Get my book "The China Sourcing Manual - Learn How to Successfully Source in China" packed full of 20 years of experience in working with China and almost 300 pages of strategies, templates, procedures and best practices based on the operations manual of a successful sourcing agency. Get the E-book (PDF version) + digital copies (word and excel format) of the templates outlined in the book here: https://www.asiabridgelaw.com/the-essential-reference-guide-to-china-sourcing-learn-best-practices-avoid-common-pitfalls/ *** Earlier videos talked about how to find and evaluate suppliers, not let’s get into how to negotiate a good price. Different industries have different margins, and even within the same industry, some suppliers quote high, some quote low. So, I am sorry to say there is no set formula for negotiation like “if they say 100, I say 50 and we split the difference”. In the USA for example, we tend to think of negotiations as a sport with set of rules and protocol. Two gladiators sit at the negotiation table and the one with the supplier negotiation ninjitsu is going to get the better price. But in China the rules of negotiation are totally different. There is no fixed time when the negotiation takes place or ends. In short, there are a whole set of Chinese negotiation tactics which are beyond the scope of this video and certainly outside of the skill set of the average foreign buyer, including myself. My Chinese father in law likes to remind me that the Chinese have been negotiating with each other for 1000 of years of continuous history and it is not like I’m going to walk in the room and out negotiate them. He’s right, but even if I can’t beat them at their own game, I still have the ability to out research them. And this brings us to the most important weapon in your supplier negotiation arsenal: research. Most of my negotiations take only a few minutes, but my research may have taken months. My typical negotiation goes like this: Mr. Li, it has been a pleasure to get to know you and your company. I am impressed with the quality systems and the strong reputation your firm has. However, my co-workers on the sourcing team are required to get multiple quotations from multiple suppliers. My staff has found a factory of similar size to yours with similar quality and lead-times in the next province over, and their price is 8% lower than yours. We would prefer to do business with you if you can match the offer from the other supplier. It basically comes down to a diplomatically delivered “take it or leave it”. If my research is accurate about the options, for example the other suppliers is 8% lower that Mr. Li, then Mr. Li will know that I know what he knows, in terms of what is the going price for a given product in China, and Mr. Li will more than likely come down in price. However, because suppliers have a very good sense of the going price of a given product in China, and they may even personally know the other factories, never try to bluff or make up a fictitious 2nd supplier with prices made up out of thin air. If Mr. Li senses you don’t really know the going price for a product in China, you will find it hard to negotiate effectively. On that note, as always, I sign off- wishing you successful sourcing in China! And if you found the information in this video useful, consider returning the favor: subscribe to my YouTube channel, hit the “like it” button and post some comments. Or check out my blogs and monthly newsletter If you have any questions, feel free to reach out via Linkedin, find me at the China Sourcing Academy or visit my company’s website. -~-~~-~~~-~~-~- Please watch: "The China Sourcing Manual - Learn How to Successfully Source in China by Mike Bellamy" https://www.youtube.com/watch?v=-hLHfPQz4FU -~-~~-~~~-~~-~-