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.
As the New Year has begun it is my belief that adopting the attributes of the Ox is necessary to deal with this recession that is causing problems for the entire world. The common consensus is that buyers all over are being very cautious. They must continue to buy goods, but are taking a more detailed and methodical approach.
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. Push for price discounts from your current suppliers. For example, steel prices have dropped by 20% from Sept 08 to Jan 09. There is talk that some raw material prices will start coming back up in February 09, but until that starts happening keep asking for discounts.
2. Push for lower Minimum Order Quantities (MOQs). The factories are more willing to reduce their MOQs now than they were before 2008. Use this to your advantage to lower your inventory dollars.
3. Talk to and persuade the factories you are buying from to be proactive and efficient. Ask them to develop new product and capitalize on their competitive advantages. Share your manufacturing experience with them.
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. It is important to pay attention to the raw materials being used to make your items. Factories will be looking to save money anywhere they can and using cheaper/inferior materials will be one way.
7. Since you have worked hard to develop your supply chain in China, make sure you keep it. Negotiate the best pricing you can, but dont beat them down to where they can not make any money. They are in the business to make money also and if they decide your account is no longer worth their while, you will be left without a supplier and will have to start the process all over again.
8. Keep your suppliers clued in to the current state of your business and market. They too are nervous about the slow down in the economy, so if you share with them what you are experiencing they will be less stressed about your recent reduced orders and more willing to quickly react to your needs when the time arises.
Be like the Ox in 2009. Use quality Project Management and Third Party Inspection to prosper and take market share in these challenging times. With the right approach and attitude this year can be more than just surviving, but actually THRIVING!
Sincerely,
Greg Schultheis President AMROSIA Group Limited info@amrosia.com www.amrosia.com
As the New Year has begun it is my belief that adopting the attributes of the Ox is necessary to deal with this recession that is causing problems for the entire world. The common consensus is that buyers all over are being very cautious. They must continue to buy goods, but are taking a more detailed and methodical approach.
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. Push for price discounts from your current suppliers. For example, steel prices have dropped by 20% from Sept 08 to Jan 09. There is talk that some raw material prices will start coming back up in February 09, but until that starts happening keep asking for discounts.
2. Push for lower Minimum Order Quantities (MOQs). The factories are more willing to reduce their MOQs now than they were before 2008. Use this to your advantage to lower your inventory dollars.
3. Talk to and persuade the factories you are buying from to be proactive and efficient. Ask them to develop new product and capitalize on their competitive advantages. Share your manufacturing experience with them.
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. It is important to pay attention to the raw materials being used to make your items. Factories will be looking to save money anywhere they can and using cheaper/inferior materials will be one way.
7. Since you have worked hard to develop your supply chain in China, make sure you keep it. Negotiate the best pricing you can, but dont beat them down to where they can not make any money. They are in the business to make money also and if they decide your account is no longer worth their while, you will be left without a supplier and will have to start the process all over again.
8. Keep your suppliers clued in to the current state of your business and market. They too are nervous about the slow down in the economy, so if you share with them what you are experiencing they will be less stressed about your recent reduced orders and more willing to quickly react to your needs when the time arises.
Be like the Ox in 2009. Use quality Project Management and Third Party Inspection to prosper and take market share in these challenging times. With the right approach and attitude this year can be more than just surviving, but actually THRIVING!
Sincerely,
Greg Schultheis President AMROSIA Group Limited info@amrosia.com www.amrosia.com
About the Author:
Mr. Greg Schultheis has been living in China for more than 6 years. He is American born and living in China full time has allowed him to learn Chinese. He has been hired by companies all over the world, big and small, to do consultant work. For a limited time, you can get a free consultation on Project Management and Third Party Inspection in China by emailing us at info@amrosia.com.
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