Negotiating with Chinese supplier

Here is some tips that can help you when you are doing business in China.  How to deal relationship and how to negotiate with suppliers. 

Business is cultural

First, doing business is a cultural experience in China. Not only are the physical places of business different but the understanding of fundamental business relationships are also different. Here, business is personal. Business relationships can include gifts, favors, dinners, karaoke, cigarettes, night clubs, drinks, friendship and long term commitments. Problems with orders, requests, and even small details are personal.

Results are what matter most

Remember your priorities. Production methods may be different from what you are used to but results are what really matter. If your Chinese counterpart has a unique way of getting the same results that you get from your manufacture at home don't try to force them to do it "your way."Quite often there are very good reasons for how they do what they do. 

Cooperation

"We would like to have good cooperation."This is a favorite saying of the Chinese. You'll hear it everywhere and read it in most emails. Actually it means that they want to be comfortable with you and have a continuing relationship. The key is applying that concept in a multicultural context as all too often it's repeated when there are factory problems or delays that they want you to accept.

For Westerners cooperation is clearly spelled out. You fulfill your part of the contract and I'll fulfill mine. With an extra dose of patience and customer service thrown in we will both be satisfied by the results. The Chinese would quickly agree with this but add that cooperation is much more than just fulfilling the contract and has much more to do with how you work together than what you accomplish. Everyone wants to make money and everyone wants to be satisfied/satisfy the other party. But the Chinese also add significantly more weight to the intangibles than do Westerners.

Act the Part

In China performing your role is very important. Every relationship has, in the Chinese mind, a clear role and position. Each actor should play his part or the relationship is thrown out of balance, leaving the permanence of the relationship and the individual roles unclear.To be effective and to allow your Chinese counterpart to feel comfortable (i.e. to "cooperate" well) you must both understand each other's role within the context of business. The importance of roles in Chinese culture really cannot be understated.

So what is the role that individual foreigners play in this environment of real politic? Your role is that of honored and privileged guest. You are the guest, the buyer, the one with the money and the ability to accept or reject product and place more orders. You will be respected for the troubles you have endured to get here. You will be appreciated greatly if you have learned some Chinese. You will find lasting personal and professional relationships if you are willing and able to work within the Chinese system.

The Devil is in the Details

Follow up on all details diligently. Ensuring correct production mid-stream rather than at the end of production will save time and money. Voice, fax and email may give you a little piece of mind, but photos, samples and ultimately some eyes on the ground are much safer. If you can't be there yourself, hire someone to be there for you. If you are going to manage production from across the ocean make a detailed QC list of each piece, part, color, package, requirement and regularly request comprehensive reports, samples and photos. When you actually go visit the factory take time (days if necessary) to QA everything completely. If you are especially concerned about the quality of a certain part/piece schedule your trip to coincide with the production of that item and watch the entire process. Don't take their word for it-see if for yourself. Establish a standard, sign off on the standard (literally sign your name to an approved sample) and then make sure that production matches.The more diligently you require feedback or QC yourself the more likely the factory will understand and meet your expectations. Set the bar high from the beginning.

Contracts

Practically, PI is deemed as a contract, but PI is too simple to protect your rights, you need to write down the following terms and conditions on a paperwork – Contract. As per Contract law of People’s Republic of China, a contract shall contain the following clauses:
1, title or name and domicile of the parties;
2, contract object;
3, quantity;
4, quality;
5, price or remuneration;
6, time limit, place and method of performance;
7, liability for breach of contract;
8, methods to settle disputes.


Quote partly from David Dayton