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Negotiation Preparation Report

Case: Design and Supply Project for Cement Production Line with a Daily Output of 2500 Tons

Party that our team represents: The National Cement Company, Ltd.

Team members and the respective roles

CN &Observer: Diana（negotiating representative of our company）

Critic&Expert(market guru):Nicole (responsible for price calculation and profit calculation)

Builder:Anna(responsible for establishing contact and observing the other negotiators)

Relater&Recorder: Ellie(responsible for coordinate contradictions and recording content)

Background information of the counterpart

External Environment

Political and Legal Environment

China Cement Association has formulated the Cement Industry Capacity Reduction Action Plan (2018-2020) on the basis of extensively soliciting opinions from relevant enterprises and local associations.

Social Environment

In the face of the impact of COVID-19 in 2020, China actively and quickly implemented targeted epidemic prevention measures, and the manufacturing industry quickly resumed work and production, promoting a rapid economic recovery.??On the other hand, the total production and sales of cement industry were kept under control due to the impact of the epidemic under the influence of the downstream real estate, infrastructure investment and other industries.

Economical Environment

According to the China Cement Association digital Cement network monitoring, the national cement price index of 2020 is 439, basically the same as 2019, the price to maintain a reasonable operation level.??Benefiting from stable consumer demand and high prices in the cement industry, the operating efficiency of China's cement industry will remain stable in 2020.

Cement Production Lines Situation

The extension of the upstream and downstream industrial chain of cement plants by China Cement Group is relatively simple. The concentration degree of aggregate industry and ready-mixed concrete industry is relatively low, and the combination degree of the three industries is low and there is potential competition relationship.

Internal Environment

Company Environment

FUJIAN CEMENT INC. is a China-based company principally engaged in the production and distribution of cement and cement clinker. The company has two major professional cement brands, namely "Jianfu" brand and "Lianshi" brand. It has a long history of factory construction and rich experience in cement production. The Company produces and distributes its products primarily in Fujian province, China. The products of the Company are used in urban real estate development, rural civil construction and water utility, road and rail construction and other major infrastructure projects. There are image projects such as Xiamen International Airport.

FUJIAN CEMENT INC. has current annual cement production capacity of 500 million tons. It has four manufacturers and two branches with five rotary kiln production lines, most of which are new types of outside decomposition rotary kiln specialized in production of high-grade cement. Quality of its cement products is stable. FUJIAN CEMENT INC. is rated as a user satisfied enterprise in Fujian Province every year. "Jianfu, Lianshi" brand cement series products have a variety of varieties and grades, all of which have passed the national product quality certification, including P.O52.5、P.O42.5R、P.II42.5 grades cement meet the quality certification requirements of excellent products, and reach the international advanced level.For 23 years, its quality pass rate remains 100% and its cement products are inspection-free products.

Disputes

According to 天眼查,our counterpart has some financial disputes with their suppliers.

Interests of both parties

Our interests:

Strike the project for cement production line at the lowest price;

Strive for longer warranty and shorter timescale of the project;

Get a partnership at a lower price and a more suitable terms of payment

Establish long term partnership on the basis of mutual benefit.

Counterpart’s interests:

Utilize the counterpart’s wide international reach to expand our international market share;

Negotiate optimum price for the benefit of the business;

Ask for payment as soon as possible;

Establish long term partnership on the basis of mutual benefit.

Common aspirations

Promote cooperation and establish a long-term cooperative relationship

Strengths and weaknesses of both parties

Our party

Counterpart



Advantage(s)

Disadvantage(s)

Advantage(s)

Disadvantage(s)



In recent years, with the recovery of the American economy, the demand for cement in the United States continues to grow, and the cement market develops steadily.

Our main market is California and we can offer flexible assistance to the other company

Our company has a good reputation and“do have a lot of power.”

As the main venue for negotiation, it is easy to allocate resources in all aspects. At the same time, it is convenient to coordinate with personnel in all aspects, or ask the superior for relevant negotiation conditions.In addition, many experts come to give suggestions and ideas at any time

Due to the investment in multiple projects, the company has a long business cycle and less cash flow, which will delay the payment

The bidding has been successful. If the negotiation fails in the middle of the bidding, the contracting fault liability is required for re bidding

As the main venue for negotiation, it is easy for you to find the corresponding decision-making department or the superior with decision-making power, resulting in a lack of buffer for your negotiation team.

The cement production technology is advanced and the product quality is guaranteed

A long history of building factories and rich experience in cement production.

Due to the large quantities, difficulties and regional differences of construction, the delivery date may have many uncertainties.

There are other equally competitive competitors

Faced some contractd disputes with a lot companies

Urgent need to expand the market,starting with cooperation with us

As a foreign enterprise,it will be adversely affected by hedging policy





Objectives of the negotiation

Strategic objective: Reach this contract pragmatically on the basis of maintaining and balancing the interests of both parties, and explore and develop long-term cooperative relations between our two parties

Target point: Reduce prices by 7% to 10% and obtain high-quality after-sales service.

Reservation point: Conclude the transaction at a total price of US $50 million.Pay 10% of the total contract price in advance. And issue an usance draft for 80% of the total contract price D/A to Party B through the bank after delivery of all equipment. In addition, Party A will pay 10% of the balance to Party B by D/A.FUJIAN CEMENT INC. should provide a 24-month warranty.

Options in the negotiation

Price

Advance

Terms of payment

Balance

Date of delivery

Warranty



Option1

$47.5million

5%

L/C at sight for 60%

35% by T/T

4 months

24 months



Option2

$45million

15%

L/C at sight for 80%

5% by T/T

5 months

24 months



Option3

$50million

10%

L/C at sight for 40%

50% by D/A

3 months

30 months



Option4

$50million

10%

 80% by D/A

10% by D/A

4 months

24 months





Strategy applied in the negotiation

Strategy of starting by friendly and affectionate communication情感交流式开局策略

A straight to the point strategy开门见山策略

Leave enough space for negotiation 营造让步空间策略

Set a high price 高价开局策略

Pliers strategy老虎钳压制策略

Abandon unimportant benefits for core profits以小换大策略

Fictitious committee虚拟委员会

Good guy /Bad guy strategy唱红白脸策略

Encroachment strategy蚕食策略

Withdrawal proposal strategy收回条件策略

Summary strategy适时总结策略

Procedures and tactics for different stages of the negotiation

*The opening stage

Generally, considering this is our first cooperation,we will initiate the negotiation deliberately and thoughtfully. We'll start with a few questions, using polite language in a con 内容过长，仅展示头部和尾部部分文字预览，全文请查看图片预览。 y for breach of contract in Contract Law

Article 107 : If a party fails to perform its contractual obligations or fails to perform its contractual obligations in accordance with the agreement, it shall be liable for breach of contract, such as continued performance, remedial measures or compensation for losses.

The United Nations Convention on Contracts for the international sale of goods stipulates that force majeure refers to unforeseeable, unavoidable and insurmountable objective conditions.

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