by Renaud Anjoran in 'Quality Inspection Blog'
An importer asked me what he should do when Chinese factories ask for his ”price targets.”
I think it is a legitimate question from factories (when it comes to trading companies though, it makes sense to be suspicious).
Here is the sequence I advise importers to follow when they source new suppliers:
Don’t forget, in China, price is very closely tied to quality. If you negotiate a very low price, most suppliers will end up saying yes. Then they will wonder how to make your products. They will probably use the very cheapest materials and subcontract production in a small workshop. You will get what you pay for.
One last piece of advice: if you pay 20 percent above market price, all you risk is wasting 20 percent of the money you disbursed for your project (and actually it is closer to 10 to 15 percent because the FOB price is only a portion of your total landed cost). If you pay 20 percent below market price, you risk getting something that can’t be sold at all (which means you risk losing all your investment).
Do you agree?