Following last month’s meeting on: Managing Suppliers Relationship, the Sourcing Forum of the European Chamber is pleased to invite you to the next meeting of the forum, which will take place on Wednesday, April 8th 2009.

The format of this event will be a roundtable discussion on the topic: ‘Negotiating with Chinese suppliers’ and the objective will be to share experiences on local negotiations with Chinese suppliers and identify the best practices.

Attendees are welcome to present business cases and specific issues they face regarding the following key issues:

- Negotiation strategy: defining goals and identifying targets
- Team to involve in the negotiation, profiles, roles and objectives
- Process and methodology: face to face negotiation and online bidding
- Price negotiation and other contract modalities
- Impact of “guanxi” in the business relationship
- Key mistakes that are to avoid in negotiating contracts

We will also use this meeting to introduce the Position Paper and explain how members can contribute to the sourcing section of the Position Paper 2009/2010. To view and download a copy of the sourcing section in the Position Paper 2008/2009, please click here.

Agenda:
4:30 – 5:00: Registration
5:00 – 5:10: Opening Remarks by Sourcing Forum Chair
5:10 – 5:20: Position Paper introduction
5:20 – 6:30: Roundtable Discussion
6:30 – 7:00: Networking with Snacks and Beverages

Event Terms & Conditions
Please confirm your attendance before close of business on Tuesday, 7th April 2009 with Tang Jiaying at nanjing@euccc.com.cn or by phone on 025 8362 7330 or use the registration button above. Registration starts at 4:30 pm and fees will be collected in cash at the entrance.

If after registering you are unable to attend, please cancel your participation by phone or email. This will help the smooth running of the event.

If you have any questions regarding this meeting or the European Chamber, please don’t hesitate to contact Mr. Matthias Broemser by phone: 025 8362 7330 ext. 82 or email: mbroemser@euccc.com.cn

Event review

Sourcing Forum Minutes

Roundtable Discussion on "How to Negotiate with Chinese Suppliers"

Time: 5:00 – 7:00 pm

Date: Wednesday 8th Apr 2009

Venue: 8th Floor, Sofitel Galaxy, Nanjing

Author: Adrien Dierckens (adierckens@euccc.com.cn)

 

Participants

To view the list of participants please click here.

Agenda
4:30 – 5:00: Registration
5:00 – 5:10: Opening Remarks by Sourcing Forum Chair
5:10 – 5:20: Position Paper Introduction
5:20 – 6:30: Roundtable Discussion
6:30 – 7:00: Networking with Snacks and Beverages

Format
The format of the event was a roundtable discussion.

Key issues addressed in the discussion

-       Negotiation strategy: defining goals and identifying targets

-       Team to involve in the negotiation, profiles, roles and objectives

-       Process and methodology: face to face negotiation and online bidding

-       Price negotiation and other contract modalities

-       Impact of “guanxi” in the business relationship

-       Key mistakes that are to avoid in negotiating contracts

Meeting Minutes

Chair and Business Manager introduced the Position Paper and announced that the preparation of the Sourcing Forum Section for the 2009/2010 Position Paper is starting now. Nanjing members were urged to contribute to the paper with their comments and ideas. It was pointed out that the introduction of the Position Paper marks only the beginning of the process. In case of comments and ideas Mr. Matthias Broemser (mbroemser@euccc.com.cn) is the person to contact.

 

Roundtable Discussion

The roundtable discussion started by focusing on the strategy of negotiations. It was pointed out that negotiations need time and the supplier/purchaser relation needs to develop. Members shared experiences on previous negotiations and how cultural differences affect them. It was stated that for negotiations with Chinese suppliers the personnel level is of big importance. Members expressed that it is necessary to identify the right person to negotiate with and to keep a good relationship with the supplier. It was further stated that the supplier should first be checked, on whether he is capable of delivering the needed product and that the purchaser should be aware of what the supplier wants to get out of the cooperation, before the negotiations are started. Money should not be the concern in the first place.

One of the attendees shared his experience on a case where a conclusion was never reached and asked for possible reasons why the negotiation partner kept on winding around every time. A member expressed, that based on the experiences within his own company the sales managers can have strict rules on negotiations and with only limited flexibility. Therefore one possible reason for winding could be that he has to get back to his boss for a final decision, but does not want to mention this issue.

The chair of the forum asked for any cases where a decision and a contract were made after the first negotiation already. One of the participants shared experiences on a case with several bad surprises coming up after an agreement was made just with one negotiation round. To avoid bad surprises, members suggested to think of the purchasing process in preparation to the negotiation. Furthermore every detail related to the purchased product (insurance, delivery etc.) should be considered and documented in a written form.

This led to a discussion on the language that should be used in negotiated contracts. A member suggested minimizing the risk of ambiguity by writing down contracts at least in English and Chinese and prioritizing one contract in case of issues that are not clear as a matter of translation.

The chair presented a business case in which a European company doing business in China recognized after studying their prices and procedures that “guanxi” had an effect on their procurement issues. Hereupon members expressed the different needs of short- and long-term relations and commented that in order to establish a long-term relationship it is important to consider the supplier as a partner. By being open to new ideas of the supplier and helping him to develop, the relation can be strengthened and confidence and trust on both sides can be boosted.

Thereupon the chair introduced “dynamic negotiation” (a form of e-bidding where suppliers lower the price for a specific order; the supplier offering the best conditions gets the order) to the participants. The members shared experiences and discussed several business cases regarding e-bidding and the behavior of the suppliers in this transactions. It was stated that sometimes suppliers use these platform to generate orders which seem to leave them without making any profit. Participants discussed these issues and stated that this can be part of the marketing plan to increase the number of customers and generate future orders.

The chair asked attendees for the preferred time to hold the sourcing forum (afternoon or evening). A decision was not made as votes for afternoon and evening were even.

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