Negotiating with Chinese Factories

Some tips from recent negotiations.

1. If you are here you can better manage both what you want and when you get it. Not being here leaves all of the confirmation and compliance in the hands of the supplier who may or may not have an interest in meeting your requirements.

2. Many factories see negotiations as a zero sum game. This attitude must be overcome before you can get to other tangible results. If you have not fully and in extensive detail resolved this issue, you will either not get the results you want or you'll get them on paper only.

3. Don't ever give the factory a reason to believe that you're leaving (even if you are). Don't lie. But informing a supplier that the relationship is over effectively ends any leverage you may have in completely current products. If there is no relationship (I mean money) there is no need to cooperate.

4. Anger is a good as saying you're gone. Because competition is so fierce in China, and because there are so many other options out there, angry emails, arguments and blow ups, unless carefully managed, tell the factory that you've moved on (why else would you burn personal bridges?).

5. Detailed contracts in English are never read and even less often understood. OK, so there is a slight exaggeration here. I should say "almost never read." But you get the point. You may think that you have covered your bases but the contract probably means very little to your supplier.

6. Be clear, simple and concise in communications-especially long distance communications. Very simple. Overly clear. Short, bullet point specifics and no more.

7. If you don't have photos, samples, art and the supplier isn't touching a sample there will be gaps in communications-think blind men and elephants. Don't assume that anyone knows what you are talking about. Even if they make a similar product.

8. If it gets to the point that you have to choose to take bad product or move to another location to do it all over again, DON'T burn the bridges. You still need samples, tooling, and may be product to be reworked. If you are up against tight timelines, moving may not solve your problems. It is almost always best to work through issues first before fleeing the problems and starting the process all over again.

9. Search for better answers. This means that what you are told is probably only a surface or primary issue. If production on products worth 10's of thousands of dollars to your supplier are just sitting around because of a minor issue, you can be sure that there are other causes for the delay.

10. Finally, paying more to get what you originally contracted for is not always a bad thing. Sometimes it really is the win-win.

David Dayton is the owner of Silk Road International and currently lives full-time in Shenzhen, China. He speaks English, Thai and Mandarin and has worked in Asia for more than 15 years. You can contact him at david@silkroadintl.net  or at www.silkroadintl.net.

One person has commented on this article.

 1. Untitled
Lawrence, Unregistered

Many excellent points. Especially in regards to communication.Avoid big words, keep it simple and always confirm (and re-confirm) key points.

 Posted 2010-04-23 14:51:03

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