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Jason’s Journey: Mastering Procurement in China
Building Win-Win Partnerships
Jason, CEO of a U.S. electronics company, has been sourcing from China for over a decade. His key takeaway? Always incentivize your Chinese business partners and ensure mutual benefits in every transaction.
Starting with No Capital
When Jason first started his company, he had no funds but placed a 30,000-unit order with Chinese factories. They responded with quotes, but when he reduced the order to 80 units for testing, they refused. He realized he had approached factories that were too large.
Despite the unprofessional formatting of their quotes and poorly designed product manuals, Jason saw an opportunity. He redesigned a factory’s product manual, offering it for free. Impressed, the factory not only accepted his small order but even lowered the price. A week later, they won new U.S. customers due to their improved manuals, proving that win-win collaborations don’t always start with a contract.
The Importance of Strategic Selection
Not all deals should be accepted. When factories questioned why Jason wouldn’t work with them despite lower prices, he replied: “I need a long-term partner, not someone who’s either a scammer or a fool.” A smart buyer prioritizes both their own and their supplier’s profitability.
Gaining Negotiation Leverage
During a crucial meeting with a large Chinese factory, Jason noticed the managers frequently laughed among themselves. Curious but lacking a translator, he recorded the meeting and later had it translated. The results? He uncovered their pricing strategy and bottom line—giving him a critical advantage in negotiations.
Time as the Best Negotiation Tool
In China, prices are never fixed. Time pressure works in the buyer’s favor. Jason planned ahead for the 2012 Olympics, anticipating a surge in demand for large-screen TVs. In January, he negotiated but delayed signing. By February, the factory, worried about losing the deal, lowered the price by 10%. By March, Jason further delayed, claiming to have found a better supplier. After a few weeks of silence, the factory dropped the price by 30% compared to the initial quote.
Keeping Your Cards Close
When asked about his target price, Jason’s response was: “Zero dollars.” He never revealed his budget, ensuring suppliers competed for his business instead of setting prices based on his expectations.
Always Have Backup Suppliers
Jason constantly searched for alternative suppliers, making it clear that no manufacturer was indispensable. This pressure ensured better pricing and service. His company always had a Plan B and Plan C, keeping suppliers on their toes.
Avoiding Middlemen to Cut Costs
Every extra layer in the supply chain adds at least 10% to costs. To identify intermediaries:
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Check email domains (though some large companies still use generic emails).
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Visit the factory in person.
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Examine employee uniforms for branding.
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Ask production staff if they know the sales representative.
By applying these strategies, Jason optimized his sourcing in China, proving that smart procurement is about more than just price—it’s about leverage, strategy, and long-term partnerships.