Guanxi in Chinese Negotiation: Of Alpha Dogs and Leg Humpers

Chinese negotiating counterparties like building relationships as part of the deal-making process, but they aren’t usually big fans of the type of even-split, 50-50 partnerships that Westerners favor. Traditional Chinese negotiators are more comfortable with a clear hierarchy. On one hand, they can be the alpha male who sets the rules and the pace – leveraging on their China knowledge and local contacts. But they are also comfortable elevating you to god-like leader status while they fawn and give face – and don’t contribute much else.

The only role that you aren’t likely to see a traditionally Chinese counterparty take on is the one you want – an equal partnership. If that’s what you are after, you had better plan on spending a lot of time searching out the right counterparty, and you’ll still have to negotiate very explicitly and thoroughly from the very first meeting.

    Guanxi Type 1: Your new best friend
    • Some Chinese counter-parties will use flattery, friendship and social events to build a cordial relationship.
    • This is a ‘sales-type’ approach. He is selling his services to you, and he wants a salary or expects you to buy goods or services from his firm.
    • Good news – they may be taking the initiative to build a strong, healthy, win-win relationship.
    • Bad news – they may be pressuring you to reciprocate with better deal terms, IP, or relaxed QC/compliance requirements. He thinks his flattery and submissive behavior is a valuable service and expects compensation.
    More bad news – This scenario often leads to a balance of power shift. Once he has your money, technology and know-how, your status becomes somewhat less god-like.
    Even worse news – Those pretty young girls half your age who laugh at your jokes and think that you are so wonderful… yeah, they are in this category. Sorry, but someone had to tell you.
    Guanxi Type 2: Your guide, teacher – and boss?
    • Chinese businessmen will offer to help you through their connections, insider knowledge and guanxi with suppliers and regulators.
    • Consultative approach. They are offering to help you solve specific problems and clear away existing bottlenecks.
    Good news – They may really know what they are doing and can facilitate your business.
    Bad news – They feel that they are in charge of the new partnership.
    More bad news – You probably need them more than they need you, so you are negotiating from a position of weakness.

Beware of your American impulses to treat every relationship as an equitable, just, “we’re all in this together” 50-50 partnership. It could be taken as a submissive gesture – which can invite aggressive, value-grabbing behavior.

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