Smart Shanghai Team

I remember sitting with a group of purchasing consultants talking about the problem their clients were facing.  One purchasing manager told that his standing instructions to were to negotiate a 10% price decrease for the same parts and materials EVERY year.  There are only 2 ways to sustain that trend:

1)  Find new suppliers each year — assuming that competitive pressure and hungry new sellers would ensure an endless stream of new suppliers, because you have to find a new source every couple of years.

2)  Build a long-term relationship with a single key-supplier and negotiate a long-term plan based on your requirements.

Most Chinese purchasing managers have been doing #1.  And this may work great during the early stages of a bear market.  But once the bankruptcies and buyouts have taken affect, there are going to be signficantly fewer players in the market.  Then you are going to have to learn to do #2

Hint:  Now is a great time to negotiate longer-term key-supplier relationships with solid companies.  Every company doing purchasing in China needs a solid list of key-suppliers.  Now is the time to forge long-term, friendly, mutually beneficial purchasing terms with your China supplier.