So, you’ve toured the factory, you’ve checked out the quality, and you’ve reviewed the prospectus. You’re ready now to absolutely get down to your price for your first order.
I always say that take-its-or-leave- its don’t work when it comes to China importing. At this point, you can start to request the real price. You’ve been to the factory, you’ve really checked the quality, you’ve really checked the prospectus, and they’ve given you a quote already. You can sit down with them now and just begin to explain that you like the product and you like the quality. You compliment them a lot. Tell them how well their product is built. Tell them how much you like their factory and the professionalism of their staff. Give them a lot of compliments. Then say, “I would love to buy from you. However, I can’t pay more than $15 a unit. The math just doesn’t work for me.” That will start the negotiation process.
Don’t expect to buy for $15 if you start at $15. You’re going to meet the ground somewhere in between. You already know about what their hard cost is, though. It goes from the first quote that they give you. They’re going to give you a quote at roughly three times their hard cost. If it’s $20, that means they have about six bucks in it. So, offering them $15 is not an insult.
As a matter of fact, in a situation like that, you can tell them easily, “I’ve gotten quotes on similar products as low as $12,” if you’ve got legitimate quotes. Sometimes they’ll ask you who the company is. If you can reach in your bag and pull out one and really show them, most of the time, they’ll meet it, almost every time. However, if you’re just B.S.ing your way through, they’re not going to buy that. They’re good negotiators, they know a lot of their competitors locally. They’re going to know when you’re full of bull and when you’re not.
Sometimes I will write them a buyer’s order and just state a price. I don’t like to do that in a live negotiation, but I’ll do that after I get back home. If I’m getting close to where I want to be – if they got close to my $15, $12, or $10 – I’ll literally enter a buyer’s order at $10 and fax it into the factory and ask them for wiring information of where to send the deposit. Sometimes they take it and sometimes they don’t.
You’ve got to remember this: these Chinese factories are all about paperwork. Words don’t mean anything. They can walk into their boss and say, “Boss, look. I got an order for 1,000 of these things, but they want them for $12.” Now, in their mind, they have a bird in the hand. Before, they were just talking numbers back and forth. It really didn’t matter: it wasn’t real math. Now they have a bird in the hand. So, when you’re just orally communicating and negotiating, you’re probably not going to get your best price there. It’s probably never going to happen.
Let’s assume, now, that we’re ready to make the offer. If you’re going to do it there live, I want you to say,
“Okay. I’m going to give you the terms you want on this first order, and I’m going to try to make money with it. If it doesn’t make money for me, then we’ll have to talk about whether we’re going to continue our relationship or not by the time we place the next order.”
Let them know right up front that if the price doesn’t work out, you’re going to go elsewhere. Just don’t let them think that you’re agreeing to the price they’re giving you forever.