and share relevant information with them. Knowing about the volatility of the market will help you in a powerful position. Suppliers who understand your market will take you into account during any business transaction.
A win-win situation for both parties is an expectation that you and your supplier share. This is why you must demonstrate solid growth and sound financials.
Adjust your payment terms to get a better discount
Making payment terms favorable to a supplier is one of the simplest ways to obtain a discount. Payment terms are typically 30% when the order is placed and 70% when the order is shipped.
You can, however, choose to make a more favorable offer to the supplier. For example, 40% when the order is placed and 60% before shipment. Also, you can choose to bet higher stakes for offering 50/50 terms.
Try to be a valued customer
Making endless sample requests without making any purchases is bad for business. You must ensure that you request samples to purchase the products. To be valued, it is necessary to build transparent relationships, communicate effectively, and meet deadlines.
Being valued will make it easier to negotiate with your suppliers and your value can help you and also your Chinese supplier build a long-term relationship.
Timing is very important
You will have an advantage if you negotiate at the right time. It would be preferable if you purchased goods when the market was not too crowded. You can use a technique known as “flinching” with the right timing.
If the price is exceedingly high, the flinch method will work by temporarily withdrawing from the purchase. Also, do not place any order unless you have agreed on a price.
Finally, you should be aware that shipment methods influence the cost of your China product sourcing. Choosing the proper timing, gaining the trust of your supplier, and establishing a channel of transparency all help to improve your price negotiation.
These suggestions will also assist you in purchasing high-quality products at a lower cost. Create a positive relationship with your Chinese supplier.