Are you paying your Chinese suppliers too much? How to negotiate up to a 5% price cut from Chinese suppliers in one email – SCRIPT INCLUDED

You may think that the way to grow your business selling on Amazon or your own website is to sell MORE volume or RAISE your prices.  Think again.  Often overlooked, sourcing professionals know that PURCHASING is where the real money is made.  I.e. buying low.  

Long story short or the 80/20 as I like to call it, from August 2015 until now the RMB has depreciated 3-4% against the USD (this is a moving target so check your exchange rate).  So if you haven’t already, now is the time to renegotiate pricing with your suppliers to get the discount.  You can see this depreciation in the image below.

USD to CNY Exchange Rate Depreciation - Yahoo FinanceUSD to CNY Exchange Rate Depreciation – Yahoo Finance

Some background information: the exchange rate between RMB (aka CNY) and USD is controlled by the Chinese government.  They depreciated the RMB to boost the sluggish Chinese economy and export manufacturing sector.  Depending on the severity of the slowdown this depreciation may continue.

BEST PRACTICE: The big players like Walmart have already requested up to a 5.5% price cut with all their suppliers across the board.  Now is your chance to do the same to increase your margins and stay ahead of your competition.  Anytime there is a moderate depreciation like this is an opportunity to renegotiate pricing.  

Note: this works under the following conditions:

  1. The supplier’s previous price quotation was made before the devaluation in August 2015
  2. You already have an existing relationship with this supplier so they are motivated to do this
  3. How much you can get depends on your relationship with the supplier as well as your negotiation skills.  I was able to negotiate 2-3% with our suppliers.

My advice is to ask for 5% and see what they offer.  I’m curious to hear your results so let me know in your comments below how much you’re able to get.  Good luck!

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