Purchasing managers in China seem to have an easy job these days – everyone wants to sell and there are very few buyers.  That seems to give Chinese purchasers a huge advantage.  The fact is it makes your life much easier with one counter-party – the seller.  But it makes your life very dangerous and stressful when you are dealing with another negotiating counter-party – your boss!

 Don’t let this opportunity slip away!

Now is the time for internal negotiation.  Your bosses think you can wave a magic wand and produce tremendous price cuts. After all, things are tough in your own company, and HQ expects to make up for their own weaker sales by cutting operating costs all up and down the line – especially from your department. 

 Now is your time to be pro-active and ‘get in front’ of this cost-cutting trend.  You know who you want to keep as a key supplier, and who you want to get rid of.  This is a great opportunity to present your bosses with your top suppliers and a wish list of other

 You have to get out in front of this new trend and take leadership.  What kind of changes, new metrics or improved processes would you like to see implemented?  You have leverage with your suppliers – but you also have more leverage with your boss – and with HIS boss.   Sit down with them and determine exactly what they expect of your department, and where you all want to be in a year.  Make sure everything is consistent and logical.  They can’t tell you to cut all prices by 40% but still maintain good relations with your existing key suppliers.  If there is a relationship you want to protect and you have good reasons for staying with someone who may be a little more expensive, talk to your people about it NOW.  If you wait, you may be too late to save the relationship — and you just might see your favorite supplier go bankrupt.

 The worst situation you could find yourself in is when your bosses complain you are being too soft on suppliers but your suppliers think you are driving them out of business.  This time, they might not be exaggerating.

 It’s true that your negotiating position vis a vis your suppliers has gotten stronger.  Now you have to make sure that your position vis a vis your BOSS is equally strong.  You have to take the time to re-affirm your goals and make sure you are on the same page.  Otherwise, they will expect too much of you and be disappointed when you only cut costs by 25%!

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Please help with a research project by taking a brief, simple & anonymous survey about US-Mainland negotiation.http://app.icontact.com/icp/sub/survey/start?sid=6256&cid=355149

 My name is Andrew Hupert, and I’m a teacher and writer in Shanghai. I am now working on a project for my International Negotiation class at New York University’s Shanghai campus (in cooperation with East China Normal University). 

Thanks very much for your cooperation in my research. I would be happy to share raw data with any participants who wish to see it, and will publish my findings on ChinaSolved.com , ChineseNegotiation.com and DiligenceChina.com .

http://app.icontact.com/icp/sub/survey/start?sid=6256&cid=355149

You’ll hear it when someone owes you money or a supplier is trying to defend his price (or other bad news).  ”If you push any more I’ll go bankrupt and then you’ll have nothing”.   It’s a pretty common tactic when a small or shaky business partner is the counter-party.  The bad news is that it may not be an empty threat. The worse news is that this guy may be using the same line all over town, and the first one to call his bluff loses less than you do.   

Is there a defense or counter-tactic?  The only thing you can do once it happens is to assess the situation objectively and decide how much you need the other party in the short term.  If they are strategic or leaving them will cause a short-term bottleneck, then you’ll have to find a compromise and keep them around long enough for you to find a replacement.  If the only leverage they have over you is the recovery of money they owe, then this is a much riskier proposition.  You might be best off cutting your losses.

In order to prevent this kind of thing from happening, make sure you A) have a deep list of suppliers and B) try to gain transparency with key and strategic suppliers to assess their finances and production capacity.  Consider expanding the number of suppliers you work with to minimize the impact of one of them going out of business or shutting down production temporarily.  

Negotiating in tough times requires you to shift from Win-Win to Win-Lose and back again quickly.  This is a fact of life for everyone in business, but is particularly true for purchasing managers negotiating in China.