To Get Rich isnt always so glorious: Variables and Environment in China Negotiations

In 1978, Deng Xiaoping ushered in the era of New China with his trip to the South and one of the most famous slogans that may never have been uttered – ‘to get rich is glorious’. At the time, China was a poor nation with relatively limited impact on the global economic structure.

In 1995, First Lady Hillary Clinton arrived in China to challenge Beijing to respect the human rights of women and aids victims, declaring, “Women’s Rights are Human Rights and Human Rights are Women’s Rights”. She demanded the China’s leaders stop repressing the rights of minorities, religious and women.

2007 – Candidates Hilary Clinton and Barrack Obama co-sponsor a bill threatening Beijing with sanctions and punishment if they don’t stop manipulating the rmb – a de facto barrier to trade.

On her recent trip Sec of State HRC again challenged Beijing – to buy more treasury bonds.

What happened?

In negotiating terms, we are witnessing how shifts in environment dictate changes in variables – and attempts to alter the negotiating agenda.

HRC has led the new administration’s charge to rewrite the agenda of China-Western negotiation. She introduced a phrase that we’ll all be hearing a lot from now on. “We are all in this together”.

Students of negotiation can draw 5 important lessons from this shift in negotiating tactics.

    Lesson 1: Variable selection is key to successful negotiation. Variables are really nothing more than a carefully articulated list of your goals. If you don’t ask for it, it is unlikely that you will get it. The US’ #1 variable right now is to involve China DIRECTLY in the global economic recovery. Treasury purchases, increased overseas investment, a richer RMB and open trade are the new key variables. Human rights and democracy are the new ‘throw-aways’.

    Lesson 2: The negotiating environment can’t necessarily be changed – but it can be monitored and analyzed to develop relevant variables and priorities. We are seeing two environment shifts – China’s long-term rise in wealth, influence & power AND a global recession. Politicians on both sides of the Pacific must adjust to the shifts or be left behind. Protectionist Americans and xenophobic Chinese are both in danger of being outflanked in their own INTERNAL negotiations. See LIM discussion

    Lesson 3: Agendas must be negotiated. They are the key to successful negotiation. Mrs. Clinton is trying to alter the negotiating agenda by introducing the concept of ‘shared fate’ and cooperation. 10 years ago this would have been laughable – but now that it’s on the table it will be tough to remove. Look for Chinese leaders to talk more about “China helping the world by remaining strong and focused on China”. It will be a difficult bargaining point for them to win.

    Lesson 4: Power Balance shifts – and weakness quickly turns to strength and vice versa. Remember when China was head of the non-aligned bloc and taking strength from the moral high ground of poverty and righteous struggle? Suddenly China has become the rich kid living in relative luxury — and being asked to help out others. Who was it that talked about the weak overcoming the strong? Lao Tse, and to a lesser degree, Sun Tse. Chinese politicians used to take comfort from this notion – now it has turned around on them.

    Lesson 5: Be careful what you ask for. You may get it. From Mao to Deng to Jiang, modern Chinese leaders have demanded respect and their rightful place on the world stage. Now now that China has achieved it Hu and Wen will have to manage it. You’ll notice that present day Chinese leaders no longer talk about China deserving a seat at the table. It’s looking like a very expensive chair.

Beijing and it’s conservative elements are coming under increasing stress to change their behavior and grant concessions – due to their successes and the failures of their counter-parties. This is often the case in negotiations where power balance shifts rapidly. We are seeing the same thing in relationships between buyers and sellers as shortages disappear & buyers become scarce.

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