One small mistake in negotiation or on your PI (Proforma Invoice) with a foreign supplier can be a death sentence for your ecommerce business!
I know… Morbid… But I’m not known to sugar coat things.
What I’m trying to do is keep you from making mistakes, show you how to protect yourself and what works/what doesn’t work when dealing with Chinese or other foreign suppliers. (FYI – this works for domestic suppliers as well, its just not as much of an issue because there aren’t really any language or cultural barriers when you’re dealing with a domestic supplier)
On our trips and masterminds in China/Asia AND in our Sourcing Mastery Training Program, we go over the dos and don’ts on your invoice, and how important it is that you get your details right. When you get the details right, it gives you a leg to stand on if there are ever any challenges with your product orders from foreign suppliers.
You need to define the terms of your contract with your foreign supplier VERY clearly.
What are we buying?
What kind of quality is it?
What are the specifications?
What is the variance allowable?
What’s the timeframe of delivery?
What’s the cost?
How long do we have to check it out?
What’s the recourse if there’s a problem?
(Want to see and hear GREAT detail on this subject? Then watch my “Protect Yourself and YOUR Business with These 8 Minimum Contract Requirements for Suppliers” video here)
You can do this on something as simple and universal as a pro-forma invoice (in my experience, most all suppliers and sellers are familiar with and use PIs).
Most of the time the challenges with your product orders are not just ‘normal’ challenges when you’re dealing with China, especially because they are ALWAYS in a hurry.
When it comes to business, Chinese culture is traditionally ALL about ‘how fast can we get this product done to make money’.
Given that, its all the more the reason you need to be crystal clear on your PI.
You can go to China/Asia on your own.
Or you can use Alibaba.com and start buying stuff on your own.
Or You can go and deal direct with a sourcing agent or somebody like that, but if you don’t know the rules, then you’re going to get screwed and the only person who’s fault it is, in the minds of the foreign suppliers is yours.
On the other hand, if you understand the rules and you follow the rules, then the foreign suppliers are going to respect you more and you’re going to have a better experience. Right?
Here’s another thing to keep in mind… It goes both ways. If your foreign supplier won’t agree to any of your terms, then I’m sorry… You need to find another supplier.
There are SO many great suppliers. You don’t need to get attached to one particular supplier. Its not worth the pain if something goes wrong.
Move on and find a supplier that will agree to your terms or at least terms that give you a leg to stand on and that are NOT one-sided to the supplier.
All Chinese/Asian suppliers aren’t bad. DON’T be paranoid.
Most of them are good. Just like most Americans are good. Just like most South Americans are good. Just like most Canadians are good.
It doesn’t matter where you go in the world. Most people are good, right?
But there are those that aren’t and if you don’t understand or take the proper precautions to protect yourself, then there’s a potential for you to get that bad one and get screwed.
Also, it may not be about a foreign supplier being ‘bad’ or ‘evil’ or whatever. It might be that they are just inexperienced.
So, again, knowing these ‘rules of engagement’ if you will, when it comes to negotiating and singing a PI/contract, will protect you from the inexperienced as well.
I have to interject here as well about a couple of other things.
First, make sure you get multiple copies of the signed and stamped PI.
Much like a notary public in the United States, China in particular has a stamp they will put on your PI with a signature. For all intents and purposes, when that happens, that IS a contract now.
Get multiple copies of that and keep in differ places and even better take a picture and store it digitally as well.
Plus, if you EVER need to prove to Amazon for example that you ordered this product and that it is yours, they will often times ask for an original invoice. That copy you have of the PI with the official stamp and signature will save your life when it comes to dealing with seller platforms like Amazon and they are questioning you and the validity of your product.
Second, if you do have an issue, how you ‘act’ when coming to a resolution is just as important as coming to a resolution itself.
Sending nasty emails, making accusatory remarks, etc. WILL NOT get you very far Chinese/foreign suppliers.
And so goes the old saying, ”You get more with honey than you do with vinegar.”
Be a nice guy/girl when dealing with Chinese/foreign suppliers ad nice things will happen.
You have to pay attention to the contract and that’s really what I’m trying to accomplish with you here in this blog post, the videos I’ve done, etc.
Regardless of where you source, these rules apply in some way, shape or form.
We source from Mexico. We have the same kinds of terms there.
If we’re sourcing in Thailand (which we will be in about a month at the time of this writing), we’re going to have the same kind of terms there.
Get these terms straight and clear with your suppliers and you’ll be well on your way to ‘happy’ and successful sourcing for your ecommerce business.
Thank you for the attention and thanks for reading!
If you have any questions regarding this topic, its easy to find me in our Facebook Group here.
And again, I’d love to help you cut down on the time and effort on all of this by you attending one of our Sourcing Trips or participating in our Sourcing Mastery Training Program. Click here for the trips… Click here for the training program.