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Negotiating the Price. UNIT. Learning Objectives Understand the price in international business Talking about price adjustments, discounts and concessions Understanding the techniques in price negotiation Writing counter-offer letters. 9. 价格磋商. CONTENTS.

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  1. Negotiating the Price UNIT • Learning Objectives • Understand the price in international business • Talking about price adjustments, discounts and concessions • Understanding the techniques in price negotiation • Writing counter-offer letters 9 价格磋商

  2. CONTENTS ◆ Warm-up Practice ◆Listening Task ◆ Speaking Task ◆ Reading Task ◆ Writing Task ◆ Follow-up Practice

  3. We need to discuss some questions about what we are going to learn in this unit. Sure, that’ll help us understand better about what we are asked to do. Warming-up Practice

  4. 1. Match the following currencies with their abbreviations. CURRENCIESABBREVIATIONS Canadian Dollar RMB New Zealand Dollar SFr Hong Kong Dollar EUR Swiss Franc Dollar CAD Euro Dollar SGD Great Britain Pound USD Singapore Dollar AUD Japanese Yen NZD Renminbi HKD Australian Dollar GBP US Dollar JPY

  5. Date: 2006/04/22

  6. 2. Questions 1.What is trade terms or price terms? 2. When negotiating the price of a product, what are the key elements to be considered?

  7. Trade Terms Trade terms also referred to as "price terms" or "delivery terms" are a set of uniform rules codifying the interpretation of trade terms defining the price composition and the rights and obligations of the buyer and the seller in international transactions. Trade terms are key elements of international contracts of sale, since they tell the parties what to do with respect to: ♦ delivery terms ( carriage of the goods from the seller to the buyer and division of costs and risks between the parties) ; ♦ price terms (stipulating what are included in the price the buyer paid to the seller, e.g. cost, freight, insurance, export and import clearance fees, etc. ) ; ♦ delivery obligations (what documents should the seller provide, e.g. bill of lading, insurance policy, etc. ).

  8. FCA CPT CIP FOBCFR DDU FAS CIF DES DEQ DDP EXW 工厂 仓库 敞车 机场 集装箱 码头 码头 火车站 堆场 CY 汽车站 Exporting CountryImporting Country DAF 关境 关境 Exporting Country Importing Country

  9. Unit Price Unit price comprises the employed currency, unit price, unit quantity, and trade term. 每公吨 100 美元 CIF纽约 Unit quantityUnit priceEmployed currencyTrade term USD 100 per M/T CIF New York

  10. 3. Translate these quotations into Chinese • 1) AUD100per dozen EXW Guangzhou • 2) CAD200per kilogram FCA Guangzhou • 3) EUR137 per set FOB Shanghai • 4) JPY597 per unit FAS Shanghai • 5) HKD167 CFR Hong Kong • 6) SGD463 per metric ton CIF Singapore • 7) USD 800 per set CPT Geneva • 8) SFr 2629 per kilogram CIP Geneva • USD 1 000 M/T CIF C3 London • 10) EUR 317 per piece DES Marseilles • 11) GBP 500 per unit DEQ London • 12) EUR 386 per metric ton Delivered at 5 Maple Road, Bonn, Duty Paid

  11. Listening Task In this part you are going to listen to a passage and a dialogue. Listen and try to finish the exercises while listening. Are you ready?

  12. 9.1.1 Listen to the passage and write ‘T’ if it is true or ‘F’ if it is false for each statement. • The buyer will always ask the seller to reduce the price in business. • T • 2) The lower the price, the better for the buyer. On the other hand, the higher the price, the better for the seller. T • 3) When the buyer is asking for a “fair price”, it means that the price is not fair. F • 4) The higher the price, the more profits the seller will make. • F • 5) Market prices will surely be mentioned during their negotiations on price. T • 6) According to the passage, “fair price” has nothing to do with market prices, it’s up to the buyer and the seller. F

  13. 9.1. 2 Listen to the dialogue and answer the following questions. 1) Why did Bill come to visit Mary? He came to talk about Mary’s plastic card order for the next year. 2) Why did Bill say that they had to increase their prices a little? Because of inflation, increase in cost of raw materials and improved quality. 3) What will be the minimum order for the cards if the price can be kept at the same level? 850 000. 4) What was the last year’s unit price for the cards? 18 cents. 5) What was the problem with the last year’s cards? Around 3% were faulty. 6) Will Mary place an order for the cards next year? (Open)

  14. Speaking Task In this part you are going to read two dialoguesin pairs and then you will be asked to answer some questions about what you have read.

  15. 9.2.1 Read the dialogue and then answer the following questions. 1) How did Mr Gao justify his rise in price? • The costs of production have gone up considerably recently. 2) What was the counter-offer made by Mr Keith? • 10% off for orders over 10 000 units. 3) Did Mr Gao accept Mr Keith’s counter-offer? • No, but he would give Mr Keith a special discount of 5 %. 4) What was the further price concession made by Mr Gao? • He was prepared to make this business an exception by reducing his price by 7%. 5) Why did Mr Gao make this concession? In order to encourage future business and as a gesture of friendship. 6) How long will this offer remain firm? • It will remain firm until the end of the month.

  16. 9.2.2 Read the dialogs and then answer the following questions. 1) How did Mr Huang justify his rise in price? • Because of the substantial increase in the packing expenses and transportation cost in addition to the sharp cost rise in raw materials of 30%. 2) What was the range of price adjustment Mr Huang expected? • 20%. 3. How will the market react to such a price according to Mr White? • Such a high price will lead to market shrinkage. 4) What did Mr White threaten to do? • He would turn to other suppliers with a price rise of 15%. 5) Why did Mr Huang agree to raise his price by 18%? • He agreed to raise his price by 18% with a view to long term interests. 6) What’s their final conclusion? • The price will rise by 18%. A 2% discount will be allowed for orders no less than 5 000 dozen.

  17. Reading Task

  18. PRE-READING QUESTIONS FOR PAIR WORK 1. What do you concern most about products as a buyer? 2. How do you judge whether a certain product is high in price? 3. Why and how do we defend our price as a seller?

  19. Questions 1) What situation does every salesperson eventually confront? He is afraid his price is too high for a successful deal. 2) Why are many salespeople afraid to defend their price? Because they believe that will drive away customers. 3) How should we justify our price according to the passage? We should give our price legitimacy, focus on the value of our product/service, and assure our customers of our sincerity. 4) What advice does the passage give for making concessions? Don’t make unilateral concessions. Whenever you give something away, get something in return. 5) Why and how do we qualify our prospective buyers? There are always some customers out of your price range. When you’re suspecting, simply ask: “What kind of budget are we looking at?” or “What range are we looking at here?” 6) How can we satisfy our customers without lowering our price? The advices are: (1）Be a good listener. Allow them to get their gripes about your price off their chest. They will thank you for being patient with them. (2）Help them to accept your fee by providing reasonable justification. (3）Sell your unique strengths. 7) Can you give some advice for defending your price? (Open)

  20. Writing Task In this part you are going to learn how to write a letter of counter-offer

  21. WHAT TO INCLUDE IN A COUNTER OFFER A satisfactory letter of counter-offer should cover the following points: 1.Express the buyer’s thanks to the seller for the offer. 2. Express regret at the buyer’s inability to accept. 3.Make a counter-offer if, in the circumstances, it is appropriate. 4. Express hopes of mutually beneficial business cooperation.

  22. Buyer’s counter-offer for bicycles Dear Sirs, Thank you for your letter about the offer for the bicycles. Although we appreciate the quality of your bicycles, we regret to say that their price is too high to be acceptable. Referring to the Sales Confirmation No.89SP-754, you will find that we ordered 1000 bicycles with the same brand as per the terms and conditions stipulated in that Sales Confirmation, but the price was 10%lower than your present price. Since we placed the last order, price for raw materials has decreased considerably Retailing price for your bicycles here has also been reduced by 5%.Accepting your present price will mean great loss to us, let alone profit. We would like to place repeat orders with you if you could reduce your price at least by 2%.Otherwise, we have to shift to the other suppliers for our similar request. We hope you take our suggestion into serious consideration and give us your reply as soon as possible. Yours truly,

  23. Seller’s counter counter-offer Dear Sirs, Thank you for your letter of 20 July 2006. We are disappointed to hear that the price for our flame cigarette lighters is too high for you to work on. You mention that Japanese goods are being offered to you at a price approximately 10% lower than that quoted by us. We accept what you say, but we are of the opinion that the quality of the other makes does not measure up to that of our products. In these days, we have received a lot of enquiries from European buyers and we believe our price is fixed at a reasonable level. Although we are keen to do business with you, we regret that we cannot accept your counter offer or even meet you half way. The best we can do is to reduce our previous quotation by 2%. We trust that this will meet with your approval. We hope you would accept this price and place your order at an early time. Yours faithfully,

  24. Writing Practice Task 1Compose a letter of counter-offer, asking for price reduction based on the following terms in the offer you have received from the seller. Commodity: Blue Sky Brand Men’s Shirts Specifications: White, long sleeves, made of 80% rayon and 20% cotton Sizes: L 20%, M 50%, S 30% Packing: Each in a polybag, 10 dozen to a carton Quantity: 2,000 dozen Price: US$400 per dozen CIF New York Shipment: October/ November, 2006 Payment: By irrevocable L/C payable by draft at sight

  25. Task 2: Exchange your counter-offer letter with your partner’s and then draft a counter counter-offer based on the letter you have received from your partner, declining the buyer’s request for the price reduction unless the buyer doubles the quantity.

  26. Follow-up Practice We will practice what we have learnt in this unit. Yes, let’s do it! Practice makes perfect

  27. 1. Questions and AnswersWhat would you say? 1. A: You’ve raised the price! May I know what has caused the increase? B: _____________________________________________. 2. A: Our users are under the impression that your prices are usually on the high side, compared with those of other suppliers. B: ________________________________________________ 3. A: What would you say to reducing your price by 10%? B: _________________________________________________ 4. A: We expected the price to be lower. B: ________________________________________________ 5. A: ________________________________________________ B: Oh, I’m afraid that won’t do. It simply can’t stand such a big cut. 6. A: _________________________________________________ B: If it’s a large order, a discount is possible. 7. A: I’m afraid we can only offer a 5% discount. B: ________________________________________________ 8. A: We hope that you’ll take the initiative and bridge the gap. B: ________________________________________________ 9 . A: ________________________________________________ B: You can’t take price separately from quality. 10 . A: To get business under way, we take your price. B: ______________________________________________

  28. 2. How do you comment on the price? 1) If the price is high A: The price is twice of the other countries(其他国家的两倍). B: It is much higher than that of other suppliers (其它供货商). C: I’m afraid your price is on the high side (偏高). . 2) If the price is reasonable A: Yes, the price is realistic (合乎实际的). B: It is a (n) reasonable / feasible / practical / attractive price. C: Considering the rise of the cost of everything, this price reasonable / still reasonable / within our acceptance. 3) If the price is not acceptable A: We can’t accept it. B: The price is beyond acceptance / our ability. C: I’m afraid, the price is too high to be acceptable/ unacceptable / unattractive / impractical / unworkable. 4) If the price is acceptable A: Yes, we can accept / takeit. B: Yes, the price is acceptable, though it is higher than that of your competitors (比你竞争对手的要高) C: Considering its high quality/grade/standard of your product, the price is still within acceptance . 5) If you think your price is low enough A: The price has been reduced to its minimum / the bottom / its limit (极限). B: Our price is moderate (适中). C: Our price is practical and reasonable（实际的和合理的）.

  29. 3. Presentation PracticeMake a short presentation on one of the following topics. Try to find as much information as you can from different sources available for your talk. • How should the seller defend the price? • How should the buyer negotiate the price? • Relevant topics of your own choice

  30. 4. Translation Practice 1) 与其他供应商相比，我们的价格还是很优惠的。 Our prices still compare very favorably with those offered by other suppliers. 2) 我要说的是你方价格如果不降到国际市场价格水平，你们就没有希望做成生意。 What I want to say is that you’ll stand no chance if you don’t bring your price into line with the world market. 3) 我相信没有哪个厂家会接受你的价格，因为这几乎连生产成本也赚不回来。 I believe no manufacturer would accept your price because it can hardly cover our production cost. 4) 你方的价格将在我方市场超过所以同类产品的价格，这将导致贵公司产品在我市场上销售的萎缩。 Your price for the same products will be the highest in our market, which will no doubt result in shrinkage of the market for your products. 5) 正是考虑到我们的长期的业务合作，我们才把上涨幅度限制在百分之二十。 It is in view of our long-term business cooperation that we limit the increase to 20 %.

  31. 6) 我们希望你再考虑一下你方价格，报一个新价，这样才有可能互相让步，达成协议。 We hope you will reconsider your price and make a new bid, so that there can be a possibility of our meeting halfway. 7) 如果订货量大的话，我想可以适当让利。 If you place a large order, I think a discount would be possible. 8) 由于最近原材料价格上涨，百分之三的折扣是我方能提供的最大的折扣。 A 3 % discount is the best we can offer, because the prices of raw materials have gone up lately. 9) 除非你们价格做出大的变动，否则我们成交的可能性很小。 Unless you can see your way to improve your price substantially, the chances of our closing the deal are rather slim. 10) 为了进一步扩大业务往来，也为了表示我们的诚意，我方准备破例减价5%。 In order to encourage future business and as a gesture of friendship, we are prepared to make this an exception by reducing our price by 5%.

  32. 5. Role Play 1) Make a dialogue according to the following procedures: offer — counter-offer — acceptance. Seller: USD 2000 M/T FOB Shanghai. Buyer: your price too high, our workable price USD 1800. Seller: price here has suddenly increased to USD 1900. Buyer: the best we accept USD 1850. Seller: impossible to accept USD 1850 unless quantity increased by 50%. Buyer: accept USD 1850 with quantity increase by 50% for prompt shipment.

  33. 2) You are negotiating with one of your old customers, David Cook, about the rise of the prices for the coming season. Your notes: • to raise the prices for the coming season • reasons: material costs up 20%; labor costs up 15%; overheads increased by 15% • no agreement reached; meeting sometime next week again David Cook’s Notes: • Costs up? - why can’t you absorb them like other suppliers and we also have to keep ours down • Asking for detailed explanation • Agreeing to meet next week again

  34. 3) You are going to order videophones from your business partner, but you find the price is too high to be acceptable. So you are counter offering to have 3% trade discount. The reasons: 1) as a gesture of goodwill 2) as a new product 3) to open the market in our area 4) to place a large order 5) to get the business started 6) to make the price in line with other suppliers

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