I always tell students and clients to build in a healthy range of variables at the start of any negotiation. Chinese negotiators tend to focus on money as a variable even more than other types of counter-parties. While money is a key success factor in a negotiation — it isn’t the only one. Money has the advantage of being universally understood, whereas another key negotiating variable – TIME – is not.
Chinese and Western negotiators have very different concepts about time, and this disconnect has caused a lot of headaches for the western side. There are two dimensions of time when it comes to negotiation — the time the actual negotiating process takes & the associated deadlines, and the schedules and timetables that make up key variables in the delivery or execution of the final deal.
Let’s take a look at how differing concepts of time may impact on your China negotiations.
Chinese tend to be more patient than their western counter-parts.
The Chinese are great at waiting. Patience is a far more important virtue in China than it is in the go-go West where we prize decisiveness and action. Your Chinese counter-party knows that you are in a hurry and is willing to use that against you. But patience is no mere bargaining tactic. I’ve lived in China for a while and am still impressed by the Chinese capacity to wait patiently in situations that have made my blood boil. This is as true in business as it is in their personal lives. Sure, plenty of Chinese bosses bark about how busy they are and how much of a hurry they are in, but those tend to be special situations. Western counter-parties in China had better get used to the fact that the other side plans on waiting them out – no matter what the deal on the table may be.
Use time and deadlines against you
Just because they are patient doesn’t mean they don’t know how to operate a wristwatch and calendar. They know that you are in a hurry – and many Chinese counter-parties are expert at using your impatience as a tactic. I keep hearing from western negotiators who have scheduled 5 days in Shanghai to sign a deal — but the first 4 and a half days were wasted on factory tours, banquets and pointless meetings. By the time the Chinese side was really ready to sit down and ‘talk turkey’ there was hardly any time left and the American side had to agree to terms that were sub-optimal and loosely worded. This is not a coincidence. A Chinese counter-party will always ask when you are leaving. They even offer to check your flight and arrange a driver.
Even if you are able to agree on a timetable and roll-out schedule in your negotiation and have them clearly stated in the contract, you are still not home free. Chinese consider business deals to be very open-ended and think it is normal to renegotiate whenever it is beneficial. One of those cases may very well be deadlines, timetables and schedules. In the US you can sue a business for fees and damages in the event of a late shipment or a missed deadline. While that may be technically true in China, the system here is much slower, more opaque, biased and confusing than back home. And since Chinese civil law doesn’t assess punitive damages, you may find the proceedings much more expensive than the outcome warrants. Law suits are a last resort in most places – but in China they are usually not a viable option.
Many western negotiators have suffered because of cultural differences in China — and the time issue is at the root of much of that friction and misunderstanding. Be sensitive to the different ways you and your counter-party view time, and make sure you discuss timetables and schedules early in the negotiation process. Build in incentives for compliance (which works much better than penalties for failures in China) and make sure the rest of your deal points (payment terms, credit, transfers of technology, etc) are congruous with your timetable.