Conflict Avoidance vs. Conflict Resolution in China Part II: So you are in a Chinese business dispute…

Part II: So you’ve found yourself in a Chinese conflict…

Ok — breathe. Remember that step – and repeat as necessary. Inhale, exhale. Good. Now you’re ready.

    Rule 1 It’s just business.
    It’s not personal, patriotic, nationalistic, racial, or genetic. It’s just business. You need a business solution.

    2. Interests, not positions.
    This old saw from Fisher, Ury & Patten’s Getting To Yes is still true at it ever was, though the Chinese applications may be a little different. About the only thing you are in control of is whether or not you will deal with this counter-party again. But if you lose your temper or make threats, then that option is off the table as well.

    3. What do you want to happen?
    Do you want cash back? That’s a tough trick to pull off in the Middle Kingdom. Are you planning on suing? Talk to a busy lawyer first — not one with time on his hands. He’ll tell you just how bad an idea that will be. Do you want justice? Meiyou. Never made it here. We got harmony, and we got seething resentment. Which one will you have?

    4) Do you know people who are able to help you?
    People who are willing to help? People who need you to succeed? Get these people mobilized. The ones who can help may very sit on the sidelines until the very last minute. Get them into the game. This is where Chinese culture comes into play, because motivating 3rd parties to intercede on your behalf is not simple. HINT: They are going to be very unwilling to get involved if you are foaming at the mouth and talking about how you would like to kill those thieving bastards. But if you are ‘confused about the best way to resolve this unfortunate situation….’ (followed by that long, long pause so common in this land) then they may take those first tentative steps. Relying on the offices of others is by far your best option – but it and it can result in you getting dinged again if your new Chinese Rabbi turns out to be scamming you. If you get the impression that they feel helping you is a slightly less attractive than root canal, then you are on the right track.

    5) Don’t show your worst side… How would you feel if your counter-party started screaming or sobbing during a deal? Maybe he’s nuts or maybe he’s just a big baby — but he is certainly not a suitable counterparty. Well, that’s what Chinese counter-party thinks about you when you display anger in front of them. They don’t get intimidated — they think you are a sketchy lightweight. Alternatively, don’t look like a chump. Even the Chinese -who respect stoicism – need to understand that you know you’ve been messed with, or it’s going to keep happening over and over.

Ironically, your only real choice is ‘do you go back for more pain or not?’. I know — this sounds crazy. But the fact is that there are many circumstances where your best course of action may be doubling-down and betting again on the same hand. If you have checked out your guy and gotten decent references AND the dispute stems from a genuine misunderstanding or a change in environment (yes — including price level changes), then dealing with this guy again might not necessarily be nuts. If your Chinese counter-party really didn’t intend to screw you over, then this ironically is exactly where guanxi gets built. Real guanxi — not the KTV toasting nonsense. If your guy really feels that the first deal just broke bad for you but would like to make sure that the next one treats you better — then you might have a good thing going.

If, however, the phone doesn’t get answered or worse — the deal never moves beyond the upfront money– then you need to cut your losses and move on. Unfortunately, your troubles may extend beyond the parties directly involved. Whoever introduced you or facilitated the deal is also suspect. Not necessarily, but once you’ve been punked in public you may look like an easy mark.

The road to long term profits is paved with good intentions.

It comes to intentions. I know that sounds counter-intuitive — and it really doesn’t make your life any easier. But if a Chinese counter-party is trying to do right by you, then you have to understand how they deal with a business disagreement. To an HONEST, 100% trustworthy Chinese counter-party, outside circumstances and unforeseen environmental factors still supersede your existing contract. He’ll do his best — but he expects you to be realistic. If his factory burns down or a typhoon shuts down the port, he expects you to cut him some slack. Now here’s the important thing — if his upstream supplier drops the ball or a raw material price spikes, he STILL expects you to cut him some slack. It’s not just HIS problem — it’s your problem too. That’s what guanxi means. When you get all ‘Rambo’ up in his face, talking about who drew first blood and betrayal, then he feels you are not an appropriate counterparty. This lets him off the hook and absolves him of any and all obligations he might have othewise felt towards you.

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