In the shoes trade, you may have built solid partnerships or cooperated with particular China Shoes manufacturer on a long-term basis. Those suppliers provide you with stable sources of goods for your stable shoe markets. Nevertheless, as your sales results fluctuate, customers’ taste for products alters, your intention of renegotiating contracts and terms could be ignited. Before you decided to renegotiate with your shoes suppliers in China, you could ponder the feasibility or practicality of setting out.
Whether your inventory is excess or insufficient due to sluggish or booming sales? Will adjusting your order quantity meet your sales orders and reduce inventory costs? Do you have an intention to enhance suppliers relationships for better service to provide?
The questions above can trigger your intent to disclose a renegotiation. The article introduces practical ways to use, bottlenecks and benefits and experience you could reap encompassed in renegotiation.
1. Reasons why you get thought of renegotiating with China Shoes Suppliers
1.1Decline In Profits
Lee Iacocca once said in the 1980s〝In the end, all business operations can be reduced to three words: people, product, and profits〞Businessmen operate business ultimately for profits to keep business alive and going further. Thus, generally, shoe companies would make every effort to maximize the profit they will reach. And usually, profits are bound by an array of factors such as market share, market competition, product life cycle, etc. The market share that has close relation with profits exert a significant influence on a company’s shoe business development. For instance, the decline in market share possibly leads to unsold products which relate to undigested inventory. Under the circumstance of excess inventory, you are inclined to contact your suppliers to reduce the order quantity of certain unsold products to rearrange the sale of products.
Customer demand is regarded as a factor determining what models of products are hot. You may make changes on products purchase based on sales of particular products. The decline in customer demand causes a reduction in profit. Undertaking analysis on customer demand is helpful to balance purchase and sale.
Another factor influencing the profits of a shoe business lies in relative costs. Relative costs, in general, include labor costs, raw material costs and the cost of the rent. An increase in the expenses will cut some profits. In this situation, shoe companies might think about getting the lowest price of raw materials from shoe suppliers in China.
1.2 To Meet Customers’ Changing Demands for Products.
Fashion being instilled different ideas owns a distinctive manifestation throughout every phrase, the mainstream of shoes’ style swings. Hence, keeping up with shifting customer demands is a significant challenge. As you mean to catch up with the interest of customers’, you delve into the design of shoes’ appearance and quality. To optimize sales, you focus on pricing, promotion and advertising. Herein, aligning business goals with the supply chain can give a boost to products sales. You may discuss with China shoes suppliers to modify the appearance design, accelerate innovations and explore new technologies. Thus, shoe companies pay great attention to maintain a balance between costs incurred and revenue.
1.3 Expectations for Improvement on Shoes Suppliers’ Services
In many aspects, shoe companies anticipate better service China shoe suppliers are responsible for providing. For example, shoe companies must seek the best raw material to guarantee quality. Shoe companies wish shoe suppliers in China to sustain raw material supply chain transparency by setting up supply chain mapping. They need to know suppliers’ manufacturing sites and supplier networks.
Finding better options for raw materials is one of the suppliers’ duties. Shoe companies expect equitable transactions shoe suppliers establish. As their wish, shoes suppliers in China should offer equal opportunities.
Shoe companies mean to confirm the lowest price with the China Shoe suppliers. And generally, Suppliers ought to deliver on time and provide delivery status updates. In today’s shoe business, efficiency has become more and more critical. On-time delivery, to a great degree, can improve customer and client satisfaction.
Quick reaction to buyers’ feedback can fortify an impressive image of a supplier. Efficiently replying to buyer’s questions helps deal with problems or difficulty faced and strengthen supplier relationships.
1.4 Expansion or Contraction of Target Shoe Markets
When particular products sell well in the defined market, shoe companies often tend to expand the target shoe markets via analyzing which area their new visitors come from and what models of products catch attention. Shoe companies will renegotiate with shoes suppliers in China to increase the order quantity of popular products or tailor new products for the expanded shoe markets.
Oppositely, if your market is shrinking, you may close some target shoe markets of yours and change your marketing strategy. Under the circumstance, you need to decrease the order quantity of low-margin products and consult with China Shoes suppliers to improve products’ design or start new lines.
1.5 Changes on Sales Channels
Nowadays, as the Internet develops, sales channels get more and more diversified. Apart from traditional sales channels like retailing, direct marketing, exhibitions, etc., e-commerce, live-streaming, new media marketing, etc., are leaping to eyes at every moment. Shoe companies are tapping into new sales channels to develop marketing. Expansion on sales channels can lead to an increase in sales. Shoe companies may adopt multi-channel marketing. They need to adjust their inventory management effectively as sales channels change. Thus deciding on order quantity of products from shoes suppliers in China can be a painstaking task to minimize holding costs and maximizing profit.
2.Effective Ways to Renegotiate With Shoes Suppliers In China
2.1 Clarify Your Clear Reasons for Renegotiation
Everything happens for a reason. Before asking for renegotiation, you need to be clear with your current operation situation. Do recent sales get trapped due to defective marketing strategy or products’ appeal? Have you reached your profit goals? Are you willing to increase your sales by improving the quality or design of products? Is there any room for improvement in your supply chain management? Are you satisfied with suppliers’ service? Do your suppliers deliver on time? Do your suppliers often delay the shipment? Do they meet your contractual needs? Can the cost be lowered from the production process or any other areas of the supply chain? Will you refer to further opportunities to work together with your supplier?
2.2 Confirm Your Anticipated Business Outcomes
You must have thought over what result or effect you plan to achieve before renegotiation. Your ultimate goal may be increasing your sales. There’s a close relationship between sales and products. Probably you finally attribute sales drop to products after analyzing all factors and reasons. You could consider investing in a new product design or a product redesign to change shoes’ appearance when cooperating with a shoe factory that provides ODM services.
When inventory is excess or insufficient, you could renegotiate with your China shoes suppliers to increase or decrease order quantity to make demand, ordering, and holding cost all remain constant. In terms of increasing order quantity, you may have the intention to require a discount. Most importantly, improving suppliers’ relationships should be the central theme of renegotiation. You tend to cooperate with them to identify challenges and make sure the relationship goes in tandem for both parties. In renegotiation, you may want to re-evaluate suppliers’ ability to meet your contractual terms.
2.3 Create A Clear Framework and Fair Rules to Which Both Parties Agree
The core of renegotiation is to bring both parties benefits. Negotiation doesn’t mean combat in which both parties always snub each other when taking an entirely opposing stance. Therein, probably both parties will be disinclined to compromise on counterpart’s requirements and needs. In renegotiation, both participants desire the best business outcomes. So if you are longing for continued cooperation, please create a clear framework that works for both. Also, establish fair rules to which both parties agree to regulate the time frame for the decision and time for calling off.
The first step is to locate problems that wait to be solved. You need to define the issue at risk. Problems can be chronically delayed delivery, long lead time, or invoice inaccuracy. Elucidate the problem from both angles.
The second step is to discuss the expected outcome of both parties. For example, You must care whether a product redesign or new product design will catch customers’ attention, win customers’ word of mouth, and increase sales if you plan to expand the shoe market. You also care how much R&D expenditure will be for a redesign. Or you choose to procure shoes of new styles for launching them into the shoe market. And shoes suppliers in China might disagree with your strategies and let you know the infeasibility. They might give you a quote you will refuse.
Also, you need to set up rules to keep fair, mutually understand each others’ mission and business drivers and build trust and credibility.
2.4 Offer An Incentive to Stimulate The Supplier to Renegotiate.
Your supplier wouldn’t quickly get to the table because it will take much time, cost and energy to renegotiate. You’d better draw a blueprint to illustrate the whole process and benefits that will come to them. You can tell them the products they supply sell well in your target shoe markets so that you crave for more stable supply from your supplier. When your shoe market size is shrinking, you can let them know your new plan for developing new products or products redesign to revive your shoe business.
Emphasizing your ongoing wish to keep a consistent rapport with China shoes suppliers can boost their confidence to conduct more cooperative projects with you. You can restate the responsibilities you will always stick to. To address suppliers’ concerns, you make sure you communicate with them regularly and work with them to monitor all types of risks. You can also ensure your promise to pay on time always to help keep their healthy cash flow.
2.5 Master Every Detail of Your Existing Contract
Due to your dissatisfaction with some portions of your current contract, you intend to renegotiate it. Though you know why you are discontented with them, you and your team also need to master every detail of the deal. Imagining your team are pulled down to be asked to make concessions(concessions can be deeply complicated); you can be very capable of making them if you are fully aware of the consequences.
Being familiar with what the contract says makes you form a thorough understanding of the current contract position. Hence the basis of what is being negotiated is understood. The relevant levers in the agreement can be pulled to achieve the relevant objectives.
3. Bottlenecks You Could Hit In Renegotiation With China Shoes Suppliers
3.1 Fail to Commence Renegotiation
〝The first step is always the hardest〞. You could withdraw the decision to start a renegotiation after you realize that your preparation isn’t sufficient. Spending more time improving marketing strategies, brand image, advertising, management and aftersales service may help recuperate your shoe business instead of taking action on the supply chain.
At some point in time, you may rethink whether it’s necessary to go on with a time-consuming renegotiation. For your shoes suppliers in China, they could reject your suggestion for renegotiation. They think they have been performing well missions and duties of suppliers. And they see the anticipated business outcomes of both parties don’t cross paths.
3.2 Disagreement on Amendment of Contracts and Terms During Renegotiation
When renegotiation is on stage, referring to the amendment of contracts and terms is a step you will take. However, some words are unchangeable, as contracts stipulate. For those changeable terms, shoes suppliers in China may reserve the right to amend them. Though, you still can illustrate your favorable product planning to let suppliers make a concession. As to quantities, packaging, unit size, place, method and or time of delivery or the ancillary service, there’s much room for adjustment according to your need. Changes in drawings, design or specifications can be discussed in a complex way.
3.3 Misunderstanding Each Other’s Needs
It’s expected that misunderstanding appears in renegotiation. In terms of your anticipated change to products’ design, lead time or costs, there may be a heated debate ahead. For example, your China shoes suppliers have offered you the best price to value you and long for further trade with you. But you may have a fluke mind to make a counteroffer or ask for a considerable discount. Then the renegotiation sinks into a deadlock.
Vague expressions of language could lead to mutual misunderstanding. Sometimes negotiators fail to organize their ideas, which causes ambiguity. Also, one can mix up the conveyed meaning due to a lack of attentiveness or ineffective listening.
3.4 Unanticipated Outcomes
Win-lose and lose-lose results can be achieved as a renegotiation. You may fail to persuade your shoes suppliers in China to redesign the products or shorten lead time. Your suppliers may fail in maintaining supply to you.
In a win-lose situation, the winning side craves its outcome while disregarding one of its counterparts. At last, one party reaches the goal. In contrast, another one has driven away from their target goal. The reason for a win-lose situation, probably, lies in asymmetric information. And it’s worth mentioning that the losing side can fail to realize the outcome if they don’t prepare their effective alternative and notice where they are negotiating against their interest.
In a lose-lose situation, both parties end up deviating from the initially set outcome. The scenario relates to the fact that both parties are reluctant to concede. It results in the consequence of not agreeing. The embarrassing thing is that both parties misjudge the benefits of what the other side is offering, giving rise to their regret for the agreement.
4. Benefits and Experience You Might Reap In Renegotiation With China Shoes Suppliers
4.1 Let China Shoes Suppliers Know Your New Value
The new value means new shoe business opportunities. Your success in developing new markets lures China shoes suppliers into launching their products in those shoe markets, which can stimulate them to offer you price concessions.
Assistance in reducing suppliers’ risk can elevate your position as a shoe company. You need to ensure all of your shoes suppliers in China have quick access to your forecasts and customer demand cycles. With working capital to meet the demand, you will be more likely far from disruptions in supply during spikes of increased demand. As well, make a flexible working capital finance facility to flatten your fluctuating seasonal demand, optimize your stock inventory and pay your suppliers on time.
4.2 You May Reach New Agreements With China Shoes Suppliers
Your goal guides you to dig out something new. New products planning, new services, new delivery and payment terms are upcoming. New agreements may boost your suppliers’ relationship by enabling you to procure the best products to meet the needs of your target shoe markets.
China shoes suppliers may offer you some bigger discounts for your larger order quantity in terms of pricing. During renegotiation, you could have tried your best to make every term negotiable for nearing your planned outcome. The relationship between you and your China Shoes Suppliers is enhanced as mutual understanding deepens, becoming one more milestone for further cooperation.
4.3 Get Into A Win-win Situation
The prerequisites of a win-win situation are goals set that mean to bring mutual benefits to either side. The most desirable result of renegotiation is bonded with a win-win scenario. Both you and your China shoes suppliers achieve the intended outcomes from renegotiation. The most reasonable compromises have been made. Later both sides won’t regret the outcomes. And incentives are given to each other. Both have found a way to solve existing problems and fulfill each other’s needs. Furthermore, some amendments on contracts and terms are made as to the wish of either side.
4.4 Strengthen Your Knowledge of China Shoes Suppliers
Whether you get the best of your business outcomes from renegotiation? Are you satisfied with the products and services your current shoes suppliers offer? Have you decided to get a better supply to boost your shoe business development? Are you looking for a China Shoes Supplier to cooperate on the trade?
As a leading Shoes manufacturing factory, Our XIN DE SHENG SHOE FACTORY, which has passed the ISO 9001 Quality Management System Certification, is a very professional shoe factory to cooperate with us whether you are looking for OEM or ODM. Our shoe factory is located in Jinjiang City–“the shoe capital of China,” where transportation is very convenient. The main products of our company are private label sneaker shoes, private label running shoes, private label hiking shoes, and private-label casual shoes.
We have our exporting department making international shoes orders. Our main clients are primarily from EU countries, the United States, such as MMK, Tommy Hilfiger, Wenger, Le Coq Sportif, LA-GEAR, Japan FILA, 4F, VICTOR, and other private label designer brands.
We At China Shoe Factory undertake steps of quality checks to prevent such common defects. When you place orders with us, you will not find wrinkles, dents, asymmetries, excess glue, weak glue, and wrong sizes, and other shoe quality control problems. Although the shoe factory in China has thousands of orders to deal with, we have many workers who pay attention to detail and quality.
We value the compliance and quality requirements of the European Union and the United States significantly. We can fulfill even the most stringent testing requirements of Turkey and Germany! Shoes’ quality can be guaranteed because our shoe factory has been producing Japanese FILA shoes for a long time. Our clients are worried less about the quality of the shoes we make than other shoe factories.
We strictly handle shoe quality control and inspection for shoe production to avoid minor shoe defects that can cause discomfort to users. We ensure that all legal requirements are complied with and the best quality standards are met. On the production line, we have three full inspectors to inspect every pair of shoes. Before shipment, they will be checked by a third-party shoe quality control agency. Our shoe factory has been dedicated to providing customers with shoes of the best quality.
As a large-scale shoe factory, we have invested heavily in maintenance and management. Thus we have some requirements for the minimum order quantity. The minimum order quantity of our private label shoe factory is, respectively, 1500 pairs of sports shoes and 1000 pairs of leather shoes.
If you intend to order a specific quantity, you can discuss it with us in detail. If you are interested in private label shoes, you can contact us via email at [email protected], and we will reply to you in time as soon as we receive it.
In the article, we intensively describe how shoe companies renegotiate with shoes suppliers in China effectively. To facilitate your shoe business, we have had advice above that says shoe companies should cooperate with China shoes suppliers to improve products. As well, we have got ideas about the best time to start a renegotiation.
For avoiding failure, we need to stay away from bottlenecks we could hit in renegotiation.
After mastering all critical points, we can reap plenty of benefits and experience in renegotiation with shoe suppliers in China.
Fine, the article comes to an end here. If you have any questions about renegotiation with shoes suppliers in China, please feel free to leave us messages. Thanks!