Negotiating in China: Secrets of Success, Part II

Last week we talked about the perils and pitfalls of SUCCESFUL negotiations in China. One of the first rules of doing business in China is that a signed contract is a starting gun, not a finish-line flag. In China, negotiations don’t really get started in earnest until after the signatures are on the dotted line.

But reaching the signing ceremony is getting tougher and tougher. Chinese deals almost always involve an element of policy, and China’s bureaucracy requires that international negotiators adopt a new set of rules.

What do the heavy-lifters of international negotiation have to say about reaching the contract-signing ceremony milestone in China?

1) Persistent.
They were all told it was impossible — that there was no way, no how, no chance. Persistence in China is about long term patience and composure – not threats or horse-trading. I remember the first time I put this lesson to work – long, long ago when the Portman Shangri La was the only hotel that international business people stayed in and one’s travel options were much more limited than they are today. An uncooperative concierge told me that the flight I wanted was booked and that there was nothing he could do. Instead of getting confrontational, I got comfortable. I took off my jacket and hung it on the back of the chair, put my bag down and settled in for a long conversation. As soon as he saw that I was neither leaving nor providing the adrenaline rush of a good barbarian throw-down, he quickly started supplying me with other options. I got to Beijing in time – which wouldn’t have happened if I had been issuing ultimatums or complaining. Persistence in China means becoming a very dull but not unpleasant part of your counter-party’s environment. If you go away when they tell you ‘no chance’ you’ll end up with nothing – but if you try too hard the discussion will quickly escalate into an emotional dispute. Your Chinese counter-part will enjoy a few moments of high-energy exchange, and then quietly and permanently check you off his ‘to do’ list. Westerners who get emotional, desperate or nasty are not deemed appropriate long term partners, and the initial ‘mei you ban fa’ – there’s nothing we can do’ is simply Chinese due diligence. If you don’t have the sense or smarts to try again, then you probably don’t have the resolve and maturity to be a serious business collaborator.

2) Innovative.
When Westerners describe innovation, they are usually talking about product innovation – the creation of new businesses, products and services to meet existing challenges. Chinese aren’t great at innovating products or brands, but they are masters at process innovation – figuring out new ways of getting jobs done. When Westerners view the Chinese government, we tend to see a single monolithic entity. We assume that the Ministry of Issue A has sole responsibility for Issue A and no other responsibilities. So when the representative of the Ministry says, ‘no’ our only hope is to get him to change that to a ‘yes’. Chinese dealmakers take a different approach. They are constantly looking for new contacts and revisiting overlooked branches of their network to find channels of access, potential supporters and previously unknown relationships. Competent Western deal-makers pursue the same track, believing that every time a door gets slammed shut a window is nudged open. By amassing a wide range of indirect contacts, the negotiator can eventually build a powerful network that maintains the kind of gentle but constant pressure that works on Chinese decision-makers. The successful Western negotiator in China never passes up an opportunity to add to his quiver of contacts and influencers, even if they don’t seem too useful at the moment.

3) Attention to process.
You can’t pressure the Chinese bureaucracy, but you can be ready, willing and able to move when the policy environment shifts in your favor. Winners in China play many angles in a battle of careful inches, and avoid bold dramatics that force a quick answer. The Westerners who succeed in negotiations with the Chinese conduct a concerted, serious, dignified effort that is consistent over a long period of time. When the right circumstances arise, these Westerners are aware of the situation and prepared to act quickly. Americans tend to be poor at the process element of the Chinese negotiation, while Europeans with their history of coalitions and network-building are a bit more astute. The Chinese process of deal-making looks chaotic and irrational to the newcomer, but there is a logic and order to it that remains strong even during times of great structural stress. Trying to take shortcuts, forcing decisions or aggressively taking control of the process will almost always end badly. You can’t change the Chinese regulatory and political environment, but you can monitor it and prepare in advance for the window of opportunity whenever it may arise.

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