Mitigating Conflict in Chinese Business Negotiation

 When negotiating in China, small conflict can actually strengthen your relationship – but the key is to keep mutual trust alive.

Controlling Conflict in Chinese Business Negotiation

You can avoid unnecessary business conflict  in China by picking the right counter-party.  But once you have identified a good candidate, you have to manage two opposing tendencies.  On the one hand, many westerners try to suppress all forms of disagreement or difficulty, no matter how minor.  This kind of manager is afraid that the tender shoots of a new business relationship are too vulnerable to survive the slightest   conflict, and he would rather concede a few deal points  than risk a confrontation.  One of the worst things you can do in connection-oriented China is to base your relationship on dishonesty – and that includes false expectations.  Don’t agree to terms you dislike or don’t fully understand.  If your plan is to build a cordial relationship by agreeing to big-picture issues that you will change or clarify later, you run the very real risk of looking dishonest and unreliable.

On the other hand, some negotiators try to make hay while the sun shines and want to use this rare face time to take care of all the details – no matter how unpleasant or awkward.  These strike-while-the-iron-is-hot negotiators tend to sign favorable contracts but never seem to do profitable business.  A signed document doesn’t carry the same weight in China as in the US or Europe.  Many mainland managers will find it easier to scuttle an unattractive deal by forcing a “face-losing” dispute rather than try to renegotiate terms.

The best conflicts in China are small, relaxed, and solvable.   You cannot avoid all confrontation, but successful western negotiators learn how to keep disagreements low-level and impersonal.   Once you show anger or insult the other side then the chances of settling the issue amicable drop to practically nothing.

So how can you mitigate conflict with a partner or customer in China without giving away the farm?

  • Be yourself.  Some westerners are so determined to cross every cultural barrier that they become a completely different person – one is more patient, tolerant and magnanimous than the one they are back home.  Don’t be so desperate to be liked that you become someone who isn’t respected.   Chinese know how to flatter and compliment without making promises, and you have to learn from their example.  Go into each meeting or negotiation with a list of issues you need to address.  Be sensitive, friendly and polite – but do the business.
  • Small Is Beautiful – when it comes to business conflict.  The ideal conflict in China surfaces quickly, gets solved completely and helps the two parties develop a manual for managing future conflict.   Build an atmosphere of trust by establishing a track record of small successes at different levels of the organization.
  • Keep trust alive.  Once a conflict undermines mutual trust, the relationship won’t survive.  Make sure that you keep the channels of communication open, and are prepared to over-compromise if you want to keep this connection.  Chinese negotiators tend to believe that their pool of potential counter-parties is limitless, so they have an inflated view of their own bargaining power.  When a Chinese counter-party feels that he has been insulted, betrayed or deceived, he usually finds it easier to terminate the relationship and wait for the next contestant.
  • Got to be in it to win it.   Much of Chinese business still depends on strong relationships.  Western managers dream of repeat business that requires next to no maintenance, but Chinese business people still like the personal touch.  Westerners are frequently criticized for not doing the required relationship maintenance – instead only calling to complain or ask for special favors.   If you only get out to China a couple of times a year, it is natural to want to resolve a lot of issues at once, but leave the laundry list at the hotel.   If you always show up with a folder of problems, discrepancies and issues, then you are the problem guy.  People don’t like volunteering or sharing with the problem guy.  Maximize your face time by building trust.
  • Guanxi and You.  Once your Chinese counter-parties start talking about guanxi, harmony or face, the situation has to be handled VERY carefully.  It’s rarely a good sign.  Beware the “guanxi trap” where you are expected to make real concessions right now for some vague promises of profitable relationships at some point in the future.  Chinese negotiators know that Westerners are very sensitive but unfamiliar with cultural issues like guanxi and face and are willing to exploit your fear of sabotaging the relationship that you think is key to success in the mainland.  Once you start responding to this line of discussion it can seriously undermine your negotiating position and lead to deal-ending disputes.

When it comes to controlling conflict and keeping disputes manageable, the key goal is to keep trust alive and growing.  Once your Chinese counter-parties feel betrayed or duped, nothing you do can rebuild the relationship.  In the US or Europe we’ll use contracts, arbitration and other legal options to insure that everyone respects the terms of the deal, but in China the institutional solution is usually not a good option.  The whole point of Chinese relationship-building procedures is to perform a kind of personal due-diligence investigation on you and your team.  If you fail that test due to dishonesty, emotional outbursts, or neglect, then the Chinese side feels that their system has worked the way it is supposed to – and saved them from a potentially dangerous association with the likes of you.



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