Negotiation Strategies for SMEs in Singapore

Negotiation Strategies for SMEs in Singapore

As I mentioned previously, the SME I work for is moving offices. In my dealings with other Singaporean contractors and salespeople I had noticed that the usual approach here, in my opinion, is to rip the customer/client off. It might not be as bad in Singapore as it is in China or other parts of Asia, but I have the impression that it is harder to find a trustworthy counterpart than it is in say Europe or the US.

From our dealings with businesses in Singapore, we learned some very valuable lessons that can help you or your SME save a lot of money. If you are an individual person, it might be harder for you to implement some of these things due to the relatively smaller amounts of money involved. In contrast, if you are bigger business, you have more pricing- and negotiation power.

I'm sure the below is applicable in most countries, but I was surprised as to the effectiveness of applying these simple steps when dealing with contractors/suppliers. On various occasions, we managed to cut the original quotes by 20-50%.  

1. Compare, compare, compare!

Singapore has solutions/products for every gusto. Whether you want a high-end solution or a work-around that will tide you over, you find it all. However, it takes a lot of legwork to find the right people for your job. Surprisingly for a high-tech country such as Singapore, a lot of business have very bad websites (some seem to stem from the 90s), if any. Therefore, you might be required to call them or go to their place of business to get a feel of the quality of the services/goods they provide. In general, the salespeople here speak good English, however, over a bad phone connection even simple inquiries quickly become frustrating. Either try by email or in person and be very specific about your requirements and the things you don't want.

2. Never accept the first quote you receive (even if you worked with the company before)

The first quotes we received were all overpriced, both regarding labour/services as well as hardware/materials. Have a look around and see whether you can source the hardware/materials from other suppliers, maybe even from abroad. For electronics, many US stores ship via UPS in 4 business days for a reasonable price. Further, check the quality of the products/services sold to you (e.g. find reviews online), as often what is offered to you is not what you asked for/need). Often you can get a similar product, with better qualities for a cheaper price. Always, always contend the cost charged for services rendered and try to either eliminate these costs completely or at least reduce them substantially. The cost of labor is comparatively cheap in Singapore, don't let them try and tell you otherwise.

3. Use quotes from different contractors/suppliers to push down the price.

Again, this might be obvious, but proves very effective. For instance, we had a supplier for cartridges for our laser toner. We had order with him twice for a good price. When we wanted to order a 3rd time, he replied that the price had gone up 30%! Here is how the email exchange went:

I: This is very unfortunate, a 30% price increase within 6 months is quite steep. I will have to discuss this internally. Is 500 the best price you can give us? 

He: This is the best price we can supply at.

I: Another supplier has quoted us SGD 470. If you cannot match the price I cannot justify this with accounting. Please let me know if you can go 470 or below.

He: I will do a price of $450 for you. Hope this helps. Earliest delivery will be on Wed.

Naturally, we are not talking about large sums here. However, personally I don't like being ripped off, so it becomes a question of principle and ten minutes of research and one other quote saved us 50 bucks. Not so  bad, eh?

If you follow these simple 3 steps when negotiating with a supplier or contractor in Singapore you will save a lot of money. Don't take it personally, it's not like they just try to rip you of all people off. Further, don't be embarrassed about negotiating and slashing their prices left and right, it's part of the game. Lastly, if you find a good contractor or supplier keep them tight and reward them for services provided well. Spreading word of mouth and sending business their way can help you get a better quote from them next time.