You have found a strong profitable nice product and some top suppliers of your Chinese product. Now you need to send a Request for Quotation, the RFQ, to that supplier.
Great! How do you send an RFQ to that top Chinese manufacturer?
Sourcing Nova is a top-ranked purchasing agency in China. We receive RFQ requests daily, and we make RFQ to many different top manufacturers of Chinese products daily. This means we can look at requests for quotations in two different ways and have two different experiences.
The main thing we have learned is our clients do not understand how to send a Request for Quotation (RFQ) to a Chinese supplier both correctly and efficiently. The following article is a comprehensive tutorial on how to make an RFQ to a Chinese manufacturer.
If you are ready to learn an important element of importing quality products from China, here is the definitive information you need.
What Is a Request for Quote (RFQ)?
Wikipedia’s definition of RFQ: RFQ is the business process in which a company requests a quotation from a supplier to purchase products and services.
The Request for Quotation (RFQ) is a business process. It is vital to distinguish between what is wrong and what is right in this particular process. The first thing to learn is what not to do. There are three examples of poor inquiries to your Chinese supplier.
3 common mistakes in requesting for quotations
Mistake 1: Bulk sending request for a quotation email
Too many people start with Alibaba, add some basic product keywords and make the same quotation request to several suppliers.
Consider: What are you doing to individualize your request to each supplier? If you don’t take this part of the process seriously and respect the supplier, why would the supplier give you, and your enquiry, the same?
The smaller trading companies will take every inquiry serious and respond to them as well. They have a very small chance of getting an order from a buyer, but they have to answer every request. They cannot afford to ignore even one request.
The better Chinese manufacturers get countless inquiries on a daily basis. Most recognize right off the bat you are not looking to place an order. You are trying to get the lowest possible price.
These better Chinese manufacturers are wise to your tricks and will take steps to determine who you are as a buyer. The first thing the manufacturers will do is learn if you are the head of procurement for a large business. They will string you along with postive responses to your email inquiries. If they find out you are a fresh buyer with little experience, do not expect the manufacturer to provide you a quote.
Most Chinese manufacturers will not be direct and forthright with you. They will not respond, “Thanks, but no thanks.” They will do one of two things:
- Delete your inquiry immediately. You will never hear back from the manufacturer.
- You will get a reply of a quote well outside of what you can afford. The manufacturer does this to stop you from sending emails.
Mistake #2: Being too lazy to take the necessary time to form an actual Request for Quotation (RFQ)
Sourcing Nova gets the following emails constantly:
Hello. I want to purchase Product X. Send me a price list.
We take about 0.1 seconds to recognize this is not an experienced buyer. These buyers have a considerable way to go before placing an order. Remember: Even a small order takes us time and effort to place it with our manufacturers.
These buyers have the following characteristics:
- Lack of complete understanding of what separates a decent product from a less-than-ideal product;
- Lack of confidence in their own business prospects, and are not sure they can make conversions with visitors;
- They do not take the business seriously and do not want to put in the time and energy;
- They lack systematic thinking, focus on the price unilaterally and not on reducing the final total procurement cost.
In this situation and faced with this sort of inquiry, Sourcing Nova considers this an opportunity to help the buyer learn how to make a Request for Quote correctly. We do this by asking direct and detailed questions. The result is one of two outcomes:
- A customer describes their product idea. We make the determination on purchasing needs of the customer with product requirements documents. Then, and only then, do we contact one of our top-ranked manufacturers for a valid quote.
- The customer is only interested in a price and not the information we need. As much as Sourcing Nova would like to help them, it is not feasible. We turn them away.
As we continually tell you: Our manufacturing partners are the best of the best in the industry. They provide OEM and ODM services for world-class brands.
It is only right these manufacturers be treated well and respectfully. Sourcing Nova does not want to waste their time and yours with poor inquiries.
Related post: Supplier Perception: Are You As Good As You Believe?
Mistake #3: Deceiving suppliers with false informational
Guanxi is a part of the Chinese business model. Leaders in many industries are related to one another in some way. It is not likely they will share their high-quality customers but will willingly share low-quality customers.
Note: A low-quality customer will put in a request for quote for a significant order. Their goal is to determine the production base price at the outset. They then place an order much smaller than the original inquiry.
This sort of behavior gets around the industry. Those who make inquiries based on product price are subsequently ignored.
Why is this such a big deal for suppliers? Does it matter?
Yes. Yes it does.
Producing 10,000 products is different than the cost of producing 100 products. Many buyers will use the 10,000 product cost so they can buy 100 products. This is a shady, outdated and notorious trick.
Sourcing Nova is hopeful importers will not try this technique for cheaper prices on their Chinese products.
Why do we have to request a quote
Are you looking for the best possible price on your products?
You need to make the Request for Quote (RFQ).
An experienced buyer will use the RFQ when they know what they want, the quanitty they need, when and where they need them.
How to send a request for quotation (RFQ) to a top Chinese manufacturer?
Our selected top manufacturers of world-class brands provide OEM and ODM for the top world-class across the globe. These manufacturers offer the same product quality, and prices cheaper than small and medium-sized manufacturers.
Note: These top manufacturers are also interested in seasoned, qualified buyers.
Place yourself in their position. This is why a basic requirement is the Request for Quote (RFQ).
Please do the necessary homework on the product.
Be clear, and be direct with your product requirements. At least, provide the following information:
- What product do you need?
- How many products do you need?
- What is your budget?
- What are your product specifications?
- Do you want to purchase stock products, or make your own private label?
Maintain your honest image at all times.
Are you an Amazon seller, shopify or face-to-face store front in your hometown? Be honest, and do not think you can pull one over on a manufacturer. They are shrewd when it comes to shady business practices.
There are some buyers who want to keep their information private and are not willing to share their personal information with the manufacturer. They worry the manufacturer could be their direct competition or are trying to hide something in an effort to gain an edge on negotiation.
What exactly are we trying to tell you?
Manufacturers will know your business information – you cannot hide it successfully.
How is withholding information going to make a difference? What is the big deal?
This shady practice is useless and possibly detrimental to your business.
Here is a specific scenario:
A manufacturers produces Product X. They have an exclusive Distributor A in the U.S. market. There is an agreement between the two: Product X can only be sold by Distributor A in the U.S. market and is not available to direct competition.
Distributor A invests significantly in advertising expenses for marketing Product X. Product X becomes exceptionally popular in the U.S. market as a consequence.
Enter Competitor B.
Competitor B learns Product X has a good profit margin and is interested in carrying the same product from the same manufacturer.
Competitor B lies. They promise to sell Product X only in Europe.
The manufacturer, with the understanding Product X will only be available in Europe, sends Product X to Competitor B’s freight forwarder.
Competitor B opens an Amazon U.S. storefront and starts selling Product X.
Distributor A learns of the situation. They immediately file an infringement complaint with the manufacturer. B’s products are pulled from Amazon U.S. and cannot be sold.
Use a unified Request for Quotation (RQF) template
Note: Most, if not all, Chinese suppliers have their own quotation form format. Their terms of trade, MOQ and shipping vary from supplier to supplier – even within the same industry cluster.
The overseas buyer often struggles with these different offers without a unifed standard Request for Quote (RFQ) template. The buyers run into an apples to oranges comparison.
What is necessary is an apples-to-apples comparison.
The more detailed the specifications, the more accurate a quote will be. This makes comparisions to other suppliers quick and simple.
What information do you need in the Request for Quotation template?
You need the following information:
- Quote date: The date the quotation was made;
- Quote #: The quote number is generated by a specific naming rule;
- Buyer info: The company name and shipping address;
- Trade terms: Internation trade terms lay out the responsibilities and obligations of buyers and sellers. This has a real impact on the procurement costs of the products. Buyers select appropriate trade terms based on the actual situation. Example: The buyer has a freight forwarder, chooses the FOB terms or use DDP. The goal is to get different suppliers to quote on the same terms of trade;
- Supplier info: Supplier company name, address and contact information;
- Product Details: The name, model, picture, specifications, size, unit price, quantity and total amount purchased;
- Validity Period: How long the quotation will be good for. The average is seven days;
- Payment Terms: Normally 30 percent in advance, and the remaining 70 percent balance due before shipping;
- Lead Time: This represents the time from when the factory signs the order contract to when the goods are ready for delivery. This time varies by industry.
What’s the next step after sending a request for quotation (RFQ) to a supplier?
On average, Sourcing Nova will get three to five quotations. This is the most accurate prediction of product cost.
That can be exceptionally confusing. What is the solution?
Simple. Sourcing Nova has a checklist.
Uniform request for quatation format
The first step is breaking down the supplier’s quotation, record that information in a uniform format, the buyer’s currency of choice and finally remarks from both the buyer and seller (remarks such as late penalties, normally a discount for a certain amount or air freight).
We convert this into a format you can easily understand, return it to the supplier for confirmation and use our proprietary quotation format as the final, binding document.
A quotation in uniform format is the best for you. This is a familiar format for you. Moreover, it prevents buyers from reading only the surface data based solely on the price. Our form has the most realistic cost quotes from the selected suppliers.
Many times there are hidden costs buried inside of the quotation. Buyers will pay more if they do not pay careful attention to the entire quotation.
Here is an example of what we mean: There is a low unit price on the products. What is not listed in the quotation are the development costs and any molds used. This means when the buyer puts in an order, the overall price skyrockets.
These less-than-ideal suppliers keep the tooling prices reasonable but charges extra for mass-production costs.
This is a common business practice with shady manufacturers: Get the attention of the buyer with an appealing low price, and then raise the price while keeping customers.
Watch out for those invisible hidden costs
Sourcing Nova believes that in addition to visible and quanifiable costs on the quotation that there are some deeply hidden and difficult to quantify costs when sourcing products from Chinese suppliers.
Hidden costs like:
- Supplier response time: A well-prepared professional supplier will return a Request for Quote (RFQ) within 48 hours. Smaller equally well-prepared suppliers often return quotations within 72 hours.
Sourcing Nova finds suppliers responding in this way is poor performance. Less and except reasonable circumstances, a supplier should take no more than four days to respond. A more significant time span means there are other variables in the supplier quotation.
- Supplier reply content: Our unified format quotation has a number of preset content. Most supplier quotations will cover most everything in the Request for Quote (RFQ).
Often certain elements of the quote that would have a negative effect on the supplier profit are deliberately circumvented (e.g. penalties for late delivery).
Sourcing Nova makes it a point to follow up on these terms. Any supplier who will not respond honestly and forthright raises a red flag for us.
- The person in charge of the supplier: It is common in Chinese culture for people to present themselves as “I am the boss” to others. All sales consultants will present themselves as the sales manager, even if they are fresh to the business.
The actual person in charge is the head of the specific department. Sourcing Nova’s goal is to get the contact details of the department heads. Our goal is to open and keep open lines of communication for the buyer.The majority of the day-to-day business is handled by the “Sales Manager.” Sourcing Nova wants the contact information of the Department Head in case it is necessary.
How does a purchasing agent send a Request for Quotation (RFQ)?
The process for providing a Request for Quote (RFQ) for purchasing agents and overseas buyers is mostly the same. Purchasing agents need to make quotations to overseas buyers while sending Request for Quote (RFQ) to suppliers.
Any middleman roles makes our process different in the above. Mainly in the following:
- Purchasing agents use require factors to provide quotes in EXW trade terms. Overseas buyers normally require FOB, CIF or DDP trade terms to quote;
- Purchasing agents require quotes in RMB. Overseas buyers normally quote in U.S. dollars.
- Normally factories make quotations to purchasing agents in Mandarin Chinese. This reduces the opportunity for misunderstandings due to cultural differences.
Sending a Request for Quote (RFQ) to a Chinese manufacturer is not to be taken lightly. It is important to work hard to build and maintain a trusting relationship with top manufacturers of world-class brands.
We use a standardized quotation template to reduce chances of errors.
At the same time, we have to keep in mind the price of products from each individual supplier and compare those prices under the same conditions. This keeps the practice standardized.
A single price taken out of context is not enough to make a fair assessment on the total purchase cost.
Sourcing Nova is committed to helping small and medium-sized sellers across the globe source goods from the top manufactures in China. We have strict and demanding criteria for those select manufacturers – the majority of whom provide OEM and ODM services to world-class brands.
We also take the reasonable expectations of manufacturers seriously. Our goal is to align ourselves, along with customers, with the requirements of our manufacturers for a win/win outcome.
If you are ready for top Chinese manufacturers to produce high-quality products for your business, we welcome an opportunity to work with you.