The year of the Ox has begun on January 26th, 2008 and we at AMROSIA Group Limited wish you a Happy New Year. The ancient Chinese calendar says that the Ox is strong, prosperous, and ambitious.
In 2009 both the buyer and the factory will need to adopt the characteristics of the Ox. There is no mistaking that everyone is faced with a huge challenge of how to pull ourselves out of this world recession. Customers and clients all over seem to be saying the same. They are unsure of what is going to happen so they are proceeding with caution.
As someone that is buying in China and then selling to your customers in another country, here are some tips (besides paying attentions to Project Management, Third Party Inspection and QC) when talking to your existing or new Chinese factories and suppliers:
1. Ask your current suppliers for a price decrease because of raw material prices have gone down. You can use web sites that track world wide commodity prices as a reference and reason for asking for the discount. The price of steel is a good example because recently from September 08 to till now, it is down about 20%).
2. For the last 10+ years manufacturing here has experienced exceptional growth, so many factory bosses and sales people have never experienced this type of economy. They have gotten fat and inefficient like many companies do in rapid growth cycles. They are scrambling to deal with the problems and you will need to be strong when convincing them to meet your needs. You should push for lower MOQs on items that you still. Just a couple of years ago factories would not lower their MOQs, but in recent months I have spoken to many factories that are seeing the big picture and their MOQs are coming done.
3. Make sure your suppliers understand the current economic situation and ask them to focus on increasing efficiency and productivity. Help them by sharing your manufacturing knowledge.
4. Try to negotiate payment terms that are better for you. Maybe you can reduce or eliminate the deposit or increase Net 30 to Net 45. It is important to do this now because many factories will probably be asking to change the payment terms more in their favor because money is not being lent easily right now. So if you beat them to the punch, you have a better position to negotiate from. Also ask yourself why they want to change their terms and is this a signal that they are having financial issues.
5. Go to your factories you are buying from and inspect their production line to see how busy they are. Ask questions of all sorts that do not raise suspicion, but give you an indication of the volume of work and stability of the factory.
6. Using less expensive raw material is one way for a factory to save money. Make sure they dont change materials on you unless you test and approve the new material
7. Having and keeping a good supply chain is better than no supply chain. So working with your factories to get the best pricing is important but not at the expense of driving them out of business. I have seen factory bosses drive themselves out of business trying to meet all their client's needs. Work together with your suppliers and not against them, so you both make money and can be around a long time to support each other.
8. Make sure your suppliers know and understand the status of your market. If they understand your situation, they will feel more relaxed about the slower/smaller orders and will be more responsive to your needs when you ask for help.
As the year of the Ox begins with the worlds back against the wall, we must all be determined that survival and prosperity are possible through strong thinking and ambitious and dedicated actions. 2009 is the equivalent of Mother Nature's natural selection where the strongest survive and thrive. Providing great service to your existing customers, taking market share from your competitors, and controlling/improving your supply chain through the proper use of Project Management and Third Party Inspection will put you on the strong side of this natural business selection process.
Best regards,
Greg Schultheis President AMROSIA Group Limited This e-mail address is being protected from spambots. You need JavaScript enabled to view it www.amrosia.com
About the Author:
Gregory Schultheis has lived and worked in China for more than 6 years. Mr. Schultheis is from America, but lives full time in China and speaks Chinese. He has consulted for big and small companies across the globe. To get your limited time info on Project Management and Third Party Inspection in China, contact AMROSIA Group Limited by emailing us at
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