The minimum order quantity (MOQ) is a crucial factor in business negotiations, which becomes particularly significant when exploring new opportunities.
Suppose you stumble upon a potential business venture involving importing a promotional item from China for a trial sales period.
However, there is a challenge as the suppliers’ MOQ is considerably high, which might lead you, as a newcomer or a small-scale business, to feel disheartened and stressed, eventually leading to the abandonment of this seemingly promising opportunity.
However, it is essential to recognize that suppliers or manufacturers don’t establish these hurdles to create difficulties. Implementing an MOQ is necessary to operate within their production framework effectively.
Setting an MOQ that is too low would render them incapable of covering the fundamental costs of labour and materials required during the manufacturing process, let alone generating any profit.
It is worth noting that a lower MOQ does not solely complicate the manufacturing operations, but also casts ripples across other factory-related activities. Therefore, it is important to do proper Negotiation of MOQ in China.
Let us share a few useful tips for the Negotiation of MOQ in China that can help you do your business so that you and your supplier remain in a win-win situation.
- Enable your authority
Try to prove that you have done enough research on the market and show some realistic price data, too. Your supplier will know they are dealing with a client who cannot be easily convinced.
- Shipping time checking
You may pretend that you want to check the shipping time before placing a big order, which is just a trial order. A larger order will follow soon after everything goes well.
- Product validation
You may also take a position that you are still not sure whether their product will meet your quality requirement or not. You want to evaluate the quality of this sample order.
- Support the supplier
You must also try to understand the position of your supplier, and at the same time, you must also clearly tell your problem for placing the larger order. Few suppliers may agree to lower MOQ.
- Explore alternative supplier
If the supplier is too adamant, then threaten him that you will go to some other alternate supplier. The supplier may agree on a lower MOQ if your future order outlook is bright.
- Offer a deadline
If your supplier is taking time to decide, offer him a certain deadline beyond that, you will no longer consider their supply in the future.
- Share production fee
If you are committed to finalizing the deal, you can make certain concessions by sacrificing a portion of your profits. This could involve taking on a share of their initial setup costs or fees.
- Increase quantity
If your supplier is particularly resistant to persuasion, consider adjusting your negotiation strategy.
One approach could be to propose a slightly higher Minimum Order Quantity (MOQ) than your initial target, perhaps by an additional 100 pieces.
- Modify other terms and conditions
When your Negotiation of MOQ in China is not heading anywhere, the last resort you can do is offer a certain concession on the terms and conditions of your order.
Conclusion
Negotiation of MOQ in China is a skill that involves a touch of artistry in the business realm. What might work successfully with one supplier may not yield the same results with another. Mastering this art involves engaging with multiple suppliers to refine your negotiation skills.
It is worth noting that enlisting the expertise of an agent can be a strategic solution. These professionals are adept at navigating the nuances of negotiations and can often secure more favourable outcomes from suppliers on your behalf.
