Very excited that EuroBiz has just published an article of mine comparing European and American negotiating styles in China. You can see the online version here: http://www.sinomedia.net/eb/v200904/negotiation.html (and if you want a PDF of the full piece with all the cool graphics, go to the ChinaSolved linkedin group and comment or send me a message). If you want to see a summary of the survey that the article was based on take a look here.
The upshot is that Americans and Europeans have somewhat different negotiating styles that they bring with them to China. Negotiating is more craft than science, so a skilled negotiator can adapt to the culture and environment he finds himself in. There is no absolute ‘better’ or ‘worse’ – but some approaches are more appropriate than others.
Europeans tend to be more collaborative, patient and network-oriented.
Americans are more competitive/compromising, direct and transaction-oriented. While Europeans are speaking to a broader range of counter-parties in China – both in terms of age groups and organizational types, Americans focus on middle-aged decision makers from private Chinese companies. There is a weak trend indicating that Europeans are more focused on selling into the China market while Americans tend to be buyers.
Who is better at negotiating? Well, the naïve answer is that Americans tend to transact more and report greater success than their European counter-parts. But the more nuanced answer is, ‘it depends’.
Most of the original survey data was collected at the end of 2008 – before the worst of the economic downturn hit – so US markets still seemed relatively intact. At the time, the American approach of buying cheap in China and selling to US consumers made a great deal of sense. American deal-makers are about shaking hands, signing contracts and shipping containers. While this strategy had more to commend it when US shopping malls were full of buyers, there is still something to be said for a sharper deal-focus. It keeps costs under control and allows for greater flexibility in a shifting market. Reducing your activity is much easier to do when you don’t have to worry about a wide range of partners and stakeholders.
Europeans, however, seem more comfortable with a complex, multi-faceted approach to negotiating and networking. They are more likely to be sitting down with bureaucrats, SOEs, and other multinationals – even though these conversations aren’t likely to result in deals any time soon. Furthermore, Europeans seem to be bringing over younger executives – in keeping with the ‘apprentice’ type training programs still favored in Germany and Northern Europe. Europeans are also more favorably disposed towards far-reaching joint ventures than the go-it-alone Americans who prefer to set up their own Wholly Owned Foreign Enterprise (WOFE). If China is shifting back to a more centralized economy where bureaucrats are controlling a greater share of the economic pie, then their approach will put them in the same room with more decision makers than the Americans.
Both approaches have advantages and disadvantages. One facet of the European approach that Americans may want to start emulating is their attention to the Chinese market. If western consumers overspent in the last 10 years – and most indicators seem to point to that trend – then there even after a recovery there will still be less business in traditional developed markets. The Europeans seem to have a head start over their American counterparts in two important respects. 1) They are already more focused on developing Chinese markets, and 2) they have spent more time building networks with a wider range of Chinese stakeholders – including the very bureaucrats and SOEs managers that Americans tend to shun.
It’s interesting to note that in my current survey (which by way is still in desperate need of more respondent data: http://app.icontact.com/icp/sub/survey/start?sid=6492&cid=355149 ) shows that American are considered the WORST negotiators in China – beating out Europeans 2:1. (36% to 18% of respondents.) It’s time for us to show some of that famous American ingenuity and resourcefulness.