How Many Chinese Suppliers Have You Abandoned?
By Ken, manager at traditional industry
“I do not have good news about your XXXX( a kind of product) because of the tariff added to these type of China products coming in to the US. This will make China XXX( the product mentioned above) product too expensive. We will be looking to other countries”
One our customer said to us under the big trading environment about our products which was one of our competitive product categories.
Yes, we are talking about the trade “game”. We are businessmen, just talking about business no politics. Since last year, import / export cost increasing is faced by both suppliers and buyers.
Some buyers had to stop some even most of the buying plans to China suppliers under these cost increasing pressure. 10% added tariff and another 25% tariff added followed. Potential orders stopped, China visits canceled, ongoing production orders canceled, even some ready shipping orders were canceled.
What does this mean to suppliers? Money! Money lost!
What does this mean to buyers? Money! Profit lost!
Some suppliers and buyers lost their confidence of the future of these China products. Suppliers are trying to find another way out by entering some industries they may not very familiar. Some buyers are trying to find some more cost competitive suppliers from other countries to replace their current China suppliers.
I am thinking about it recently. It’s a bit late but not too late.
Do China suppliers lose all their competitive advantages under this environment?
No, I don’t think so.
Here is what we are facing:
- What competitive advantage do we really lose?
Few suppliers or buyers are able to afford for all the added 10% and 25% cost.
- What advantages do we still have?
- Stable quality.
Comparing with other countries, the advantage of stable quality at reasonable cost is still attractive and competitive.
At this moment, both suppliers and buyers are faced to make wise choice which is more suitable to their sides according to their target markets. Are your target markets more sensitive about price than quality? Or more care about quality?
- Delivery guarantee
The truth is that on time delivery is very important to buyers. Most of China suppliers have been doing well.
- Production capacity
I suppose we can understand this well. We can hire many workers when needed which is different with other countries do.
Not too bad, huh…
These are absolutely not enough to retain the relationship with buyers who are facing the cost increasing pressure. China Suppliers are making changes to save themselves, retaining the relationships with current buyers, keeping their orders stable even growth a bit.
What changes have been made:
- Pay more attention to keep and improve quality
These buyers, who are still buying from China, care about quality . We have noticed this and will take it seriously. We dare not to break the priceless reputation of good quality.
- Strengthen after-sales service
There was no good after-sales service in traditional industry in past. Gradually, good quality guarantee is provided by many China suppliers to support after-sales service. Like my industry, I would not give quality guarantee to buyers before. But now we Do Provide One Year Quality Guarantee to support buyers.
- Enhance new product development and support
The situation changed. In past, some traditional suppliers were not very happy to develop new product samples for buyers cause the costs of creating samples are really not cheap. Suppliers could get enough orders no matter if they created new samples or not. There were many many big orders in markets.
Nowadays, good suppliers, who’d like to survive, are very pleased to be involved to develop samples. They have the common sense that orders come from samples. There might be no order after sample provided. But No order at all if no sample provided.
More than that, the product developing abilities have been improved much.
- Set up mutual-benefit development relationships
Traditional industry suppliers in past, like my industry, they could make good quality products but, lacking sense of mutual-benefit development relationships. Orders were the way to make money for us. We grown up and would like to keep growing up. thinking nothing about if customers were growing up from our cooperation. We just asked for orders.
Some suppliers will now help buyers to analyse their markets and propose more suitable products or service to buyers, thinking even more than customers themselves. Good suppliers quite understand that the best relationships is mutual-benefit growth relationships.
See, good suppliers are working hard to change, to improve themselves, to the better.
Change is a process. The process may be shorter and easier if there were warm helps from customers, a piece of comment or even an encourage.
Healthy nice supply-demand relationship is the result of joint efforts of both suppliers and buyers, which is deserved to be cherished.
It’s not easy to make updated changes of traditional industries, but we are trying and struggling for it. Please see it, try it and do not abandon it easily.
I suppose wise businessmen will prefer long-term mutual-benefit growth relationships.