Over those last 7 years of supply chain and manufacturing management in China, I have seen various technics used by Chinese vendor to lock a deal with overseas customers which sometime finally turn bad to the client.
One of the most common technics used by Chinese vendor to lock a deal is to cut down the price to attract its prey. Customer feeling confident in making a good deal send quickly their deposit to the Chinese vendor who start opening tooling, start development etc…
What come next is often the following :
1./ Whereas production is started the vendor would claim they have forgot to include something in their price
2./ Order after order the price of the manufactured product increase step after step, vendor will justify it most of time saying that usd versus Chinese yuan changed a lot or that china life cost is increasing
Customer are usually trapped and locked because their supplier hold the tooling, hold the sources of the project , have invested in development but don’t hold the ip (most of time Chinese companies will give a very low price to attract customer but then they will claim they keep the IP) and the client has no other solution than keep going with their current supplier.
I will explain in another future post how to deal with this kind of issue
And you, what is your experience with price rising over the time ?