How to Negotiate with the Chinese

FROM ChinesePod wiki: http://www.chinesepod.com/wiki/index.php?title=How_to_Negotiate_with_the_Chinese

Having lived and worked in Shanghai for a number of years, I have had a number of opportunities to negotiate with the Chinese. Here are some of my observations.

1) There is a huge difference between dealing with a 25-35 yr old representative of a JV, and a 35-50 yr old government official or private businessman. With the former, things will be fairly straightforward, but with the latter, prepare yourself for some difficulty. This is because people over 35 grew up during the cultural revolution, and their early careers were in the communist era where success depended more on politics, willpower, and guanxi, than the ability to get things done. Anyone that rose to the top in that environment is likey to be a tough opponent.

2) Make sure you have leverage. This is something that you should be considering well in advance of your negotiation preparations. This applies especially to business partnerships. For example, try to keep control of all the customer info, or the finances, or the distribution channels. The key is to set it up so you have a "nuclear option", that will stop their business. Ideally, you will plausibly be able to continue even if they get stopped (if you manufacture together, but you control the customers, you could set up an alternative manufacturing cooperation and continue to sell, whereas they would be stopped in their tracks).

3) Set up an alternative. If you are renegotiating a partnership, go to the effort of setting up an alternative partner, and get into discussions. The knowledge of this back-up will really help you keep from being pressured into things when your negotiation gets tough, and if all goes wrong with your original partner, you will have something to move forward with.

4) Emotionally prepare yourself to be hardballed (it can knock you off balance if you aren't ready for it). It is quite standard for the Chinese to start out with outrageously low offers or high demands. If you don't accede, they will say that it is useless to talk, let's just abandon the project. The meeting will end and then they will make it difficult to contact them etc. This is just a technique, but it is very difficult to deal with unless you have point 2 and 3 worked out.

5) Have a back-door channel. It is quite common in China to have intermediaries. Way before you get into the negotiation, you should figure out who could play that role, and give them opportunities to build a working relationship with your adversary. Then, if you reach an impasse, you still can send and recieve messages. The intermediary can also help you set the tone of meetings before they happen, by giving indications to your partners of how you are feeling or what you are thinking.

6) Resist the urge to initiate compromise. Westerners often feel that the way to break a deadlock is to offer a concession, in the understanding that it will be reciprocated, thus bringing both parties closer to agreement. This doesn't work in China, and your concession will be taken, but often nothing will be offered in return. Obviously, eventually both sides need to compromise, but westerners always soften too early, and this is percieved as weakness, which encourages the Chinese to add even more demanding concessions.

All this sounds very aggressive, but in fact it is the best way to have a fruitful harmonious and prosperous working relationship. If you are well prepared, and ensure that you have strong leverage in the relationship, your partners will feel their is nothing to gain from a power grab, and this will let both of you focus on working together to get things done.

Retrieved from "http://www.chinesepod.com/wiki/index.php?title=How_to_Negotiate_with_the_Chinese"


Tags: chine, china