Price negotiation with Asia: why the price agreed in January doesn't always survive until May

The Frustration That Repeats Itself

One of the most frustrating situations in international sourcing is this: you negotiate a price with your supplier in Asia in January. You confirm it by email. You incorporate it into your cost structure and present your collection to the client with that calculated margin. And in May, when the time comes to confirm production, prices have changed.

Not always dramatically. Sometimes it's 3%. Sometimes it's 8%. But always in the wrong direction.

Is the supplier acting in bad faith? In most cases, no. What's happening is more complex — and understanding it is the first condition for managing it well.

Why Prices Move Between Quote and Confirmation

The price of a garment in Bangladesh or Myanmar is not a fixed figure the factory freely chooses. It's the result of several components that have their own market dynamics:

Fabric. It's the largest component in the cost of most workwear garments — generally between 50% and 70% of production cost. Fabric is bought in China, India, or Bangladesh itself. Its prices fluctuate with the price of cotton, polyester (derived from oil), dyes and finishes, and the energy costs of dye houses. A 5% change in fabric price can move the final garment cost by 3%.

Trims. Zippers, buttons, closures, elastic, piping, labels. In technical workwear garments, the weight of trims can be relevant. And they also have their own price cycles.

Labour cost. In Bangladesh and Myanmar, the minimum wage in the textile sector is periodically reviewed. When there's a minimum wage update — which in recent years has happened in both countries — the impact is passed on to labour cost and therefore to the final garment cost.

Exchange rate. Orders in Asia are generally negotiated in dollars. If the European company buys in euros and the euro depreciates against the dollar between January and May, the euro price of the same dollar-priced garment goes up, without anyone having changed anything.

What the Industry Says About When a Price Is "Fixed"

There's a fundamental difference that many European brands don't understand until they experience it: a price offer is a valid estimate at the time it's made, based on market conditions at that moment. It is not a guaranteed price until production is confirmed with a signed Proforma Invoice (PI) and an initial payment made.

This isn't arbitrary. Factories don't buy fabric until they have the confirmed order. If the fabric price changes between the offer and the confirmation, and the factory already has its production line committed, the price revision isn't a tactical manoeuvre: it's an economic reality.

That said, there are enormous differences between honest management of those revisions and one that isn't. A good partner explains the reason for the change, provides evidence of the market movement, and looks for ways to absorb part of the impact. One who simply says "prices have gone up" without further explanation is not a partner you want to work with long-term.

How to Protect Yourself Without Breaking the Commercial Relationship

Confirm the PI as soon as possible. The PI signed with the advance payment is the moment the price is contractually fixed. The sooner you do it, the lower the risk of revision. If there's a long period between the initial negotiation and the real order confirmation, assume there may be price movement and talk to your supplier about how to manage that gap.

Include a price validity clause in the offer. When you receive a price offer, ask that it explicitly include its validity period. "Price valid for 30 days subject to confirmation" is a standard and reasonable formulation. If validity is 30 days and you take 90 to confirm, you can't expect the price to hold.

Separate fabric price from making cost in complex negotiations. In large-volume orders or with volatile-price fabrics, there are models where fabric cost is managed as a variable component — linked to market price at the time of purchase — and making cost and trims are fixed. This gives more transparency and allows both parties to better manage uncertainty.

Fix colours and specifications before negotiating final price. A price negotiated with the fabric composition and colour well defined is much more solid than one negotiated on open specifications. "Price for a 65/35 polo shirt navy blue reference X" is completely different from "price for a work polo" — the second has room to move in any direction.

Honesty as the Basis of the Commercial Relationship

Having said all the above, there's something more important than any contractual clause: the quality of the relationship with your supplier.

A factory you've been working with for several years, that knows your product, that knows you'll come back season after season, has a real incentive to absorb part of market movements and to be honest when it can't. A factory that sees you as a one-order client has fewer reasons to do so.

The price you pay in Asia is not just the number on the invoice. It's also the result of how long you've been building the relationship with the people who make your garments.