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How do you overcome price and delivery problems with monopoly suppliers?

Posted: 2011-07-05

Full Question

How do you overcome the problems (Price negotiation & Delivery schedules) with monopoly suppliers?

Answer

While every country may be different, let me give a few points about dealing with monopoly suppliers in China.

First point: Avoid this situation if possible.

Second point: If you can rely on your order size to interest the supplier, in China, it helps to have some friendship in the balance.

Allow me to explain:

Even after verifying the materials for my order were in the factory, now and again, I would get a call at the 11th hour stating the supplier couldn't ship and usually some reason was made up like "power outage", "lack of workers" and the most common fake reason- "equipment or tooling problems". Not much I could do if the vendor was a monopoly. But 9 out of 10 times, when I looked into it, I learned that another more important buyer (in the eyes of the factory) twisted the arm of the supplier to use my stock for their order. If you are buying 10,000 neckties and Wal-Mart walks in to your supplier with an order for 1 million, you may find the supplier ready and willing to break the terms of your agreement to make more money from somewhere else. That is why I try to find factories that are an appropriate size where my order will get the respect it deserves. And for those factories that have a monopoly, another tool I use is to build a "goodwill piggy bank". I try to maintain good relations through holiday greetings, frequent visits/ meals and even vacation invitations so that the suppliers get to know me as a good friend rather than just PO #.

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