Maple Sourcing Ltd.
Maple Sourcing Ltd.
We Make Your Sourcing Easy!
Need help? sales@maplesourcing.com
English
Maple Sourcing Ltd.
Maple Sourcing Ltd.

How to Negotiate Lower MOQ with China Suppliers?

2023-12-14
748 Views

How Can You Negotiate MOQ with Chinese Suppliers?

In business, negotiation can help to secure favorable terms for contracts, reduce costs, and increase profits. Effective negotiation also enhances a company's reputation, as it shows that the business is professional, respectful, and able to work well with others.

Usually, there are specific steps on how to contact China suppliers. If the wrong questions are asked, the buyer may even be manipulated by the supplier due to unprofessional behavior. As for today's topic, here comes with MOQ. 

Whenever you decide to place an order from China supplier, you need to do China supplier negotiation, and often the issue of MOQ may come up. The price of any product will depend on this factor. Quite a few of you may be taken aback as may not have heard this term and are not aware of its significance. Often you may also need to do a very hard negotiation of lower MOQ to finalize the deal.

What does MOQ mean?

MOQ means Minimum Order Quantity. It is the lowest quantity that can be ordered from a supplier. For Chinese factories, MOQ is the minimum quantity that they are willing to produce. (For buyers who choose sourcing agent in Shenzhen, the concept of MOQ also exists, but it saves you the troublesome time and the supplier racking their brains. Because usually the MOQ can change for different buyers.

Why do suppliers use MOQ?

In China supplier quality managementChina suppliers employ MOQ to keep product manufacturing costs under control. Above that quantity, the supplier is able to produce the goods, pay for all associated costs, and still make a reasonable profit.

For doing that, they total up all their costs and choose a price that will satisfy both themselves and their clients.

MOQ is crucial to the manufacturer since it allows them to screen out unreliable clients and those who are not committed to launching or expanding their enterprises.

Negotiation of lower MOQ is a common practice among small business owners, and it requires careful planning and execution to achieve the desired outcome. In this article, we will discuss things to consider when negotiating lower MOQ with China suppliers when you focus on how to find suppliers in China.

1. Understand the supplier's perspective

After you find suppliers in China,the first step in negotiation is to understand the supplier's perspective. Suppliers have to incur various costs to produce and ship products, and MOQ is often determined based on these costs.

The production process involves setting up production line, arranging machines, hiring workers, and paying for utilities and facilities, which are fixed costs that remain the same irrespective of the order size.

In addition to the fixed cost, suppliers have variable costs, such as

Material costs
Labour costs
Packaging costs
Shipping costs.

Therefore, when sourcing products from China and do China factory audits, you'd better know these suppliers set MOQ to ensure that they can recover these costs and make a profit.

2. Research the market

Before negotiation, it is essential to research the market thoroughly. Understanding the demand for the product and the competition in the market will provide a better understanding of the supplier's pricing strategy. 

Some foreign customers are not familiar with the Chinese market, and they may mistakenly choose an inappropriate starting quantity. Generally speaking, owners with large industrial scale will choose agents who do Chinadirect sourcing services to help them handle the procurement side. Standard purchasing agents have mature global supplier management. These authoritative organizations can help save a lot of time.

Researching the market helps in negotiating better pricing and MOQ. If there is a high demand for the product, the supplier may be more willing to negotiate lower MOQ to secure the business. It will also help to identify other potential suppliers that offer better MOQ and pricing.

3. Offer to pay a litter higher price

In some circumstances, a vendor will set a high MOQ for you, but if they anticipate having you as a long-term customer, they may be ready to create fewer units up front.

At this point, negotiating price is always a better way rather than the actual MOQ. The supplier will probably choose it if producing fewer units makes financial sense for them.

You could propose to pay higher costs for fewer units as one option. For example, if the vendor's MOQ is 500 pcs at $1 each, you could offer to purchase 300 units at the price of $1.25 each.

Finding a medium ground where both suppliers, as well as buyers, are happy is therefore important. If you are very close to the ballpark price figure of your supplier’s profit requirement, then sometimes you can get them to be agreeable to a certain lower MOQ.

4. Negotiate payment terms

Ask the supplier whether they can produce the complete production run and delivery you the order in instalments if you are unable to pay the supplier's MOQ in one go. Offer to pay half up front and the balance half over the course of three months, for instance.

Not every seller will be ready to do this approach, and once more, it all depends on how much the vendor values your business. They might accept this arrangement if they think you are worth the money.

So please show your sincerity for long-term cooperation during you are negotiating with Chinese suppliers.

Negotiating other terms can be a useful tactic to lower MOQ. For instance, suppliers may offer discounts for larger orders, faster shipping times, or better payment terms.

Suppliers are more likely to negotiate other terms when they believe that the business relationship will be long-term. Therefore, it is essential to build a good relationship with the supplier by maintaining regular communication and providing feedback on the product's quality.

In particular, for service agents like us, the China direct sourcing ltd, the suppliers in our system have special prices or MOQs taken care of. Many business owners can get better prices from agents than purchasing directly from the market themselves. This is one of the reasons why many companies and individuals choose to purchase through purchasing agents.

5. Show sincerity and commitment

In some circumstances, a vendor will set a high MOQ for you, but if they anticipate having you as a long-term client, they may be ready to create fewer units up front.

Try to close your deal quickly. The supplier may accept the offer when you directly request their bank account details and offer to send them the money right away.

Showing commitment to the supplier can help in negotiation of MOQ. Suppliers are more willing to negotiate lower MOQ with businesses that are committed to the product and show potential for future orders.

Therefore, it is essential to demonstrate commitment by placing repeat orders, providing regular feedback, and promoting the supplier's product.

6. Prepare a clear and detailed plan

Before entering negotiations with supplier, it is essential to prepare a clear and detailed plan. The plan should include the desired MOQ, the expected price, the timeline for production and delivery, and any other terms that are important to the business.

Having a clear and detailed plan will make negotiations more efficient and help to avoid misunderstandings. It will also show the supplier that the business is serious and well-prepared.

7. Be aware of cultural differences

Negotiating with China suppliers requires an understanding of cultural differences. Chinese culture places a high value on building relationships, and it is essential to establish trust and respect before negotiations can begin.

It is also important to be aware of the importance of "face" in Chinese culture, which means avoiding confrontational or aggressive behaviors during negotiations.

Additionally, China suppliers may use indirect communication, which can be confusing for Western businesses. It is essential to listen carefully and ask clarifying questions to ensure that both parties understand each other's positions.

8. Be flexible

Being flexible is crucial when negotiating lower MOQ. It is essential to understand that the supplier has to make a profit and meet its cost. Therefore, it may not always be possible to negotiate lower MOQ to the desired level. In such situations, you may consider other business aspects. For example, agree to a slightly higher quantity but at meantime, request for some price reductions.

It is important to be flexible when negotiating China suppliers, you should try to find a compromise that works for both parties.

9. Use a sourcing agent

If you get stuck on the MOQ problem, and can’t figure out the way to solve it, maybe it is time to look elsewhere and use help from a sourcing agent in China. There exist many sourcing agents and they can use their connection and veteran method to solve the problem based on a few commissions on top of your order amount.

Working with a sourcing agent can be an effective way to negotiate lower MOQ with China suppliers.

Sourcing agents have local knowledge and experience negotiating with suppliers, which can be valuable in securing favorable terms. Sourcing agents can also help to overcome language barriers and cultural differences, making negotiations smoother and more efficient.

They can also provide quality inspection and logistics support, which can be particularly helpful for small businesses that do not have a dedicated team to manage the importing process.

Conclusion

In conclusion, negotiation of lower MOQ with China suppliers is challenging, but essential process for small businesses who want to order in smaller quantities.

By following the above guidelines, small businesses can negotiate lower MOQ successfully and establish a long-term relationship with China suppliers.

PREV: No information
All Articles
The Role of Technology in Global Supplier Management
How to Verify Chinese Company Without Visiting China?
China Inspection Services Help You Source Top Quality Products
Practices to Find the Best Sourcing Suppliers in China
Ideas for Wholesale Promotional Gifts from China
Tips for Design and Packaging Sourcing in China
Guide for Purchasing and Supplier Management in China
Verified Suppliers Offer Safe Trade for Importing from China
How to Choose Suppliers When You Order from China?
Supplier and Contract Management for China Sourcing
How to Get Started with Importing Electronics from China?
Importance of Quality Control Service to Buy Goods from China
Steps for Effective QC Inspection When Importing from China
Procurement Outsourcing Offers Perfect Solution to Importers
How to Ensure Quality When You Import Goods from China?
Hire Sourcing Company to Ensure Quality and Timely Delivery
QC Inspection in China Helps Importers Avoid Costly Mistakes
Importance of Supplier Verification in China for Importers
Increase Profit by Importing Wholesale Products from China
Step by Step Guide to Do Bulk Buy from China
Valuable Tips for Buying Outdoor Items Made in China
Role of Factory Audit Services in Supply Chain Management
Metrics for China Supplier Evaluation: Quality, Cost and Delivery
Digital Transformation in Consumer Product Sourcing
China Direct Sourcing and Supply Chain Sustainability
Importance of Quality Control Inspection in China
Choose the Right Chinese Supplier with Factory Audit
How to Monitor Quality of Products Made in China
Tips to Choose a Product Development Company in China
Things to Know about Product Purchasing in China
Quality Control Management for Importing from China
Supply Chain Sourcing Solutions for Importers from China
Why New Importers Need a Chinese Sourcing Agent?
Importance of Hiring China-Based Procurement Company
Tips for New Importers about Inspection Services in China
Streamline Your Import by Hiring Chinese Procurement Agent
Advice for Bulk Purchases from Electronic Market in Shenzhen
Comprehensive Guide on How to Order from Alibaba
Why You Need Professional Quality Control Service in China?
Challenges of Global Souring from China and Proven Solutions
What Items Are Checked for Quality Control Audits in China
Mistakes to Avoid when Sourcing Chinese Products for Amazon
Tips of Bulk Purchasing Products from Chinese Wholesalers
Why Is Chinese Supply Chain System So Effective and Efficient?
Things You Should Know about Pre-Shipment Inspection in China
Get Rapid Prototypes by Using Chinese Prototype Manufacturers
Everything You Need to Know about FBA Sourcing from China
Valuable Tips on How to Find Chinese Suppliers Online
Promote Sustainable Development by Quality Control in China
Competitiveness of Importing Bulk Items from China
Read More
Our Features
Custom Products
Turn concept to reality
Quick Response
Within 24 hours
Detail Oriented
Strive for perfection
Assured Quality
100% Guarantee