Locking clients in with ‘special order’ items and MOQ stock purchase
A regular and effective business trick of Chinese manufacturers is to convince the purchaser that a material used is a ‘special’ one and needs to be ordered in advance and more often than not, the minimum order quantity (MOQ) is above your required amount, prompting them to explain that they need to order more, but they can use this on the next order.
It is also difficult for you to get the supplier information about this component and this helps the supplier ‘lock’ you into future business. If you need to look for another supplier, then the whole process of tracking down this ‘special’ order material begins again and the new supplier has an item they can use as leverage against you. At least this material will not appreciate in price, if you can afford to buy more than your order requirement. If the supplier buys it, you really have no idea how much is being used until the next time it is ordered and the price has risen yet again.
There are 2 different options the supplier normally presents you with:
1. You purchase a quantity to last a certain amount of orders – You bear the cost and are effectively locked in until it runs out.
2. The supplier purchases a quantity to last a certain amount of orders – You guarantee the supplier this business.
Both situations seem to satisfy the client whether you are financially constrained or not but actually they satisfy the supplier even more, with both eventualities leading to more business with them. A long and good working relationship is indeed an advantage between both parties however if these types of concessions are being made where you as the client are buying into a longer term contract with the supplier, you have to be convinced you are getting the best possible product out of them.
A 3rd party quality control service can, over the long term, assist you on a daily basis to maintain and increase the quality of your product locally.
For more information on dealing with your production in China, please visit the official ETP website.
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