Conflict in Chinese Negotiation – The Basics

Conflict Management in Western-Chinese Business Negotiation

Managing conflict in China is a tough, but if you leverage on the relationships you’ve built  and observe a few simple rules you might come out of your disagreement with a stronger partnership than ever.


Conflicts arise in every relationship.  Westerners have two main modes of managing conflict in China – ignore the situation completely or take a scorched earth approach to solve the problem once and for all.  Managers who find a middle path are generally more successful, but that’s no easy feat.  Conflict management is closely tied to relationship-building skills – you can’t be good at one without the other.  Those who build strong relationships with well-structured deal terms are the ones who recover and prosper through disagreements and misunderstandings.   If you cut corners early, used consultants or third parties to make your introductions or over-promised during the relationship-building phase of the negotiation, then you can expect conflicts to occur more often, accelerate faster and have worse outcomes than average.

Will Trust Survive?

They key to dealing with conflict in China is to make sure that mutual trust isn’t the first casualty of battle.  The whole point of building a relationship in China is to get to the point where your word means something to the other side.  If you plan on working with this person again then it’s important to know where the lines are drawn.  If he feels you have been dishonest or failed to hold up your end in some way, then the invisible bonds of  trust are broken (without your knowledge) and now he is free to pursue more aggressive negotiating tactics (lying, stealing, under-delivering).  After all, you made the first move – even if you had no idea that’s what you were doing.

The problem is, his definition of “bad faith” covers a much broader range of meanings than yours does, and might include botched business etiquette, cultural slights, a brusque manner, an insubordinate underling, or just about anything else.   Building a Chinese relationship is child’s play compared to repairing a damaged partnership.  Due to distance and cultural barriers, minor disagreements often fester for months or years in silence and then suddenly spiral into uncontrolled combat after a seemingly minor provocation.   Your job is to stay out ahead of the situation by carefully monitoring your counterparty and his organization, looking for non-verbal cues that you are becoming less popular, and not permitting the situation to snowball out of control.   It is easier to deal with problems when they are still small.

The Path of Reconciliation

One intercultural quirk that western negotiators need to be aware of is that Westerners and Chinese resolve conflict in different directions.  Westerners look back to the cause and assign blame.  Chinese look to the next transaction and acknowledge power.  This means you either have to take a whole new approach to conflict management — or persuade them to take your approach.  Once the disagreement starts, speaking louder and repeating yourself doesn’t actually help.  You are talking about who is to blame and they’re saying how lucky it is that they can hook you up with a new deal right away.

Chinese negotiators like to resolve conflict with a forward-looking perspective.  If they acknowledge that things went badly for you in the last deal, they’ll try to fix things on the next deal.  This cements the relationship (doing more business together), preserves face (no need to admit to anything, both sides have an incentive to smooth over the conflict) and gives each side room to maneuver for maximum advantage (I’ll get him again / get him back ).  Harmony is preserved, the authorities don’t stick their noses in and everything is handled quickly and quietly.

Western negotiators are usually either lawyers or lawyered-up, and they resolve conflict with a very backwards-oriented approach.  They like to publicly identify who was right, who was wrong, when the damages occurred and how it was done.   Americans also like suing for damages.  Public humiliation is part of the process, and punitive settlements could be astronomical.

 

Is there a way to reconcile the two perspectives on conflict resolution?  Over the next few weeks I’ll be looking at Chinese-Western Conflict (business only).   The series will cover  Conflict Avoidance, Conflict Mitigation and Conflict Management, and will finish with a Best Practices guide to managing conflict in China.

  • Conflict Avoidance. Conflict avoidance means picking the right partner – and walking away from the rest.  Good relationships count for a lot in China – especially when there’s a disagreement.
  • Conflict Mitigation. Conflict mitigation is about knowing the appropriate level of conflict and figuring out ways to control it.  Always make sure everyone can come back to the table without looking foolish.
  •  Conflict Management.  Conflict management is often a function of deal structure.  Both sides have to want to stay in the partnership. 

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