China Negotiation Survey Results: Chinese Negotiating Counter-parties and Age.

The most successful Western negotiators in China are focusing on middle-aged counter-parties from private Mainland Chinese enterprises. It probably comes as no surprise to experienced negotiators that there was a strong correlation between high success rate and older counter-parties. American and European deal-makers reported the highest percentage of successful negotiations when talking to Chinese in their 40s and 50s – and avoiding those in their 20s and 60s. Low success negotiators tended to meet with a younger cross section of potential counter-parties. Westerner who ranked themselves as moderately successful negotiators (50% of their negotiations led to signed deals) in China met with EVERYONE – from the 20s to the 60s.

The Survey
The survey was running for 1 month and received approximately 160 responses.
The question being discussed here was: ‘Did you successfully negotiate deals?’ The range of answers was A) Every negotiation yielded success (100%); B) Most negotiations yielded success (75%); C) Half my negotiations were successful (50%); D) A few successes (25%). Aggregate responses were:

100% successful: 8%
75% successful: 52%
50% successful: 24%
25% successful: 14%

The next step was to look at age of the Mainland Chinese counter-party. Survey respondents were asked to judge the age of their negotiating partners. For this question, multiple answers were possible – with the average respondent reporting that they sat down with members of 1.7 age groups. The responses were as follows:

Under 30: 24%
30 – 39: 54%
40-49: 57%
50-59: 27%
60+: 11%

American and European responses were isolated and divided into 3 groups – High Success (75 & 100% success rates), Moderate Success (50%) and Low Success (25%) and then filtered by the age groups they were spending most of their time with.

Low Success Westerners – Western negotiators in China who had trouble doing deals were spending lots of time with younger Chinese negotiators. Of the ‘Low Success’ category, 46% reported meeting with 20-somethings. In their defense, they seemed to be meeting with anyone who would talk to them – the average low-success negotiator was negotiating with members of 2.08 age groups.

Moderate Success Westerners –Westerners reporting 50% success rates were still spending lots of time with young Mainlanders – 40% of moderately successful respondents were spending time with the sub-30s. The key difference was the introduction of an older counter-party. 27% of moderate successes were meeting with ML Chinese over the age of 60, compared with only 8% of the low-success dealers. This group of Western negotiator was seeing an even wider range of counter-party than the low-success negotiators — the average respondent was meeting with 2.13 age groups.

High Success Westerners –Americans and Europeans reporting the most successful negotiations in China were meeting with a smaller, older set of counter-parties than their less successful countrymen. The interesting thing is not that they are seeing more middle-aged Chinese than the low-success Westerner – but rather that they are meeting with significantly fewer members of the younger and older demographics. Only 9% of high-success dealers were meeting with those in their 20s. Likewise, the share of successful negotiators meeting with 60+ Mainlanders dropped to only 4%. The average high-success negotiator was only seeing members of 1.54 age groups – mostly in their 40s, though 30 & 50-somethings were well represented as well.

Implications – Traditional practices in a radically different environment:
These demographic patterns won’t seem strange to experienced Western business people, since they approximate the trends that we’d expect to see in NY or London. The same study indicated that when Mainland Chinese negotiate with other Mainlanders, they tend to focus almost exclusively on younger counter-parties – possibly member of their existing network or peer group. So the question emerges – are Westerners applying their traditional best practices in China (consciously or unconsciously), or do economic forces impose this particular business reality in boardrooms from Anaheim to ZhuHai?

Common ground – the Reliable Middle-aged Manager:
Two China myths dearly loved by the business press are the Whiz Kid Entrepreneur who is transforming China into a free-market paradise and the Backroom Patriarch who pulls strings from a position of authority, respect & secrecy – and both seem to be disproved by these findings. A common trend about commercial enterprises all over the world is that middle managers with 15-30 years of experience are pulling the trigger on just about all significant decisions. Younger employees – regardless of their ability, talents or genius – are most highly valued when they carry out other people’s plans and strategies. Older, more experienced managers are preferred as strategic planners, goal-setters or supervisors. Day-to-day operational decisions are usually made by middle-aged managers – either individually or in committees.

Decision-making with Chinese Characteristics
Does this mean that Western deal-makers can simply apply their tried & true methods and tactics in China? Not really, since identifying and reaching the real decision-maker in China is a big part of successful deal-making. Westerners have to be aware of the differences between the negotiation process at home and here in China.

    Access is tougher.
    Chinese decision-makers are harder to identify and make contact with than those back home. In the US a reasonably aggressive salesman or purchasing agent can expect to ‘climb the ladder’ and move closer to the true decision-maker as his proposal gains traction within the target organization. You can’t assume the same is true in China. Yes, commercial practices in Shanghai and Shenzhen are getting more rationale and transparent. Language barriers, non-economic factors and impaired information flows all make gaining access to the right people much more challenging in China than in the West. Newcomers to China are advised to begin their research by identifying key decision-makers and developing a plan for gaining access. In the early days, worry less about closing deals and more about developing good channels of information.
    Gatekeepers are more prevalent
    I still remember one fateful meeting early in my career when a prospective buyer told me that the company president wanted to see me. I was a bit flustered and apprehensive at first – and then confused as the Big Boss walked out of his office, looked me up and down for a few seconds, shook my hand, took my card and then abruptly returned to his desk. ‘Wanted to see me’ was right – he wanted to make sure that I actually existed and wasn’t a raving lunatic or shifty scammer. Every US manager knows about due diligence and the need to personally verify that a legitimate counter-party exists. This is not the way in most China businesses. Gatekeepers are more common and play a larger role here. A lot of those younger Mainland counter-parties are not really negotiators – they are gatekeepers whose instructions are to keep the boss from being disturbed. Many Western negotiators make the mistake of assuming that they will work their way up the decision-making chain of command by starting at the bottom. It tends not to work too well. Successful Westerners tend to develop reliable methods of ‘ambushing the DMU’ and initiating direct contact with the real decision-maker.
    High turnover means bad habits may be transmitted & institutionalized
    A danger for Western negotiators in China is high turnover – both within their own organization and within their Chinese counter-party’s team. With an average tenure of 18 months, many China-based negotiators are switching jobs before they’ve had the opportunity to significantly improve their deal-making skills. This is particularly dangerous for Western managers running teams in China, since there is an excellent chance that your new recruits are being trained in ‘negotiating worst practices’. Anyone who has been to one of Shanghai’s many cash-bar networking events will know all too well how easy it is for young expats to spend months chasing down dead-end leads and non-starter business development schemes. If they were hanging around long enough to build their skill level and learn from past mistakes, then this wouldn’t be a major problem. But if your recruits only last a few months before they wash out or move on, then your organization may be institutionalizing rookie mistakes. That explains why unsuccessful deal-makers are spending so much time with young counter-parties. These are the newbies networkers who can’t yet tell the difference between a Tsingdao-fueled party-boy with business cards and a viable business prospect.

Next: Types of Mainland counter-parties

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