Chinese Negotiation: Obama the Mystery Man

A common negotiating tactic in China is the introduction of an unknown new party to the negotiating team.  In China your counter-party may use a local twist and tell you that a new senior person (or ministry, bureau, partner, owner, boss, etc) who you will never meet has suddenly demanded new terms or concessions.  Your counter-party – whom by now you are quite familiar with – will throw up his hands and sigh.  “This is China,” he’ll tell you sadly – meaning that you have no recourse or options other then starting over and erasing much of the progress you’ve already made.

Don’t be surprised if the Chinese business community approaches the Obama administration as the ultimate Mystery Man – with the ability to control regulations, visas, taxes, trade restrictions, policy initiatives and product quality bench-marks. Right now all of China is in the position of dealing with an unknown new counter-party whom they will have to accommodate but will never deal with directly. Eventually you will be able to use this to your advantage.  But in the short term, your Chinese counter-party may feel that the most cautious, risk-reducing behavior is simply to put all talks on hold and wait until they have more information.  You probably don’t want this to happen.

Chinese negotiators dislike uncertainty more than most counter-parties

Chinese negotiators have less tolerance for uncertainty than Americans.  Europeans tend to be in the middle when it comes to managing uncertainty.  Old-style Chinese negotiators freeze up when confronted with the unknown, and will literally refuse to continue discussions until they have more information.  Modern Chinese negotiators will keep talking, but they still consider the deal on hold until the situation becomes clearer. 

If you are already at an advanced stage of negotiation with a Chinese counter-party, your #1 priority right now is to make sure that the deal stays on some kind of track.  The Chinese impulse is probably to lay low and back off from making any commitment until they know more about what their new counter-party is really after.  That may mean putting your entire negotiation on hold – and the worse part is that they may never even tell you about their decision.  They’ll just decide amongst themselves not to take any action and just keep the negotiations dragging on forever – to gain more information and avoid losing face.  

Your job is get the Chinese to frankly discuss their concerns about the new administration, and try to convince them that they are still dealing with a stable, predictable, committed partner.  YOU may not feel that Obama, Pelosi or those yet-to-be-named cabinet appointees have anything to do with your deal – but your Chinese counterparty probably feels differently.  This is where you must leverage the personal relationships that you have built up during the preceding discussions and meetings.  You will start by reassuring them, and subtly alter your relationship to become their ‘big brother’ and guide who can act as an advisor in this and all future dealings with American business partners under the new administration.  Remember – there hasn’t been a change in US administration for 8 years, and most Chinese negotiators equate the Republican Party with status quo and stability.  You can exploit their insecurity and inexperience and enhance your own position and authority in the negotiation.

Culture & Risk

Remember that you and your Chinese counter-party assess risk differently in 2 dimensions right now.  First, you differ in your assessment of the riskiness of a new political party controlling Washington.  Second, you differ as far as ‘best practices’ for handling risk and uncertainty in general. 

 If you ask a Chinese, American and European manager, “which is worse – a bad decision or no decision?” the American is likely to say that a bad decision is better because it moves you forward and breaks the deadlock.  Traditional Chinese managers tend to say that a bad decision is worse and that the prudent course is to do nothing.  Remember – Chinese business is more bureaucratic and hierarchical than American business, and there are fewer (individual) rewards for success but much harsher penalties for failure.  (If you ask a European manager, he will likely spend hours drilling you about the definitions, parameters and stakeholders involved in deciding which decisions are ‘bad’ and what ‘no decision’ really means.)

In traditional Chinese business, time is NOT money – but it is for you.  You have to keep those Chinese counter-parties at the table by convincing them that you are still a credible, stable, reliable partner who can now offer the added benefit of acting as guide in the mysterious new landscape of a Democratic administration.  

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