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Example of B2B business negotiation

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Yiqiao Song

The representatives from a Moldovan toy company and a Chinese cotton company negotiate a cotton supply deal. The Moldovan company needs 10 tons of cotton delivered in the next 2 months to fulfill orders. The Chinese company can only supply 6 tons from stock and proposes shipping the remaining 4 tons from their India plant. They agree to ship the entire order from China to reduce transportation costs. After discussing price, payment terms, and hedging against currency fluctuations, they appear to reach an agreement. The Chinese representative offers a factory tour to conclude the meeting.

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NegotiationPart: Goodafternoon everyone, thank you for coming to listening to our negation. Before we start, I would like to mention that we change a little bit the structure of the negotiation. The presentation will be included in the negation. I representa company from Moldova that manufactures toys and my partner represents a company from china which sells cotton. Good afternoon, Diana Grajdan is my name, I have a meeting with Ms. Song. She should be waiting for me. Good afternoon, Ms. Song, it is a pleasure to meet you. Good afternoon, Ms. Grajdan, welcome to China. I hope you had a good flight. It was very early, but no problems, thank you. Please take a seat. Would you like a coffee or a cup of tea? No, thank you. I will rather have a glass of water. It is your first time in Binthai? Yes, and it looks like a vibrant city. I think I will take the opportunity to visit the famous giant Pandas in Chengdu and enjoy the national Chinese cuisine. Could you recommend me something? Quanjude Restaurant, specialize in Peking duck. It has become the brand name for roast duck, a must-taste food in China. Sounds very good, thank you. I have done a little research about your company and found out the United State Fortune magazine included your company in the top world 500 strong enterprises. That is really impressive. Tell me more about your company. I also took a look on your official website and read some reviews. Your customers seem to be very satisfied. Since it is our first time to enter the Europe market I would like to know more about your company.
Yes, we try our best to satisfy our customers and quality as you pointed out, is very important for us. Your samples that you have sent to us look pretty good and meet our needs and standards. We have already chosen the models we need. I am very happy to hear that. I suggest to start discussing about the business. Ms. Grajdan, to start off with I just want to say that I believe I can offer you a very good deal and come up with a win-win result. I suggest to talk first about the quantity and delivery and afterwards to move to price and payment terms. What is the quantity you need to be delivered? Since we are a small company we need to be supplied with materials twice per year, but this could change since we look forward to growing our business. At the moment, we signed some important contracts and we have big orders. We need 10 tons of materials to be delivered within the next 2 months. I am afraid we cannot match that. As you probably know it is the end of seasonfor cotton. Normally we have the harvest in autumn. In this conditions we went out of stockat the moment. Really? I have flown for nearly 20 hours to hear that such a big supplier as you cannot provide such a small quantity of 10 tons? So I should call our deal in question? I totally understand you, but lets calm down first. We can find some easy solutions for this issue. We are able to provide you 6 tons now from our stocks and the rest of 4 tons we will be shipped directly from India, because we have a plant in India. That could be acceptable. I know that you offer FOB DESTINATION SHIPMENT. However, Moldova is an inland country and I am concerned about the transportation methods and costs. If I understand you correctly there will be 2 shipments: From China to Moldova and from India to Moldova and that is paying to times for nearly the same distance. How about transferring the rest of 4 tons of cottonfrom India to China, which is close to each other, and make one single shipment to Moldova. That will drive your transportation costs down, and also my final payment will be lower. That sounds like a win-win situation. Regarding the method of transportation I think the bestoption is by train, it will be more affordable than by plane. Well, now lets talk about the price and the payment terms. Considering the quantity and free
on board shipment we can offer you the price of 5.5 dollars per kilogram. That means a total payment of 55 000 dollars have to be transferred to our accountwith HSBC, Shanghai within 30 business days after receiving the invoice. I am afraid the price is higher than expected. The price includes total costof raw materials + transportation costs. Ithink the price is justified. I preferred to do business with China becauseI know the current situation in your country. The previous governmental policy led to a huge stockaccumulation in the Chinese State Reserve of cotton. As a result, China currently holds 58% of the world cotton stock. The 2015 target price for cottonin China was set at ($3,080) per ton, less with 3.5 percent than last year. As China is the leader of the market, this situation also affected the global price of cotton, which in the last five years has dropped considerable. I understand your position and interest. I think we could make a concession regarding the price in case we sign a contract for 3 years. In the current situation, a stable customer is of a high value. So how do you find the price 4.5 dollars per kilogram? We are also looking for long-term partners and suppliers. I think we could consider this offer, but will we receive a discount if we pay in the first 10 days after receiving the invoice? Yes, of course. You will get a discount of 5%. That sounds very fair. In the condition of signing the contract for 3 years I have to point out that the price you are proposingwould be variable depending on the fluctuation of the currency, in our case, dollar. We are not in a stable environment at the moment. The exchange rate could affect us negatively. Us too. So we could consider hedging against currency in both direction. That would be acceptable. I guess we might have a deal. I hope this meeting will lead to a strong relationship between our companies. It was a pleasure to meet you.
For me too. I will ask my secretary to prepare and send you the purchase order with all our discussed details. Now if you allow me, I will be glad to make you a short factory tour.

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Example of B2B business negotiation

  • 1. NegotiationPart: Goodafternoon everyone, thank you for coming to listening to our negation. Before we start, I would like to mention that we change a little bit the structure of the negotiation. The presentation will be included in the negation. I representa company from Moldova that manufactures toys and my partner represents a company from china which sells cotton. Good afternoon, Diana Grajdan is my name, I have a meeting with Ms. Song. She should be waiting for me. Good afternoon, Ms. Song, it is a pleasure to meet you. Good afternoon, Ms. Grajdan, welcome to China. I hope you had a good flight. It was very early, but no problems, thank you. Please take a seat. Would you like a coffee or a cup of tea? No, thank you. I will rather have a glass of water. It is your first time in Binthai? Yes, and it looks like a vibrant city. I think I will take the opportunity to visit the famous giant Pandas in Chengdu and enjoy the national Chinese cuisine. Could you recommend me something? Quanjude Restaurant, specialize in Peking duck. It has become the brand name for roast duck, a must-taste food in China. Sounds very good, thank you. I have done a little research about your company and found out the United State Fortune magazine included your company in the top world 500 strong enterprises. That is really impressive. Tell me more about your company. I also took a look on your official website and read some reviews. Your customers seem to be very satisfied. Since it is our first time to enter the Europe market I would like to know more about your company.
  • 2. Yes, we try our best to satisfy our customers and quality as you pointed out, is very important for us. Your samples that you have sent to us look pretty good and meet our needs and standards. We have already chosen the models we need. I am very happy to hear that. I suggest to start discussing about the business. Ms. Grajdan, to start off with I just want to say that I believe I can offer you a very good deal and come up with a win-win result. I suggest to talk first about the quantity and delivery and afterwards to move to price and payment terms. What is the quantity you need to be delivered? Since we are a small company we need to be supplied with materials twice per year, but this could change since we look forward to growing our business. At the moment, we signed some important contracts and we have big orders. We need 10 tons of materials to be delivered within the next 2 months. I am afraid we cannot match that. As you probably know it is the end of seasonfor cotton. Normally we have the harvest in autumn. In this conditions we went out of stockat the moment. Really? I have flown for nearly 20 hours to hear that such a big supplier as you cannot provide such a small quantity of 10 tons? So I should call our deal in question? I totally understand you, but lets calm down first. We can find some easy solutions for this issue. We are able to provide you 6 tons now from our stocks and the rest of 4 tons we will be shipped directly from India, because we have a plant in India. That could be acceptable. I know that you offer FOB DESTINATION SHIPMENT. However, Moldova is an inland country and I am concerned about the transportation methods and costs. If I understand you correctly there will be 2 shipments: From China to Moldova and from India to Moldova and that is paying to times for nearly the same distance. How about transferring the rest of 4 tons of cottonfrom India to China, which is close to each other, and make one single shipment to Moldova. That will drive your transportation costs down, and also my final payment will be lower. That sounds like a win-win situation. Regarding the method of transportation I think the bestoption is by train, it will be more affordable than by plane. Well, now lets talk about the price and the payment terms. Considering the quantity and free
  • 3. on board shipment we can offer you the price of 5.5 dollars per kilogram. That means a total payment of 55 000 dollars have to be transferred to our accountwith HSBC, Shanghai within 30 business days after receiving the invoice. I am afraid the price is higher than expected. The price includes total costof raw materials + transportation costs. Ithink the price is justified. I preferred to do business with China becauseI know the current situation in your country. The previous governmental policy led to a huge stockaccumulation in the Chinese State Reserve of cotton. As a result, China currently holds 58% of the world cotton stock. The 2015 target price for cottonin China was set at ($3,080) per ton, less with 3.5 percent than last year. As China is the leader of the market, this situation also affected the global price of cotton, which in the last five years has dropped considerable. I understand your position and interest. I think we could make a concession regarding the price in case we sign a contract for 3 years. In the current situation, a stable customer is of a high value. So how do you find the price 4.5 dollars per kilogram? We are also looking for long-term partners and suppliers. I think we could consider this offer, but will we receive a discount if we pay in the first 10 days after receiving the invoice? Yes, of course. You will get a discount of 5%. That sounds very fair. In the condition of signing the contract for 3 years I have to point out that the price you are proposingwould be variable depending on the fluctuation of the currency, in our case, dollar. We are not in a stable environment at the moment. The exchange rate could affect us negatively. Us too. So we could consider hedging against currency in both direction. That would be acceptable. I guess we might have a deal. I hope this meeting will lead to a strong relationship between our companies. It was a pleasure to meet you.
  • 4. For me too. I will ask my secretary to prepare and send you the purchase order with all our discussed details. Now if you allow me, I will be glad to make you a short factory tour.