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In Wenzhou, if I ask the factory to quote an FOB price, would they be able to reduce the product price for me by claiming the tax rebate?
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I'm from Wenzhou and I doYes, recently when discussing orders with the factory, I asked them to quote the FOB price. They verbally promised that they could reduce the price for me by using the tax rebate. I want to clarify whether the tax rebate earned by the factory can actually translate into a price discount for me? Are there any compliance risks or negotiation strategies involved in this?
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
From a compliance perspective，your question touches upon the core misunderstanding of export tax rebates. Export tax rebates are input taxes refunded by the state to encourage exports and do not constitute a source of corporate profits. If the factory promises to reduce prices for you using the tax rebate funds，there are significant compliance risks: First，the tax rebate funds typically take 2-3 months to arrive，and allowing you to benefit in advance will shift the pressure of capital chain to the invoicing process，potentially leading to the risk of fraudulent VAT invoices. Second，F(xiàn)OB quotes should be based on actual costs plus reasonable profits. Using tax rebates as a bargaining chip for price reductions constitutes price fraud，and customs inspections may identify this as underreporting export prices，resulting in fines or even degradation penalties. Last year，a company in Wenzhou was fined and had taxes retroactively collected by the tax bureau for similar operations. We recommend that you require the factory to provide a clear cost breakdown table，with the tax rebate portion listed as a separate financial gain rather than directly offsetting the purchase price.
Cindy ChenYears of service：3Customer Rating：5.0
Key Account ManagerStart a Chat
The FOB price includes all costs incurred by the factory before the goods are delivered to the ship's side at the port of departure, including raw materials, labor, domestic freight, customs declaration fees, etc. Tax rebates can indeed reduce the factory's overall costs, but this money is refunded by the state after the factory pays input tax in advance, rather than representing additional profits. In practice, whether the factory is willing to share the tax rebate benefits depends on the order quantity and your negotiating position. Wenzhou factories usually factor in tax rebates when quoting prices, but publicly claiming to "reduce prices with tax rebates" is more of a marketing tactic. The key factors to consider are: first, whether the FOB price is already lower than the market level; second, whether the payment method allows the factory to quickly recover its funds. It is recommended to ask the factory to quote two prices - a tax-inclusive FOB price and a tax-exclusive FOB price, so you can clearly see the true potential for tax rebates. Additionally, under the FOB clause, you should specify a freight forwarder to avoid the factory profiting from the logistics process.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
This question touches on the core negotiation skills in foreign trade. If you directly ask the factory to reduce prices with tax rebates, it will make you appear unprofessional and may prevent you from securing a favorable price. The correct approach is: "Mr. Li, given our long-term cooperation, we hope the benefits from tax rebates can be reflected in the price. Could you please tell us how much the FOB price could be optimized?" This not only saves face for the other party but also leaves room for negotiation. Wenzhou factory owners are straightforward but shrewd. They usually factor tax rebates into their quotes. Your focus should not be on who owns the tax rebates, but rather on securing the lowest market price. Here's a three-step strategy:
1. First, compare FOB quotes from three factories to identify the bottom price.
2. Then, propose sharing tax rebates as a final bargaining tactic.
3. Finally, offer to increase order quantities or accelerate payments in exchange for greater discounts. Remember, tax rebates are the factory's legitimate income. Your goal is to minimize total costs, not to split their rebate payments. Maintaining a "we're a win-win partnership" attitude during negotiations will yield better results than direct price haggling.