The method of purchasing
Posted by: Omnitech (IP Logged)
Date: July 07, 2012 12:42AM
1. Fair payment terms and contract
Once you have paid 100%, you have no more leverage. Don’t think Chinese suppliers are motivated by your next orders. Most of them aren’t.
Try to pay by letter of credit, or limit your deposit to 30%. And do not wire the remainder before shipment (or, in any case, before quality was confirmed by a final inspection).
For your large orders, use an OEM agreement drafted by a lawyer specializing in Chinese law. The key is to be very detail oriented, to pre-define the amount of each penalty, and to ensure that the contract is enforceable in a Chinese court of law.
2. Fail-safe purchasing steps
How do you make sure your purchasers follow the right buying procedure? For example, they should not forget any step in qualifying new suppliers, or regarding payments.
You need to set up a buying procedure that incorporates all the QA steps, and make sure it is respected by everyone in your company.