Sourcing from China: Who are the “Happy Buyers”?

After a couple of years in China, I have managed to meet a good number of entrepreneurs and business people sourcing goods from Chinese suppliers. I’ve also read plenty of posts from fellow bloggers providing negotiation tips and often narrating horror stories (and I’ve also shared tips and written horror stories myself!)

Last week I was chatting with somebody who is heading a representative office that helps source a number of goods to its headquarter. I soon realized this person was a satisfied buyer who surely had lots of horror stories to tell but was far from bitter about suppliers. That made me think about the people I’ve met that could be (quite simplistically) described as “happy buyers”. They all have some common characteristics.

What I’m about to write may not hold true for everybody, but I’ve come to realized that the “happy buyers” I’ve met share the following approach to business:

1. “Happy Buyers” are into building long term relationships
a) They happen to be genuinely looking for “win-win” situations because they want (and more importantly need) long term suppliers.
b) They focus on strengthening the relationship because they are aware that not having big purchase orders they need to leverage on the relationship- and with that objective in mind, they make sure that they visit their suppliers very often… because in China things don’t get done by fax.

2. “Happy Buyers” approach price negotiation very professionally
a) They understand their suppliers cost structure (how much goes into labor, materials cost…), and
b) They track commodity prices that are involved in their products
So, when a supplier comes back saying “I need to increase the price” they can:
a) Assess if there is a valid reason behind the request
b) Estimate what would be the fair cost impact
c) Objectively decide if they should give in (in future orders… not for this one!)
… All of which will positively help the long term relationship and both sides satisfaction.

And, of course, there are some other very basic things in common like having the right tools in places (contracts, good quality control…)… but for the purpose of this post I wanted to focus on the two I’ve mentioned above.

I know there will still be a lot of bad experiences out there (even when you have ticked all the above/ and even suffered by those same people I talk about)… but I am just describing what satisfied buyers that I’ve met have in common.

So, are you a “Happy Buyer”? What is your secret?

2 comments

  1. Interesting… I guess they also make sure the factory knows what they require (with the approval of pre-production samples, but also some precise specs about the product and the packaging).

  2. So this person is sourcing products from a Rep. Office for it’s overseas office? I can’t tell you the numerous red flags that sends up. For one, sourcing is not an allowable activity under the Rep. Office rules and 2. it says this company is just trying to setup in China on the cheap. This can lead to several problems in the long when engaging a business like this.

    What I do applaud is the attempt to find some positives in engaging suppliers in China. Everyone only hears the horror stories and bad side of most supply situations in China so to hear someone enjoying it is good to know.

    With that said, since 2005 -2009, the company I work for had placed 1000’s of orders to China. In 2010, we have only ordered 1 shipment from China. Most of our orders have moved to Europe, Thailand and other SE Asian countries. Not because the prices is better, infact we are paying more in most cases, but because it just simply is easier to do business elsewhere.