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. [email protected] 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. [email protected]