Happy Chinese New Year! The year of the Ox officially began on January 26th and this year promises to be a challenge for everyone. The Ox is one of 12 animals that represent the Chinese Lunar Calendar. The Ox symbolizes prosperity, strength and ambition.
It is clear that 2009 will be a challenge for everyone (buyer and factories alike) and the need to be Ox like will be a must. Dealing with and overcoming the world wide recession is a task we must all address. Our clients all over the world are telling us the same things. They want to move forward cautiously because of the uncertainty in the market now.
If you are importing goods that are made in China then you are probably aware of the need for QC, Project Management, and Third Party Inspection. I have listed several techniques and ideas to keep in mind when talking to a potential new supplier or your existing ones:
1. Steel prices are one example of how raw material prices have gone down recently (about 20% from September 2008 to January 2009). So asking your suppliers for price reductions should be done immediately.
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. Ask for better payment terms ASAP. You suppliers might actually be planning on changing their payment terms to better benefit them because money from banks is tight now. If you ask for better payment terms first, that will give you the upper hand if they push back with plans of increasing the deposit or changing Net 30 to Net 15. Take time to think about and investigate why they want to change their payment terms and whether this is a sign they are in financial trouble.
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. Using less expensive raw material is one way for a factory to save money. Make sure they dont change materials on you unless you test and approve the new material
7. Having and keeping a good supply chain is better than no supply chain. So working with your factories to get the best pricing is important but not at the expense of driving them out of business. I have seen factory bosses drive themselves out of business trying to meet all their client's needs. Work together with your suppliers and not against them, so you both make money and can be around a long time to support each other.
8. Finally explain to your suppliers exactly what is going on in your market. You are both in business to make money and as you succeed, so do they. If they have a better understanding of what is going on, they will not be as stressed and more willing to help you however possible.
As the year of the Ox begins with the worlds back against the wall, we must all be determined that survival and prosperity are possible through strong thinking and ambitious and dedicated actions. 2009 is the equivalent of Mother Nature's natural selection where the strongest survive and thrive. Providing great service to your existing customers, taking market share from your competitors, and controlling/improving your supply chain through the proper use of Project Management and Third Party Inspection will put you on the strong side of this natural business selection process.
Regards,
Greg Schultheis President AMROSIA Group Limited info@amrosia.com www.amrosia.com - 21151
It is clear that 2009 will be a challenge for everyone (buyer and factories alike) and the need to be Ox like will be a must. Dealing with and overcoming the world wide recession is a task we must all address. Our clients all over the world are telling us the same things. They want to move forward cautiously because of the uncertainty in the market now.
If you are importing goods that are made in China then you are probably aware of the need for QC, Project Management, and Third Party Inspection. I have listed several techniques and ideas to keep in mind when talking to a potential new supplier or your existing ones:
1. Steel prices are one example of how raw material prices have gone down recently (about 20% from September 2008 to January 2009). So asking your suppliers for price reductions should be done immediately.
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. Ask for better payment terms ASAP. You suppliers might actually be planning on changing their payment terms to better benefit them because money from banks is tight now. If you ask for better payment terms first, that will give you the upper hand if they push back with plans of increasing the deposit or changing Net 30 to Net 15. Take time to think about and investigate why they want to change their payment terms and whether this is a sign they are in financial trouble.
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. Using less expensive raw material is one way for a factory to save money. Make sure they dont change materials on you unless you test and approve the new material
7. Having and keeping a good supply chain is better than no supply chain. So working with your factories to get the best pricing is important but not at the expense of driving them out of business. I have seen factory bosses drive themselves out of business trying to meet all their client's needs. Work together with your suppliers and not against them, so you both make money and can be around a long time to support each other.
8. Finally explain to your suppliers exactly what is going on in your market. You are both in business to make money and as you succeed, so do they. If they have a better understanding of what is going on, they will not be as stressed and more willing to help you however possible.
As the year of the Ox begins with the worlds back against the wall, we must all be determined that survival and prosperity are possible through strong thinking and ambitious and dedicated actions. 2009 is the equivalent of Mother Nature's natural selection where the strongest survive and thrive. Providing great service to your existing customers, taking market share from your competitors, and controlling/improving your supply chain through the proper use of Project Management and Third Party Inspection will put you on the strong side of this natural business selection process.
Regards,
Greg Schultheis President AMROSIA Group Limited info@amrosia.com www.amrosia.com - 21151
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 consulted for big and small companies across the globe. 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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