There is nothing more frustrating when doing business in China than the last minute price increase, or change in product specifications. It does happen more regularly when importing direct from China, even after you have signed a contract, sometimes even after you have paid a deposit.
Guess what? It happens for any number of genuine or underhanded reasons in any market. Don’t jump to conclusions and ruin a valuable supplier relationship, first find out why, then resolve the issue.
Doing Business in China – 5 Reasons an Order Increases in Price
- Increased cost of materials – a common issue with long lead time sales and fluctuating raw materials markets
- Product specifications changed – as you developed the product, it became more complex and the factory had to re-cost the job
- Incorrectly priced – the sale person incorrectly classified the job price, which production then corrected
- Factory overload – during peak season and prior to holidays – low value jobs can be delayed or priced again
- Incomplete supply agreement – components or extra services not included in initial discussion had to be factored in,
These are all very genuine reasons for a cost increase, and not necessarily underhanded tactics by a supplier. From first hand experience, I can tell you this happens in Australia, however the complexities of dealing with suppliers across borders and cultures make resolving these issues, where a buyer feels they are paying more than they should, more complex.
Doing Business in China – How to Prevent Price Increases
- Review and finalise product specifications and ask factory to review and finalise before contract is signed
- Ensure the supplier contract is signed with the quote as an attachment
- Know your material component details and have a cost breakdown of your quote
- Have back-up suppliers in place, that you can easily switch to
- Be prepared to cancel payment and walk away if you are being treated unfairly
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by Craig Ford
Importing from China – Last Minute Price Increase
My Import Label, How to Prevent Price Increases