CHINA IMPORT FORMULA

CHINA IMPORT FORMULA
Yo u r
St e p - By - St e p F o r mu l a
I mp o r t i n g F r o m Ch i n a
To
HOW TO NEGOTIATE AND POSITION
YOURSELF BEFORE PLACING
PURCHASE ORDERS
Today we will cover:
1.Cross-cultural understandings between
international buyers and Chinese suppliers
2.The do’s and don’ts of quality control, logistics
and payment methods
3.How to protect intellectual property
4.Proven negotiation techniques
COPY OF SLIDE
PRESENTATION
AVAILABLE
Take plenty of notes but feel free to
relax and listen – anyone interested
in a copy of this presentation can
send me a message to
+614 19440612
or email and I will make it available
to you.
brendan@chinaimportformula.com
A CROSS-CULTURAL UNDERSTANDING
BETWEEN INTERNATIONAL BUYERS AND
CHINESE SUPPLIERS
Table 1: A CROSS-CULTURAL UNDERSTANDING BETWEEN
INTERNATIONAL BUYERS AND CHINESE SUPPLIERS
INTERNATIONAL BUYERS
CHINESE SUPPLIERS
Low Cost
Profit Margin
Merchantable Quality
Profit Margin
Consistency of Supply
Profit Margin
Quick Production
Allocated Production
Clear Answers to Questions
Any Answer but Never a NO
Contractual Value
Relationship Value (Guanxi)
Long Term Gain
Short Term Gain until Proven
COST DRIVERS AND COST
BREAKDOWN ANALYSIS
Sunk Cost
1.R & D Amortization (especially in the beginning)
2.Advertising Costs
3.Plant and Equipment
4.Capital Investment and Licenses
Variable Costs
1.Raw Materials
2.3rd Party Material Inputs
3.Labour – Wages Plus Housing Plus Living Expenses
4.Red Pocket – Referral Fee
5.Logistics Freight to Docks (FOB) – Not if Ex Works
6.Exchange Rate – Conversion from USD into CNY (2%
spread)
Profit
-10% to 50%
THE DO’S AND DON’TS OF QUALITY
CONTROL, LOGISTICS AND PAYMENT
METHODS
Table 2: Quality Control
DON’Ts
DO’s
Order with Sample
Get a Sample
Accept a Semi-perfect Sample
Get a Sample 110% Perfect
Forget to Inspect the Goods
Get an Inspection
Shoot the Hostage
Keep the Hostage
Table 3: Logistics
DON’Ts
DO’s
Import without Customs Check
Have a Customs Broker
Import without Duty Check (left footed
shoes)
Have a Customs Broker
Try and Do It Yourself
Use a Shipping Company
Use Factory’s Insurance
Get Your Own Insurance
Use Factory’s Shipper
Use Your Own Shipper
Table 4: Payment Methods
DON’Ts
DO’s
Pay to Anyone in Nigeria
Pay to China Directly
Buy Branded Goods
OEM yourself
Give up the Currency Spread
Use a trusted Broker
Pay 100%
Pay 30% then 70%
HOW TO PROTECTINTELLECTUAL
PROPERTY
Legal
1. Sign an agreement with the Supplier
2. Hire a Lawyer – they may advise you to get
Patent, Trademark or Copyright Protection
Practical
1. Have the volume so the factory will want to support
your IP
2. Be an Angry Bird
3. Unless you are already an established brand
consider building a niche ¼ inch wide and 8 miles
deep and by the time someone copies you are onto
the next product
PROVEN NEGOTIATION TECHNIQUES
Perceived Experience and Size
1. Have good presentation
2. Use the right email templates
3. Use the right lingo (know your MOQs from your
FOBs)
4. Use a contract – go direct to owner
5. Quote price to USA – trial order
The Pricing Process
1.
2.
3.
4.
5.
Order quantity to get prices
Piggybacking – my story to get my pocket bikes
Use a currency broker
Separate Cost components
Offer material in USD and Labour in CNY
Relationships
1.
2.
3.
4.
Go to China
Give a gift
Westernize their marketing material to get MOQ
Karaoke and Vodka
THANK YOU
COPY OF SLIDE
PRESENTATION
AVAILABLE
Anyone interested in a copy of this
presentation can send me a
message to
+614 19440612
or email and I will make it available
to you.
brendan@chinaimportformula.com