Negotiating in China: Calculators vs. Calendars

Americans negotiating deals in China love whipping out their calculators and ‘getting down to business’. Chinese counter-parties, when confronted with Western hard-assitry, have a big problem. They don’t know whether they should pretend to be impressed or pretend to be confused. It’s a safe bet that your Mainland Chinese counterparts aren’t going to let out a sigh of relief or give one another high-fives, but they could. When Westerners get antsy to sign a deal, the Chinese side has generally already won.

Put away the calculator and take out your calendar. If you want to make it in China, you have to play a longer game. Three areas where Westerners need to think about their planning horizon are:

    1) Timetable for entry. When you say fast, they hear expensive. Trying to fast-track your first China deal is like mashing down the accelerator when you have no idea where you are driving. You’ll probably get lost in a hurry. You need a schedule for research, network-building, registration and business entry. There are few certainties when doing China business but here is something you can count on: If you don’t have time to do the research and prep-work, then you don’t have time to do business in China. When it comes to China business entry, speed kills. If you plan on going from first meet to WOFE in less than 6 months, then you probably need to revisit your planning process.

    2) No deadlines on signing deals. Chinese dealmakers equate patience with intelligence. If your Chinese counter-party hears that you absolutely must have a signed deal by 2:00 on Friday, then he will make damned sure that substantive conversations don’t start until 1:00 that day – no matter how long your trip is. Believing that your deadline is his problem is a classic mistake Westerners make when dealing with Chinese counter-parties. If you want to look like a serious player to the Chinese, you tell them you want to start doing business as soon as you understand the situation and are certain about how to proceed. Even if you are lying, this is the kind of statement that Chinese counter-parties respect.

    3) Exit strategy. What if things go wrong? What if things go right? Americans in China tend to see ‘The Deal’ as their sole concern. All too often, process, operations and compliance issues get glossed over in favor of price and timetables. You should be thinking about how and when you are getting out of this arrangement – no matter what the contingency. Getting out of a bad deal in China is relatively simple, albeit expensive and aggravating. Experienced Western business-people in China will tell you, however, that the successful deals are often the stickiest because now there are profits, sales, and valuable assets to fight over.

Next: Doing the Deal vs. Doing the Business

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    Next: Doing the Deal vs. Doing the Business

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