The worst thing that may demoralize your sales force is this: the sales people made the sale for an extremely important client after clearing numerous hurdles in a long sales cycle that seemed to take forever, simply to have the goods delivered in poor condition. The client became angry, asked for a refund, and vowed never to purchase from you again. Actually, here is the real case Analysis of a foreign company in China that required every wrong step in its own procurement practice, for example:
While it promised to have its own Products imported from Germany, it really sourced them from a factory in Guangdong province. It did not take long for its customers to find out which factory it sourced from; The mill that produced those Products started to mro industry them with a generic brand at substantially lower costs; There are frequent product Flaws that ranged from incorrect specifications to damaged products found in the packaging to delivery of the wrong products; It takes a very long Time to refund clients, or provide suitable replacements, largely because payment for the supplies are made upfront; Prices for the procured Products are constantly fluctuating, or always increasing without improvements in quality, making it more difficult to sell.
When asked to look for greater Providers, the procurement staff responded that other providers are colluding with the present one, and they will all quote the exact costs at similar terms. Unfortunately, this is not an isolated situation for foreign companies in China. It is actually widespread among several foreign firms here, and these issues need to be solved if earnings performance were to improve.
Getting into the Sellers’ Minds
It is well-known that China is the factory of the world. What that means is that China also has an excess production of all sorts of products, and that is the reason why Chinese exports are sold in virtually every corner of the planet. What this means is that most Factory supervisors are facing cut-throat rivalry where vicious price wars are common. But some mill bosses are smarter than others. They supply tailor-made products for customized orders. When a supplier provides Customized products, it will be more challenging for buyers to make comparisons between products. What many procurement managers do is to supply for a supplier who can produce products to specification in the desired quality for the acceptable price. Then they simply stick to that 1 provider for subsequent orders.
Actually, many procurement Managers are unwilling to change suppliers because there will be the expenses of re-casting the molds used to create those products. Besides, who’s to ensure that the new supplier is going to be better than the older one? So unless the present provider actually screws up big time, it is unlikely that they will be replaced in the near future.