Think about this for a minute...
If a chinese lady walks into a grocery store in China and picks up a bottle of coke. upon getting to the cash register to pay, will she pay in US dollars or in Chinese local currency? of course in Chinese currency. So, if a chinese local gets a fixed price when buying inside china, why should you and I pay more for the same products simply because we are foreigners?
Do you think prices of goods in china's local markets change based on how the US dollar is doing against China RMB? Nope. Prices of locally produced goods in china remains the same irrespective of whats going on in forex market.
You may find this hard to believe, but an average Chinese supplier makes more money trading foreign exchange with your money than he makes selling products to you.
The moment your supplier knows you're a foreign buyer, he will immediately add up to 30% to the price he quotes you as a forex buffer. This is one secret your chinese supplier is definitely hiding from you.
So what's a forex buffer? It's simply a safety cushion your supplier adds to your price due to daily fluctuations in foreign exchange rates. For instance, if the exchange rate of US Dollars to chinese RMB is 1:6 on the day your supplier gives you a price of $2 per piece for a product you're buying from him. What happens if 2 days later the chinese RMB loses 10% of its value and the exchange rate is now 1:6.6?
This means your supplier just lost 10% on that transaction if he sold to you at the price he quoted you 2 days earlier.
No one likes to lose money, so does your supplier. So in order to avoid this loss due to the instability of foreign currency exchange rate, your supplier typically adds 10-30% to his price.
The simple solution to this is to get quotes in RMB currency and also pay in RMB.
You're probably thinking, "So I should just tell my supplier I only want to pay RMB and I will get a cheaper price?" NO. Your supplier will fight and resist this idea. In fact he may just quote you a RMB price based on current Forex rate of US Dollar to RMB to just to make you shut up. Is this a good deal? No. Does this mean you're getting a lower price, NO.
There's a way to trick your supplier into bending to your rules and give you the same RMB price he would normally sell to a chinese local company.
A QUICK TIP:
Avoid sending payment to your supplier by wire transfers or western union. In fact never send payments through your bank! You will save a ton of money by sending chinese local currency through a forex batch processor. If you must send US dollars, still use a forex platform - It's half the cost or in most cases, free!
There was a time I would pay over $1000 a month just in bank wire fees! Now I batch my payments through a forex clearing platform. What does this mean? I send all my clients money into a central account and then route them to each supplier's RMB account in china. THIS SIMPLE TIP HAS BEEN SAVING ME OVER $1500 EVERY MONTH IN BANK FEES. Genius, right?