The impact of a series of factors such as rising raw material prices, appreciation of the renminbi, implementation of the new labor law and rising land prices has caused "Made in China" to encounter an unprecedented crisis. From the "Made in China" affecting the world to the current crisis, it has only been a few years. Such changes have caught many SMEs caught off guard.
In the negotiating field of the business, the SME owners have racked their brains to reach an agreement with the buyers. Some business owners even said: If you don’t raise prices, you will die faster. What should I do?
The art of price increases
It seems that the price increase is a difficult thing for the buyer. A mechanical processing manufacturer is close to the problem. When it is really unable to absorb the pressure from raw materials and labor costs, he has cooperated with one. Over the years, buyers with stable supply relationships have requested price increases. The supplier's reply is: After applying to the headquarters, the headquarters believes that the prices of the products they sell have not risen, so the purchase price cannot rise, and the pressure of rising costs can only be absorbed by the machinery manufacturers themselves. And this is equivalent to pushing him to a dead end.
Companies that share a common destiny with this machining manufacturer abound. Business owners have not had time to enjoy the benefits of "Made in China", they fell directly into the price hike. At this time, it is imperative to find a way to increase the price that buyers can accept.
A business owner who produces environmentally friendly packaging products believes that it is not difficult to negotiate price increases with buyers. “When doing business with customers, it is necessary to adopt a more flexible pricing strategy and negotiate price changes. The agreement, for example, when the price of raw materials has dropped, will give the buyer a part of the profit accordingly; if the production cost increases, the buyer will be notified in advance, so that they are more acceptable," the business owner said.
A clothing manufacturer believes that the price increase strategy can appropriately reserve a buffer. When the buyer re-stocks and does not agree to the price increase, he can supply some products to him first, but clearly tells the buyer that the next purchase will increase. Price, or extend the delivery time to deal with.
However, the requirements of suppliers for suppliers are often very strict. If suppliers do not act according to the contract, they will often be severely punished and may even lose customers forever.
One metal processor's approach is to compress production costs and do some hand and foot on the specifications of the metal parts provided. For example, if the metal thickness is reduced a little, it can save a lot of raw material costs. The "hands and feet" that the company has made on the product clearly tells the buyer that it is forced by the cost pressure, and if it needs a higher quality product, it can only increase the price.
The solution proposed by a plastics manufacturer is to adjust the product price of the product line, the price of the product with a large sales volume maintains the original price, and the price of the product with a small sales volume increases, so that the profit can be kept in balance with the original.
A business owner believes that price increases are often difficult for buyers to accept, because he also has operational pressure, so he needs to be more artistic. Don't raise the price in one place at a time, but adopt the method of “warming water to cook frogsâ€. . Because the big environment is obvious, the buyer will also see that the supplier will support him in the loss of his own interests, and will gradually accept the price increase, reaching a reasonable position than the final product price.
Is there winter preparation?
Obviously, the domestic SMEs face buyers who are far stronger than them, which is also an important reason for the difficulty in price negotiations. A foreign trade salesperson believes that companies should at least prepare enough customer reserves when they are healthy, one customer does not agree to price increases, and there will be other customers who may accept price increases.
However, today's companies often face the situation that all customers are dissatisfied with the price increase. What should the company do at this time?
On the one hand, compress internal expenses and save costs. An industry insider believes that enterprises can reduce expenses in several aspects at such a critical point: first, to make profits to the upstream, that is, to obtain support from raw material suppliers, to extend the account period or to lower the price of shipments; To convert part of the funds that the company should send to employees into equity investment, explain the current difficulties to employees, and ask employees to work together to tide over the difficulties.
On the other hand, develop new products. For example, looking for alternative materials with the same performance and cheaper prices, producing new products, and having a competitive advantage over the old products in terms of price; developing more functions in product functions, developing more functions, and making the products appreciate; More in place, so that buyers recognize themselves.
However, it is clear that a large number of small and medium-sized enterprises in China have only developed after the 1990s. In particular, small and medium-sized enterprises that have formed a Chinese manufacturing scale have mostly developed in the late 1990s and are still at a stage of life and death. . "People have no long-term care, there must be near-worry." This sentence is understood in another way. It is because there are too many difficulties to be solved at the moment, and there is no way to take into account the crisis that may arise in the future. Many SMEs are often trapped in front of them, so the preparation for long-term plans is not sufficient, which makes these companies at a disadvantage when facing buyers, especially in the current environment, it is difficult to negotiate.
It is at a disadvantage when negotiating with buyers and is closely related to the characteristics of “Made in Chinaâ€. Taking Dongguan, an important manufacturing base in China, as an example, Dongguan's manufacturing industry is concentrated on “three to one supplementâ€, relying mainly on simple processing industry, and supporting its rapid development is due to the large amount of cheap surplus labor in rural China. Because the processing requirements are simple, workers are more substitutable and have a wide range of labor options, so they have not been troubled by labor issues for many years. Up to now, the employment environment of rural labor has improved, the price of agricultural products has spurred agricultural recovery, workers have been in short supply, and factory production costs have risen. However, foreign buyers are not willing to pay for this - the reason is very simple, the processing technology is simple, so the supplier's substitutability is strong. A large number of factories produce homogenized products that can be replaced by buyers at any time. Buyers have their own small abacus as suppliers. As suppliers continue to look for new customers, buyers are constantly looking for more suitable suppliers. This supplier is increasing prices, and they are willing to do “liveâ€. Lei Feng." In the current buyer market environment, competition among suppliers is particularly important. In the absence of industrial protection measures, suppliers have started vicious competition, competing to cut prices, and where is the ability to raise prices?
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