The way how the majority people in China is quite different from how the westerners would do.
1. They would calculate all different kinds of cost and add a reasonable profit on top of it, (not all of them, but I would say more than 90% of them).
The profit in different industries or items is quite different, but if they are in the business for a long time, they know what is reasonable, and the serious businessmen would quote based in a high quantity so that their prices look competitive. However, from what I learned in the past few years, I found out that many westerners quote on a much higher margin, it makes commom things very difficult to sell to China, only some special items such as some naterial resources and very high tech product are easy to sell in China.
What I am going to say is not about how to sell to China, but I am going to give you some tip on how to deal with Chinese people, and before you know the tip, you need to know how they think, and this is very important for you to make a good plan or negotiating stragety. They quote you very low in the beginning if when you are not ordering a lot from them, and most of the westerners don’t get that, and it makes them uncomfortable when they say something that is not supposed to say during their conversation. They understand that it is a new relationship, and it takes time for you to prepare a bigger order later, but they don’t want to look bad for the beginning, so they offer with good prices.
2. The prices are very transparant in China, all the people know that, and they know that there are many competitors in China, in order to survive, they have to provide you good prices, and sometimes because of the low prices they offer, they will have to make the items cheaper with lower quality so that they can earn a little profit, and they are afraid to tell you the truth, sometimes, because the prices they quote are not so good to them, they will have to offer cheap customer services and maintainace services, and the bad customer services or warranty policy might cost big problems to you.
What I am trying to tell you is that when you know that your business partner is not a scammer, and you believe that he or she is a good person, and you want to deal with him/her for a long term, Do NOT try to bargin too much. That the image of China is not so good is because that only a small percentage of scammer or cheaters in China are ruining it, and when you get scammed, you tell everybody, and others would forget the fact that most of the people are nice, and it is bad to start a business relationship when you assume that your business partner is bad.