Here are six tips to keep in mind when negotiating with Chinese suppliers. Including the following areas: - Sourcing - Short Listing Suppliers - Quality Control - Find a Point of Sale - Negotiations - Contracl / Agreement Signing - Payment - Monitor Supply Performance

1. The sourcing process is not
simple by any means, but it’s a
lot easier than you may think.
By checking all your numbers
and establishing good
relationships, many hassles
usually related with sourcing
can be easily avoided.
Post this handy sourcing
checklist up in your office to
remind yourself of the most
important steps and you’ll be
an old pro before you know it.
© 2010 - Buyer’s Complete Sourcing Checklist - Page

2. Negotiating is never easy, but it can become even more difficult when faced with an unfamiliar culture. Although anything can be negotiated
in China – you’ll probably get better results if you know the ins and outs with suppliers. The more you understand about the positions, cultures,
pressures and backgrounds of your counterparts, the more you can use that knowledge to get what you want.
Here are six tips to keep in mind when negotiating with Chinese suppliers:
Sourcing
There are three major methods with which to find a supplier:
Internet Publications Tradeshows
Online B2B marketplaces such as Alibaba.com Trade and industry periodicals were once very Conventions and exhibitions focus hundreds,
are the most popular sourcing methods today, popular, but are now being left behind as even thousands of suppliers in one place,
as they offer easy access to a huge amount of more people turn to digital media. though because they are available only for
information quickly. Nonetheless, they still provide buyers with short periods, it’s near impossible for to see
informative editorial content as well as the everything in a show.
PROS: connection to suppliers that they seek.
Interactive, easy, methodical and efficient. PROS:
PROS: Face-to-face meetings help build partnerships
CONS: Informative, portable. quickly.
Missing that ‘human factor’.
CONS: CONS:
Slow, non-interactive, good ones are pricey. Too much to see, too little time, travel
required.
PRO TIP: Want to see which tradeshows are right
for you? Search for tradeshows on Alibaba.com
now!
© 2010 - Buyer’s Complete Sourcing Checklist - Page 2

3. Short Listing Suppliers
It’s generally a good idea to talk with at least three suppliers at a time to keep your options open, as well as to gather more
information about the product you’re sourcing.
 Can the supplier deliver what you want, when you want it?  Do you know anyone who has used and can recommend them?
 Are they financially secure?  Are they on any approved supplier lists from trade associations,
 How long have they been established? local or central government?
Quality Control
Make sure quality control is an integral part of your sourcing process. The little time and money it takes to do this may save you a
fortune in the future.
Do-it-yourself Hiring Experts
If you choose to monitor the quality of your goods personally, be sure Quality inspection companies can take a very time-consuming process
you are familiar with the laws and regulations. Check for standards off your hands, though this pricey service is not a luxury that many
such as safety requirements (Chemical compositions, manufacturing buyers can afford.
practices) as well as international trade laws (tariffs, import duties).
PROS:
If a supplier offers samples, don’t hesitate to take them up on your Comprehensive, customizable
offer. Not only will you get to check the quality of goods, but you will
also get to experience their service through the whole supply process. CONS:
Costs accumulate exponentially depending on size of shipment and
PROS: attention to detail
Cheap
PRO TIPS: 1. Many suppliers on Alibaba.com offer
CONS: free samples, click here to check them out now!
Relies on experience, time-consuming
2. Set aside a budget for QC early, as this cost will
vary from product to product .
© 2010 - Buyer’s Complete Sourcing Checklist - Page 3

4. Find A Point-Of-Sale
The last thing you want is to hold on to goods without a way of selling them, so make sure you can sell the goods before you even
make an order
Negotiations
If you focus too much on getting the lowest price, suppliers may end up lowering product quality in return. Instead, concentrate on
other important factors:
 Quality  Payment terms
 Value for money  After-sales service and maintenance
 Delivery promptness  Life-time costs
Contract/Agreement Signing
Make sure your contract spells out exactly what you need as well as what the supplier offers in return so that both parties are aware
of each other’s expectations.
 Goods – Specify what goods are being bought, noting any legal or  Quality Control – Be clear about who bears what risks in case of loss
technical rules with which they must comply. or damage at each stage of the process.
 Price – How much will you pay? In which currency? At what  Potential problems – Include procedures that would be
exchange rate? implemented if a dispute arises.
 Payment Method – When and how will payment be made?  Service level agreement – Define the level of service your supplier
 Delivery – How will the goods be transported to you? must provide.
 Trading terms – Specify exactly who is responsible for shipping  Legal jurisdiction –If there is a dispute, where would legal
costs, duties, and customs-related formalities. proceedings be heard?
© 2010 - Buyer’s Complete Sourcing Checklist - Page 4

5. Payment
The form of payment is often a part of negotiations, as the type chosen will directly affect the amount of risk you are exposed to.
Credit Card Escrow Services
PROS: PROS:
Fast and safe, card benefits Safest
CONS: CONS:
Not widely acceptable Costly
Money Transfers Paypal
PROS: PROS:
Fast, shows trust in the supplier Somewhat safe, widely accepted
CONS: CONS:
Money sent is irretrievable Susceptible to scams
Monitor Supply Performance
Just because you’ve paid and received the goods does not mean the transaction is complete. Keep in contact with your supplier by
providing feedback and comments to keep the relationship going. This will help you secure better terms and services in the long term.
About Alibaba.com
Alibaba.com (HKSE: 1688.HK) is the global leader in e-commerce for small businesses and the flagship company of Alibaba Group. Founded in
1999, Alibaba.com makes it easy for millions of buyers and suppliers around the world to do business online.
© 2010 - Buyer’s Complete Sourcing Checklist - Page 5