Very helpful post over on the Foreign Entrepreneurs in China blog, entitled, “36 Tips on How to Deal or Negotiate with your Chinese Suppliers.” I urge you to read the entire post, but I particularly liked the following (lucky) eight tips because they are important and yet not often enough discussed:
- Not all good suppliers have English language websites. Get someone on board who can read Chinese.
- If there is any IP involved, register it in China before you approach anybody and then get your potential suppliers to sign a Non-Disclosure, Non-Compete, Non-Circumvention Agreement (a/k/a NNN Agreement) before you reveal your secrets to them.
- If you can’t visit the factory, get an Inspection Company to do it for you. It is not that expensive.
- Give realistic purchase estimates. If you promise ten times more than you are actually planning to buy, your manufacturer will make up for the loss in anticipated profits by giving you poor quality.
- Learn about your supplier’s cost structure (labor costs, material costs, etc.) so if it seeks to negotiate a price increase, you have a factual basis for arguing against it.
- It is a good use of your money to get a China knowledgeable lawyer to draft your contracts so that they are enforceable and so that they cover the points needing coverage, including IP protection, product quality, product specifications, and penalties.
- Ensure the manufacturer you are considering has the machinery & capability to produce your product. Ask them to produce a few samples in front of you.
- If you can’t visit the factory to check on your product send an inspection company or somebody you trust to do so.
What do you think?
UPDATE: Quality Inspection Blog has also linked over to this 36 Tips post, adding a number of his own comments to the tips.