How to Avoid Price Trap in International Procurement?
Successful international procurement generally depends on two things. First is selecting reliable local supplier, and the other is obtaining accurate and reasonable price.
It is difficult for non-professional local Chinese, not to mention foreign buyers who are not familiar with Chinese language and culture. Not long ago, a client manager Mr. Ji from Alibaba Beijing office mentioned a successful case of a client by using their services: a trade company successfully sold five sets of oil drilling equipment to a buyer in Brazil at 260 thousand US dollars each with cost only about $ 60,000 each. In this case of international trade, it is undoubtedly successful for the trade company in achieving export sales while for the Brazilian buyer, it is not as successful as he may have chosen the right and reliable supplier but failed to obtain accurate and reasonable price. Therefore, we can not say that this is very successful international procurement. Similar cases often occur in various countries.
Successful international procurement must satisfy two elements: choosing reliable manufacturers or suppliers and obtaining accurate and reasonable price. How to make it? Founder and CEO of PRICETECH INC, Mr. Thomas Tang gave his recommendations. Mr. Tomas Tang said: "The rapid development of Internet services provides great convenience to global buyers in that through google.com or alibaba.com and other similar websites, buyers can quickly search for manufacturers or suppliers anywhere in the world, but it is also these websites that drown buyers with vast information of manufacturers and suppliers, making buyers unable to make right decisions and choices in a short period of time. There are two effective ways in making accurate selection of manufacturers or suppliers: First is to set up branches or procurement offices in procurement area and employ local professionals that are familiar with local market, proficient in foreign and local languages and with the assistance of Internet, telephone communications and off-line inspections to conduct effective screening. "
In the above case, the Brazilian buyer sent procurement inquiries to manufacturers at the very beginning hoping to obtain the offer from the supplier. However, as the manufacturers are unfamiliar with foreign languages and were unable to communicate with the buyer, the buyer had to turn to a trading company who is proficient in foreign languages. Therefore, the manufacturer lost a valuable trading opportunity while the buyer eventually spent an extra of about $ 1 million to purchase the five sets of drill bits. According to the current market, a representative office can be established in any city in the world with $ 1 million.
Mr. Thomas Tang continued: "Another effective way to select vendor or supplier is to use the services of a professional consulting company. Such consulting company must be located in the origin of the product procured with rich procurement experience and channels. The role of this kind of consulting company is to provide services equivalent to a local branch or office of buyers while the buyers only need to pay USD800 as consulting fees that is equivalent to tips for the deal. For example, in the above-mentioned drill bit case, the buyer only needed to pay USD800 for reliable manufacturers and accurate and reasonable price by using such professional services provided by pricetech.com. Comparing with one million USD, USD800 is only 0.8% of the deal and not even the equivalent of tips. "
Mr. Thomas Tang also reminded us that the current internet business rankings are based on the payment amount rather than the actual capacity of the manufacturers which is another problem existing in the internet world. If the buyer is to choose manufacturers only by ranking, inaccuracy may occur; even if you are lucky enough in choosing the right manufacturer, the risk of falling into price trap still remains.
Objectively speaking, pricetech.com is a website to provide services for the buyers. They charge buyers and help them choose and screen manufacturers. For more information or to get more advice and services from Mr. Tomas Tang, please visit www.pricetech.com.
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PRICETECH is a professional company committed to providing consultation on price of products Made in China.