How do you do business with the suppliers in China？

How do you do business with the suppliers in China, how do you negotiate with them, how do you set up a good relationship with them?

Here I would like to take an example of LCD/LED TV to explain to you.

 

1. 1. How do you find the suppliers for LCD/LED TVs?
   1. you can find them through Alibaba.com or Globalsources.com, but big suppliers don’t do ads. on these kinds of websites.
   2. Canton Fair or Hong Kong Fair. Big and serious suppliers spend money on the trade shows, because they think that serious.
   3. You can find the suppliers through an interpreter like me, I have visited more than 15 LCD/LED TV suppliers in Shenzhen.

 

1. 2. What are the trade terms with the manufacturers in Shenzhen China.

1. Payment: Almost all the suppliers in China want at least 30% deposit when you place the 1st and 2nd order, and 70% before loading the containers, and then they can accept L/C at sight later on, so please don’t waste your time trying to negotiate with your desirable terms, they prefer not to do any business if you don’t follow their terms. Some big companies are willing to give you 4% discount for T/T, 2% for L/C at sight, they are willing to give you better price rather than give you better payment terms.
2. Deliver lead: Most of the TV suppliers have a 30 day delivery time, and 35 to 40 days for the first order, because they need to get your logo graphic and confirmation of all the information they need to complete your order. This is negotiable, it depends on how busy their production lines are, how many components are in stock, and how busy their people are. However, as for TV, they need to purchase TV panel, electronics parts, and cabinet, this will take some time depending on how close they are with their suppliers.
3. C. Quality: Most of the suppliers are buying A grade panel, which is usually 70% or 80% no bright dots, 20% to 30% 3,3,5 which means that no more than 3 dots on the A zone, no more than 3 dots on the B zone, in total no more than 5 dots on the whole screen.
4. D: Warranty: most of the TV vendors provide 1 year warranty or 1% spare parts (no including panel and cabinet, only electronics boards, remote control and cables.)
5. E: Price: most of the suppliers are very honest on the prices, some Indian customers are trying to negotiate and get a better price, sometimes you will just insult them and will only make the relationship worse if you are trying so hard on the price negotiate. If you really don’t trust their prices, you can just find more suppliers to compare the prices. If the suppliers are really willing to do business with you, they will offer 2 to 4% discount, maximum 5%, but their services and the following-up of orders might be worse if they find more better customers later on.
6. F: Quantity: most of the electronics suppliers will request a MOQ of 1000pieces. or a 20’ container, some good suppliers are willing to do it with 500pieces. They can’t accept 100pieces to 300pieces. the reason is very simple, the cost to deliver your order include marketing, sales, purchasing of parts, set up production line, labor operation time and materials, and the only difference between small order and big order are basically labor time and materials which don’t cost that much. And the most important reason is that their suppliers are not willing to accept less than 500piece order. If you are willing to pay much more for 300pieces, say 30% or 40% more, they are still not willing to do it, however this is a simple math, 300*(1+40%)=420, then why don’t you buy 500pieces. For your information, most of the suppliers don’t have any electronics product in stock, they might have some samples though. If you need to know exactly why, you will need to know the manufacture process, more information on http://www.interpretershenzhen.com/electronics-product-manufacture-process

 

1. 3. What are the LCD/LED factories like?

Most of these factories only have one or two production lines (assembly lines), only some big companies can make their own electronics boards (The main chipsets are mostly from Mstar the models are usually MST6M181 and MST6M182), very few suppliers have their injection machine to produce the plastic cabinets, only a few big companies have open cell technology for the panel, the panels are mainly from Chimei, some companies are using LG/Samsung/AUO/BOE

This assembly line can produce 100set per hour, medium and big companies can produce 200 thousands set per month.

 

As the LED TV are getting cheaper and cheaper, most of the companies are only now producing LED TVs instead of LCD TVs, CRT TVs are now out date.

 

 

1. 4. How much do the LED TVs cost at Shenzhen Manufacturers?

 

A good price lists from a big LED TV suppliers based on a 40’ container:

15.6” 69USD

18.5” 88USD

21.6” 110USD

23.6“ 129USD

26“  162USD

32“  189USD

42“  349USD

One 20’ container can take 700set of 22” LED TV.

 

1. 5. How do you build up good relationships with the manufacturers in China?

 

If you have very good relationship with the suppliers in China, you will get very good price at the very beginning, and your will get good product/ good deliver lead as well as services after you place the order. Here are some tips to build good relationships:

1. Hire someone who speaks good English to be your interpreter and a private driver when you visit them, when the suppliers see this, they will understand that you are visiting many suppliers and you really want to do business, if you are a serious customers, you will get the best price at the beginning.
2. Hire someone to be your business guide and consultant who is very experienced in the electronics and international business. This person can act as your eyes and ears after you place the orders. The suppliers have to deliver your order as soon as they can because you have someone who is chasing them to do things for you, at least they don’t forget your order.

Hire an inspector to check your product before shipping. Sometimes it is not because that the suppliers want to deliver your bad quality product, but because the sales persons are too busy or their quality people are careless, so they might forget this or that, or just make a small mistake like this or that, so to be sure of your order, double check is always go