Unit Three Making an Offer

Introduction Making an offer or quotation is very important in business negotiation. Though it takes a very short time to do so, a proper offer or quotation means to the profit you may get from the transaction.

Explanation and comments on the text Now go through the “Introduction ” and answer the questions in Task One. 1)What is a quotation? 2)What is an offer? 3)What is a firm offer and what is a non-firm offer? 4)What about the skills of making an offer? 5)What should we pay attention to before we make an offer?

Explanation and comments on the introduction When we make a quotation or an offer, we should know something about the price factors, finding out what factors that form your price: 报价之前必须了解价格的构成因素 1.Cost of purchases of the goods ( Including cost of labor, cost of raw material and etc. ) 购货成本（包括劳动力成本、原料成本及其它出口费用） 2. Other export charges: storage, freight from the production site to the seaport, customs clearance, export commodity inspection, export license and formalities, insurance, freight of ocean transportation etc. 其它出口费用：仓储费、货源地到港口的运费、清关费、商检费、出口许可证及手续费、保险费、海运运费等；

3. Market situation: market situation at home and abroad at the present and in the near future (decline or rise; upwards or downwards?); supply and demands of the product itself and the similar products at present and in the near future (supply exceeds demands or demands exceed supply?); Competition among the similar products, its market share both at home and abroad etc. 市场信息：目前及今后国内、国际市场行情的变化（涨跌？趋涨？趋跌？），目前及今后一段时间该产品及同类产品的供求情况（供过于求还是供不应求）; 同类产品之间的竞争如何; 该产品在国内、国际市场的占有率等等。这些都是我们对外报价时应考虑到的因素。如果行情看涨，报价可以适当偏高，但是，如果产品目前已供过于求，适当调价也是理所当然。

4.Customer: old or new customer？ Middle-man, commissioner or real Importer? More buyers, less Sellers? Or more sellers and less buyers now? Usually, offer a favorable price to an old customer, yet a higher price to a new one. Different offers to different customers may result in different effects. 客户对定价的影响：对方是老客户还是新客户？ 是中间商、佣金商还是实际进口商？目前是卖方市场还是买方市场？通常对老客户报优惠价，新客户则偏高，中间商可打折，代理商可报含佣价，报价不同会有不同的效果。

5. Characteristics of the goods: expensive or cheap products 5. Characteristics of the goods: expensive or cheap products? seasonal products or not? Usually，higher value, higher price. 产品本身的特点对定价的影响：所交易商品是高档货？低价货？还是季节性货物？一般而言，价值高的产品，在对方可接受的范围内尽量报高价。 6. Price terms: To show costs and liabilities between the sellers and the buyers. Prices are different on different price terms. 价格术语用于区分买卖双方的费用和风险。价格术语不同，几个也就不同。 7. Other terms and conditions: terms of payment, delivery, quantity, packing, currency (hard or soft currency and the fluctuation of exchange rate may influence the price. 其它交易条款：支付、交货、数量、包装、币种（软通货、硬通货、汇率）等条款均有可能对定价产生一定的影响。如订货量大，报价自然偏低，要求将交货期提前，价格可能就要调高，报价货币有下跌的趋势，则报价就要考虑到这些金融风险，价格自然也就偏高。

Supplementary materials 报价的策略： 1. 先报价还是后报价？依照惯例，卖方与买方之间应由卖方先报。先报价的好处是能先行影响、制约对方，把谈判限定在一定的框架内，在此基础上最终达成协议。先报价虽有好处，但它也泄露了一些情报，使对方听了以后，可以把心中隐而不报的价格与之比较，然后进行调整：合适就拍板成交，不合适就利用各种手段进行杀价。  当然，先报价和后报价各有利弊。谈判中是决定“先声夺人”还是选择“后发制人”，一定要根据不同的情况灵活处理。一般来说，如果你准备充分，知己知彼，就要争取先报价；如果你不是行家，而对方是，那你要沉住气，后报价，从对方的报价中获取信息，及时修正自己的想法；如果你的谈判对手是个外行，那么，无论你是“内行”或者“外行”，你都要先报价，力争牵制、诱导对方。

2. 高报价高获利。一般而言，报价越高，或者买方递价越低，获利也就越高。比如：你报价一万元，那么，对手很难奢望还价至一千元。 当然，报价也得有个“度”，不能漫天要价，假如你到市场上问小贩鸡蛋多少钱1斤，小贩回答道300元钱1斤，你还会费口舌与他讨价还价吗？因此，采用此策略时，要在对方可接受的范围内报最高的价格。 3. 报实盘还是虚盘。如果行情不稳，报虚盘为好。实盘的有效期对报价方具有约束力。实盘的有效期越长，则报价方在有效期内所负的价格波动，汇率风险也就越大。但有效期如果太短，对方没有足够的时间考虑，也不易达成交易。

Dialogue One A Quotation Based on Different Price Terms

Lead-in We have got to know what we should take into consideration when we work out a quotation. And this price is usually calculated on an FOB basis. In the following dialogue, we will see how to work out a quotation on different price terms, how to quote a price in different currencies.

Explanation and comments on the text 1. Understand the key points of the text Go through the dialogue and answer the questions in Task One. 1）What about the prices on the sheet? Are they quoted on FOB or CIF basis? 2）What price term does the buyer require for Art No.B212? 3) What is the price for Art No.B212 in RMB and US dollars? 4) What is the price for Art No.B212 on the basis of CIF Los Angles and CIFC 2%? 5) What do you think of the price on CIFC 2%? Is it correct?

Supplementary materials 中国银行外汇牌价中现汇买入价、现钞买入价、卖出价、基准价、中行折算价的不同含义 1、卖出价是银行将外币卖给客户的牌价，也就是客户到银行购汇时的牌价； 2、买入价则是银行向客户买入外汇或外币时的牌价，它分为现钞买入价和现汇买入价两种。 1）现汇买入价是银行买入现汇时的牌价。 2）现钞买入价则是银行买入外币现钞时的牌价。 3）现汇和现钞是不同的概念，是外币存入银行后的两种不同形态。钞是可以存入取出的，汇不行，只能兑换成钞才可以取；但汇是可以像汇款一样汇往国外的，钞不行，一定要兑换成现汇。 至于为什么会不同，那是因为银行在外汇交易的过程中会承担风险，所以要控制价差赚取提供服务的费用。 现汇卖出价和现钞卖出价是相同的，即卖出价。 3、基准价是人民银行公布的一种中间价，其他商业银行可在基准价基础上，按照人行规定的浮动范围制定自己的买入、卖出价。 4、中行折算价为中行根据基准价及自身情况确定的中间价 货币名称 现汇买入价 现钞买入价 卖出价 基准价 中行折算价 英镑 1008.38 987.44 1016.81 1005.91 港币 88 87.29 88.34 88.15 美元 681.98 676.52 684.72 683.2

如果商品的价格是每台人民币3万元，FOB上海，改用美元报价时，其公式应为： 2. Explanation and comments on the text 1) Make a quotation in different currencies Look at the following list and decide which exchange rate you can use when you make a quotation in US dollars. 货币名称 现汇买入价 现钞买入价 卖出价 英镑 1005.38 984.18 1013.45 港币 87.95 87.24 88.28 美元 681.59 676.13 684.33 如果商品的价格是每台人民币3万元，FOB上海，改用美元报价时，其公式应为： 30000÷美元的现汇买入价（681.59） ÷100 = 4401.47 or 30000÷美元的现汇买入价（6.8159）= 4401.47

Now you try Suppose the price for Art No. 123 is at 128 yuan per piece on an FOB basis. Now please quote the price in Hongkong dollars. 128 ÷ 港币的现汇买入价（87.95） ÷100 = 145.54 2） Make a quotation on different price terms 实际业务中，经常报FOB, CIF和CFR价格，这三种价格核算分别为：  1．FOB价= 实际购货成本 + 单位产品国内总费用 + 预期利润额 2．CFR价= FOB价 + 出口运费 3. CIF价= FOB价 + 出口运费 + 运输保险 3) Make a quotation on a commission FOB含佣价=FOB净价÷（1 – 佣金率） CFR含佣价=CFR净价÷（1 – 佣金率） CIF 含佣价 = CIF净价÷（1 – 佣金率）  但CIF有其特殊性，所以上述CIF含佣价的公式也可以表述如下：  CIF含佣价=CIF净价÷[1 – 佣金率 - （1 +投保加成率）x保险费率  Suppose the price is $840 on CIF basis, insurance is to be covered for full invoice value plus 10%, premium rate is at 1.2%, please make a new quotation on CIFC5%. (例如：设CIF为840美元，加成10%投保，保险费率为1.2%，如客户要求改报CIFC5%，试求其含佣价格) 解：CIFC5%=CIF÷[1 –佣金率– (1 +投保加成率) x 保险费率] =840÷[1 - 5% -（1 +10%）x 1.2% ] =896.67（美元） 

Comments 案例点评： 在现在出口利润普遍不是很高的情况下，对于贸易全过程的每个环节精打细算比以往任何时候更显重要。国内有些出口企业的外销利润不错，他们的做法是，对外报价时，先报FOB价，使客户对本企业的商品价格有个比较，再报CIF价，说服客户在在国内市场安排运输和保险。这样做，不但可以给买家更多选择，而且卖家有时在运保费上还可以赚一点差价。 

Dialogue Two Making a Firm Offer

Lead-in As we know, making a proper offer is very important in business negotiation. We have got some ideas about how to make a quotation or an offer on different price terms. Today, we will see how to make a firm or a non-firm offer. Now, tell me what is a firm offer and what is a non-firm offer. A firm offer is a definite, clear indication of the offeror, which usually has a validity time, can not be withdrawn (撤回) or revoked (取消) within its validity time. A non-firm offer is not a promised indication made by an offeror , which usually contains some reserved conditions (保留条件). Such kind of offer can be cancelled at any time and it is not binding to the offeror.

Why do the offeror sometimes make a firm-offer and sometimes non-firm offer? 1) Usually, a firm-offer is more practical than a non-firm offer and that’s why buyers often ask sellers to make a firm offer instead of a non-firm offer. 2) If the market tends to go up, it will be favorable for sellers to make a non-firm offer instead of a firm-offer, which will enable them to adapt to the changing market and conclude the business at the best price. Even the buyers ask for a firm offer, the sellers should try to shorten the validity of the firm-offer.

Explanation and comments on the text 1. Understand the key points of the text Now, go through the dialogue and see on what occasion the seller makes a firm offer. 1) What is the buyer interested in? 2) What about the market for aluminum oxide? 3) What quantity does the buyer want to buy? 4) What offer does the seller make? A firm or a non-firm offer? Is it favorable for the sellers to make a firm offer under such circumstance? 5) In case you are required to make a firm offer when the market tends to go upwards, what are you going to do? Is the seller willing to extend the validity of the offer? (KEY: Shorten the validity of the offer)

Comments 案例点评： 报实盘还是报虚盘是报价的策略之一。实盘一般比较接近实际价格，所以买主要求卖方报价时多要求报实盘。其次，实盘一般均有有效期，在有效期内，报价方不得撤回报价，一旦对方在有效期内接受该报价，则报价对双方均有约束力，因此，报实盘相对而言回旋的余地较少，一般要谨慎行事。虚盘的特点是所报价格可以随时撤回，报价对双方均无约束力，所含水分也比较多。一般而言，行情上涨，变化较大的情况下，报虚盘对报价方比较有利，即使对方坚持要求报实盘，也要尽力将有效期缩短。本案例符合上述所提背景，因此，在买方坚持报实盘时，卖方所能做的一是缩短报盘的有效期，其次在报价时应将市场变化给报价带来的影响考虑进去，报价时价格适当提高为妥。

Dialogue Three A Quotation with a Discount

Lead-in We have got to know how to make an offer on different price terms. Also we have learned how to make a firm or a non-firm offer. In the following, we will learn how to allow a discount when we make an offer.

Explanation and comments on the text 1. Understand the key points of the text Go through the dialogue and answer the questions in Task One 1) What does the buyer want to buy? 2) What about the sales of the seller’s live abalones? 3) What quantity does the buyer require? 4) Is the seller willing to make a quotation first? 5) Does the seller usually allow a discount? 6) What discount does the seller grant for this deal?

Comments 案例分析： 折扣是一种常见的促销手段。折扣报价是指对基本报价作出一定的让步，直接或间接降低价格，以争取顾客，扩大销量。其中，直接折扣的形式有数量折扣(Discount in quantity)、现金折扣（Discount in cash）等。间接折扣的形式有回扣和补贴。 所谓数量折扣是指按购买数量的多少，分别给予不同的折扣，购买数量愈多，折扣愈大。数量折扣的促销作用非常明显。本案例也属于这种情况。 运用数量折扣策略的难点是如何确定合适的折扣标准和折扣比例。假如享受折扣的数量标准定得太高，比例太低，客户将感到失望；购买数量标准过低，比例不合理，又起不到鼓励客户购买和促进销售的作用。因此，应结合产品特点、销售目标、成本水平、利润幅度等因素来制定合适的折扣标准和比例。

Supplementary materials 现金折扣 （Discount in cash） 现金折扣是对在规定的时间内提前付款或用现金付款者所给予的一种价格折扣，其目的是鼓励客户尽早付款，加速资金周转，降低销售费用，减少财务风险。采用现金折扣一般要考虑三个因素：折扣比例；给予折扣的时间限制；付清全部货款的期限。提供现金折扣等于降低价格，所以，在运用这种手段时要考虑商品是否有足够的需求弹性，保证通过需求量的增加获得足够利润。

回扣和补贴 (Rebate or allowance) 回扣是间接折扣的一种形式，它是指买主在按所定价格将货款全部付给卖方以后，卖方再按一定比例将货款的一部分返还给买主。补贴是以特定形式所给予客户价格补贴或其他补贴。比如，当中间商为企业产品提供了包括刊登地方性广告、设置样品陈列窗等在内的各种促销活动时，生产企业给予中间商一定数额的资助或补贴。又如，对于老客户，将旧货折算成一定的价格，在新产品的价格中扣除，客户只支付余额，以刺激消费需求，促进产品的更新换代，扩大新一代产品的销售，这是一种补贴的形式。

实训 Language practice. 1) May I have your latest price sheet? I. Sentence translation. 1) May I have your latest price sheet? a) May I have your price list? b) May I have your latest price sheet? c) May I have your business card? 2) Please quote me the lowest price for… a) Please quote me the lowest price for Art. No. 146. b) Please quote me the lowest price on CIF basis, inclusive of a 2% commission. c) Please quote me the lowest price for 500 tons of rice, stating the earliest possible time of shipment. 3) We are interested in your aluminum oxide a) We are interested in the cooperation between us in the future. b) Our customers are interested in your new products this year. c) We are interested in doing business with you.

4) Could you give me some idea about your price? a) Could you give me some idea about your packing? b) Could you give me some idea about your business scope? c) Could you give me some idea about the earliest time of shipment? 5) If you place the order right away, we will consider it. a) If the order is a sizable one, we will consider it b) If the price is favorable, we will consider it c) If shipment can be made in advance, we will consider it 6) What price do you think is reasonable? a) What price do you think is competitive? b) What product do you think will sell well? c) Which day do you think is suitable?

2. Translate the following into English orally: 1) If your quotation is competitive, we’d like to place an order for 20000 pieces. 2) Here is our quotation: FR250 per ton CIF Marseilles. 3) If your order reaches 10000 yards, our price will be even more favorable. 4) Could you please make us a firm offer for 2000 kilograms of mangoes right now? 5) I’d like you to quote me the price on CIF basis instead of on FOB basis. 6) 500 sets of dinner utensils, at £ 26 CIF London, for shipment in July, 2006. The offer is valid for 3 days.

7) 2 metric tons of frozen sea fish, packed in cartons, at USD2500 CFR New York, for shipment on or before August 30,2006. The offer is subject to your reply to us within three days. 8) 200 kilograms of Chinese Black Tea, first grade, packed in boxes, at HKD360 FOB Shanghai, for shipment no later than July 30,2006. The offer is subject to our final confirmation. 9) 10,000 yards of Chinese silk, light colored, USD35 per yard CFR New York, less 2% discount, for shipment within 45 days after receipt of the covering L/C. 10) 10,000 pieces of silk pajamas, red, yellow and white, equally assorted, USD150 per dozen CIF Los Angeles, inclusive of a 2% commission. Shipment will be made in June/July in two lots. The offer is valid for three days.

3. Translate the following dialogues into English orally: A: Good morning! Can I help you? B: I’d like to have a look. A: Well, take your time, please. B: Have you got the latest price sheet? A: Yes, here you are. B: Thank you. What’s your quotation for this kind of air-conditioner? A: 3400 yuan per set FOB Shanghai. B: What is it in US dollars? A: Just a minute, please. I will work it out for you at once. B: How much? A: USD500 per set FOB Shanghai. B: Do you allow any discount? A: If your order is more than 20 sets, we can allow a 5% discount. B: I’d like to order 30 sets for shipment in June. Please quote me a favorable price. A: The price for 30 sets is USD475 per set FOB Shanghai. B: Good. Thank you.

4. Have a try 1. Suppose you are a salesman or saleswoman in a Chinese company and you are making a quotation to a foreign customer. Judge whether the following quotations are correct or not. If not, why? 1）CIF Shanghai is incorrect. CIF should be followed by a foreign port instead of a Chinese port. 2) CNY 25 and CFR England are incorrect. Chinese currency is still under controlled and it can not be used in a quotation. While CFR should be followed by a foreign port instead of a foreign country or region. 3) Correct 4) CIFC Hongkong should mention the specific percentage of the commission. For example CIFC2% Hongkong. 2. The price should be as follows: CFR含佣价=CFR净价÷（1 – 佣金率） CFRC2% = USD100 ÷ (1-2%) = USD102.04