In 2012, an American client asked InstantChina to help him negotiate with his supplier over a thorny issue.
He had been buying from the same factory for over five years and business had been smooth, but recently a new competitor arrived in his city selling the same product. Ensuing price wars prevented him from making a profit. Worse, he discovered that his competitor was buying from the same factory he was.
The client flew to Shanghai and asked InstantChina’s Nigel Bai to help him confront the factory manager and negotiate a solution.
The factory manager at first denied having sold to the client’s competitor. He provided a series of excuses, saying that he had a different supplier, or that the product was not the same. After a heated discussion, the manager finally agreed that if the client could sell a certain quota, he would stop supplying his competitor.
With his problem resolved but still on shaky terms with the manager, the client decided to visit another factory while he was in the area. He took a liking to the products and was preparing to bring them to the US. Then the manager asked him where he would be distributing. To the client’s response, the manager very politely responded, “Sorry, we already have a distributor in the area, and cannot sell to you.”
Disappointed that he wouldn’t be able to distribute this new product, the client was nonetheless encouraged to hear that certain factories did follow strict regulations regarding distribution and territories.
The client and Nigel relayed his experience to the original supplier, requesting that he follow similar regulations and stop selling to his competitor. He was eventually able to reach an agreement with the manager, and they successfully reestablished a positive, cooperative relationship.