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How to deal with China suppliers #1

By Cyrus, on February 7th, 2010
Number of View: 10824

Many foreigners facing problems with China businessman. Problems like goods hold back, price mark up, defected goods, contract term, shipment mode, payment term, nominated and trademark, so how to attack and defend on these empty promises?

Goods hold back often perform by suppliers either they demand to change payment term to cash on delivery (COD) instead 30 days payment or due to market inflation costings not justify with original quotation forcing you to mark up the buying price. Sometimes rumors in the market will cause supplier change to COD so beware on your internal staff. But if this supplier was recommended by your staff push the responsibility back to him because he definitely receive commission from the supplier, to maintain his post and protect his rice bowl he will settle it, let the locals deal with the locals! This tactic could also use on price mark up by suppliers, remember whenever boss negotiate price with locals sure lose, but using your local staff to negotiate price could even further discount because the locals have to prove to you on their capability! Some cases might be you try to deduct supplier liability on past order hence they hold back your goods, remedy is either you receive your goods first then make deductions or place new order to another supplier.

Price mark up by suppliers often due to your payment term not on time. When such cases happen you have to ask your local staff to filter the scenario getting some sympathy but make sure you fulfill your promise on next payment term. Remember always set a standard price to your local purchaser to fulfill and pressurise him as a habit to maintain your factory offer price, quality and delivery. Always dont rely on 1 supplier, more choices more comparison for you to set a standard price and also maintain at least 3 suppliers on same ongoing material purchase, you will use it during crisis, why? Every supplier would encounter peak season so they will also prioritise on big client and high buying price, if you are not the major buyer and offer low buying price, would the local suppliers manufacture your goods first? They wont tell you but you must have informants, use your local purchaser visit the supplier factory daily to monitor their production to ensure your quality and delivery is safe. Dont be so stingy on your purchaser, weigh the importance, raw materials delay causing overtime to rush goods or your workers being held up for lack of material (停工待料), or maybe air freight charges, which losses is higher, your production or purchaser transportation allowance?

Defected goods deliver to your factory always happen, could be coloring not match, lab test failure, exceed defects tolerance, incorrect specification, bad quality, all these are common problems found and always only found out when production starts. Your storekeeper must go through training through frequent monitoring and examined by your supervision or your trustworthy, cannot be your purchaser to prevent him double-crossing with the suppliers. When defects found reports to supplier within 24hrs for replacement, get a new delivery date if jeopardise your production schedule request for deduction. If no replacement dont return the goods to them and on hold all payment against this supplier forcing them to bear the losses incur, if the supplier is nominated blow up this issue to your buyer with hard evidence through email with photo taken, sure you get replacement, shipment extension or compensation! No deductions supplier will never treasure their mistake and penalty, but this would remind them always prioritise and pay attention on quality control on your company purchase in long run! Sometimes during peak season supplier force to sub-contract to meet your delivery and always the defected goods rating is higher, to protect yourself always state in your contract term “sub-contracting is not allowed” and once if is found the penalty is cancellation of entire order, full losses on suppliers! On the other hand with your local staff frequent visits on suppliers’ factory sub-contracting violation could be controlled.

Remember always there is buyer and seller, client buy goods from factory, and factory buy raw materials from supplier. If your client is picky you must twice picky towards your supplier chain, is the same principal, think about it on my next article on “How to deal with China suppliers #2″ but on condition after I receive at least 10 comments, a business deal!


 

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