China sourcing agent

How to Negotiate Better with Chinese Suppliers?

Negotiation skills are important when working with your Chinese suppliers — the people who actually manufacture your products. You need to learn some good ideas before you start to send an email or phone your Chinese suppliers.

1) Do Your Homework

You won’t be able to make much progress in your negotiations if you haven’t done a fair share of research in advance. You should understand the basics of working with Chinese suppliers, while also conducting in-depth research on individual businesses to create a preliminary list of partners who seem like they would be a good fit.

Researching basics like available product types, minimum order QTY and shipping terms can help you get a better idea of which suppliers have the potential to meet your needs.

Not only will this help you make a good impression with suppliers once you pick up the phone and call; it will also help you avoid wasting time with providers that wouldn’t be a good fit.

2) Communicate What You Want

Knowing exactly what you’re looking for is another essential aspect of negotiation with Chinese suppliers.

Before you even begin negotiating with potential manufacturing partners, you should have already figured out key product specifications like dimensions, materials, colors, packages and how big of an order you wish to place.

Be thorough. Suppliers want to see that you know what you’re talking about. If you haven’t already determined your product specifications, you won’t be able to get accurate quotes from potential suppliers.

An inability to provide complete specs could also make a supplier less eager to work with you in the first place, as your perceived inexperience will make it appear unlikely that you have potential to become a long-term client.

3) Shop Around

If you want to gain a competitive advantage, you should never simply accept the first quote you receive. Always get the service quoted by at least three suppliers. I let the supplier know that I am getting quotes and will go with the best one available. This creates some competitive pricing.

Suppliers want your business. More often than not, shopping around and getting multiple quotes will allow you to leverage additional discounts or benefits from your preferred supplier.

4) Show You Are a Long-term Player

You’re not the only one who stands to lose or gain money based on who you pick as a supplier. Generally speaking, overseas suppliers prefer working with long-term clients, rather than someone who is simply placing a “one-and-done” order.

When trying to negotiate discounts and other benefits, emphasize how you are looking for a lasting supplier relationship. Ask about additional perks that the supplier provides to their long-term customers.

In the long run, it’s better for the supplier when you agree to a long-term partnership. This makes them more likely to offer special discounts in an effort to win your business, ultimately creating a win-win for everyone involved. 

5) Know the Language

When negotiating with overseas suppliers, it’s important to remember that you won’t always be dealing with someone who speaks English as a first language. Regardless of whether you’re communicating via email or in a face-to-face conversation, this means you need to keep your language simple. Learning a few words and phrases in Chinese won’t hurt, either!

Your suppliers probably understand basic English terms related to product specifications, but this doesn’t mean you should dive into industry-specific jargon.

6) Build a Relationship

One of the most talked-about aspects of doing business in China is guanxi. It is about building a network of mutually beneficial relationships which can be used for personal and business purposes. Chinese culture takes things a step further. Business professionals often get to know each other outside of formal meetings to deepen their relationships.

In an ideal world, this means you would visit suppliers in person and participate in these informal gatherings to cultivate stronger relationships. While this may not be possible for an emerging startup that is still tight on cash, you can still take small steps to build stronger bonds with your suppliers, such as sending gifts or offering to write a testimonial.

These behaviors lay the foundation for more positive interactions, which will give you much greater leverage in future negotiations.