Pricing, Negotiation, Contracts | Vetting Chinese Suppliers (Part 10)

Getting quotations is a part of vetting new Chinese suppliers, too. 

We have been creating a mini-series guiding you through effective vetting of Chinese suppliers that will help you to find the best possible manufacturer for your products this year, and, as we come to the end of it, it’s time to focus on one of the final stages: negotiating price, getting quotations, and signing contracts (listen back to the entire mini-series on vetting Chinese suppliers here 👍).

Let’s assume you have performed due diligence, factory audits, and maybe even visited (during safer times) potential suppliers and have formed a shortlist of those you are ready to get quotations from, what can you learn about them during the negotiating and quotation phase? Actually, quite a lot – and how they behave is an additional way to gauge their suitability as your new supplier! In the episode, Renaud also provides tips on red flags to look out for such as a lack of understanding of your needs, how YOU can protect your IP at this point (as sharing product designs is going to be necessary at some point), and more.

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🎧 Pricing, Negotiation, Contracts | Vetting Chinese Suppliers (Part 10) 🎧

Here’s a summary of key sections of this episode:

✅ The reason why you should consider getting quotations as a key part of the new supplier vetting process as well as all of the due diligence that comes beforehand.

✅ What is IP leakage and why is this a risk when sending product details to multiple potential suppliers in order for them to provide quotations.

✅ A list of other things you should discuss with suppliers at this stage, such as payment terms, incoterm, warehousing, etc.

✅ Horror stories about what could go wrong if you work with the ‘wrong supplier’ on developing and prototyping your new product idea.

✅ A number of tips you can adopt to protect IP and still be able to get useful quotations, such as getting preliminary quotations for similar products/components for a rough idea.

✅ Green and red flags from a quotation that demonstrate if a supplier is capable and understands your requirements (or not).

✅ Mistakes some buyers make when requesting quotations which lead to trouble in future.

✅ Why doing product design and prototyping outside of China can be a good way to protect IP and streamline the manufacturing process.

What else was mentioned in the episode?

• We discussed manufacturing contracts as a source of protection and clarity for your supplier to understand your expectations in this episode of the podcast.
• You should read this China Law Blog post about IP leakage which casts more light on the dangers of providing too much IP information to too many potential suppliers.
• Renaud suggested either working with a contract manufacturer or an OEM, depending on your requirements. We discuss the types of suppliers and their pros and cons here.
• If you’re interested in taking care of product development and prototyping before finding a manufacturer, this list of prototyping companies in China could be useful.

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Did you ever find out something very useful or worrying about potential suppliers in China when negotiating with them?

Please share your stories or thoughts about this in the comments.

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