1、ShoppingToteNegotiation Partiesinvolvedinthecase: PartyA:CompanyL(aUStradingcompany)PartyB:CompanyP(abagsupplierwhichwaslocatedinXiamenArea)PartyC:CompanyXClient(Xcorp.,oneofthelocalsupermarketsinLA)Time:MidApril,2021CompanyX(client)placedapurchaseorderof50,000piecesofnon-wovenshoppingtoteto Company

2、LAccordingtoCompanyP(thesupplier),thematerialMOQ(minimumorderquantity)forthisorderwasatleast300,000pcs;CompanyPwasoneofthemostimportantsuppliersforCompanyL.Itprovidedhighqualitybagsatareasonable Price.TheshoppingtotewasaNon-popularitem,companyLdidntwanttocarryanystock,buttheywouldliketoaccepttheorde

3、rasitwasaniceorderwithgoodprofitmargin,alsothecompanyneededaclientlikecompanyXInfirsthalfofyear2021,theinternationaloilpricewasskyrocketing.(Crudeoilpriceincreasedfrom$50to$145sinceMay2007.)Meanwhile,thecontinuousRMBexchangeratereformandincreasinglaborcosthadbeenpushingtheproductioncosthigherandhigh

4、er.Therefore,Chinesemanufacturescontinuedincreasingprice.Insomeextremecases,thesupplierrequesteda5-10%ofpriceincreasejustonthenextweekaftercontractweresigned.Usually,foreignbuyershadtocompromiseforthreereasons.First,thesupplierdidhavethereasontoraisepriceasthepurchasingpricecantcovertheproductioncos

5、t.Inthatcasethesupplierwouldratherrefusetofilltheorderthanlosemoneytogettheorderdone.Second,itisusuallyverydifficulttofindanalternativesupplierinashortperiodandrushanorderatthattime.Itwasbeforethefinancialcrisis,theglobaleconomywasprosperousandalmosteveryChinesefactorywasbusytofilltheboomingordersfr

6、omallovertheworld.Many manufacturesevenrefusetotakeanynewordersbecausetheirexistingorderswerealreadytoomuchforthisyearsproductionschedule.Third,iftheChinesesupplierrefusedtofilltheorder,theforeignbuyerwouldsufferalossfromalackofgoodssupply,anditwasdifficulttogetcompensatedifthecompanydecidedtosuethe

7、supplierthroughaninternationalbusinesscourt.ThewholeprocesswouldlastlongandsometimesthecompensationmaynotcovertheexpensespaidtotheLawyers.Phase1(quotation) Afterreceivedthe50,000piecesshoppingtoteorderfromX,wesenttheenquirytosomeofthebagsuppliers.WegotquotationsfromsuppliersverysoonandfoundthatPprov

8、idedthebestprice.AmajorproblemwasthatalmosteverysupplierprovidedwiththesameMOQ300,000pcs,toolargeforthisorder.Thereasonwasthatthenon-wovenshoppingtotematerialwasfromthesamerawmaterial,aspecialtypeofPolyester滌綸.Therawmaterialwasmadefromoil.Theupstreammaterialsupplier(e.g.PetroChina)washugeandverypowe

9、rful,thereforetheirpriceandMOQwasnotnegotiable.Thebagfactorieshadtotakethelargequantity.Unfortunately,thematerialisnotpopularforbags.Asaresult,noneofthemwouldliketocarrythestockforfutureorders.NeitherdidL.LsoondecidedtodealwithPonlyforthisorder.ThepricewasgoodandothertermsexceptMOQwerealsosatisfied.

10、PinsistedontheMOQandLinsistedonours.Thenegotiationwasstuck.Thesupplierwasanimportantbusinesspartner,soLdidnttrytobetooaggressiveonthebargainingtable.Meanwhile,Lcouldntrefusetheorderfromtheclient.So,howtomaintaingoodrelationshipwithoutsacrificingourinterests?Lneededawin-winsolution.Phase2(negotiation

11、withclientX) WerealizedcompanyPwantedtheorderasbadlyaswedo,buttheydidntknowiftherewouldbeanotherorderforthisitemandfinishthematerialstock.Theydidntwanttherisk.WehadbeenworkinghardonthissideanditdidntsolvetheproblemWethenturnedtotheclientside.Xwasafamouslocalsupermarketwhichhadsomeseasonalmarketingca

12、mpaigns.SoLtoldX:hereistheproblem,theMOQoftheorderismuchlargerthanyourorder.Wewouldliketotakeyourorderandcarrytherestofmaterialasstockfornow,assoonasyoupromiseyouwillbuyallofthemwithinthisyearXwasnotsureiftheyneed somanypiecesatthatperiod.Theydidntwanttotakethemallatonetime.Buttheycantcanceltheorder

13、astheyhadalreadystartedthepromotioncampaignandthetotewasprintedontheproductcatalogueInlaternegotiation,wesuggestedthatXraisetheorderquantity,andsplitthetotalorderintoseveralwhichwouldreliefthepressureofheavystock.Xagreed,andtheorderquantityincreasedto200,000,andtheyaskedforabetterpriceforreturn.Also

14、theywantedtosplitthe200,000into4shipments:50,000pcstobeshippedasscheduled,50,000pcstobeshippedtwomonthsafter,andsoonPhase3(furthernegotiationwithP) Wehadthreetaskstofinish:first,togetarevisedshippingtermwithP;second,toconvincethesupplierPtocarrysomestockforus;third,trytoselltherestbagstosomeotherbuy

15、ersifpossible.Again,itwasdifficulttogetasplitshippingschedule.Inthisindustry,usuallybuyerwillpaythesellerupongoodsdelivery.BecausetheRMB/USDexchangeratewasrising rapidlyatthatperiod,itwasriskyforthesuppliertoacceptafixedUSdollarpriceifthepaymentwouldbemadeseveralmonthslaterWehadalonginternaldiscussion.Luckily,wew