Chinese Negotiating Tactics: Balance of Power Shifts

Your Chinese partner used to be so polite — so respectful.  Now he won’t even return emails.  You’ve been BoPS’ed.

An Excerpt from the book, The Fragile Bridge -Conflict Management in Chinese Business

Balance of Power Shift
One of the most important ideas for Westerners to understand when negotiating in China is the balance of power shift, or “BoPS”. Chinese business-people have developed a very effective pattern for dealing with Western firms entering the China market.

Chinese Negotiators Often Start from a Position of Weakness

The Chinese side will intentionally place itself in a position of weakness at the start of the relationship. Whereas an American or European firm might try to hide its vulnerabilities or

The Fragile Bridge: Conflict Management in Chinese Business

shortcomings, the Chinese side will highlight their weaknesses. In the 1990s, it was common to hear, “We are starved for capital. We need your help to modernize our backwards infrastructure and factories.” In the 2000s, the Chinese turned their insufficient and outdated technology into an advantage. “We need your technology and designs. Help us improve our factories, and our workers will make your products cheaply.” Now the current area of weakness is marketing and international exposure. “We can’t innovate. We can’t market. Help us to expand to new markets with better products.” Westerners are brought in not as employees, consultants, or clients, but as leaders and bosses. The Chinese side of the relationship intentionally puts itself in a subordinate position and allows the Western side to run the show, and in doing so, acquires what it needs to succeed without them.

Westerners Reveal their Technology and Intellectual Property — Now What?

The problem facing the newly empowered Chinese partner is – what to do with the Westerner afterwards? The Chinese side learned what they needed, upgraded the facility, or acquired a useful new product — but the American or European side still expects to retain operational authority and receive the lion’s share of revenue and power. Neither Chinese law nor tradition give the weaker side too many options, so the local partner resorts to a tried and true method for disposing of a partner that is no longer needed.

Sometimes Conflict is the Solution — Not the Problem

All they have to do is start a fight and let it spin out of control. They lose face, their culture is insulted, and their traditions are disrespected – all due to the arrogance and ignorance of the Western side. No matter how minor or innocent the disagreement may have been when it started, the end result is always the same: the relationship is damaged beyond repair, and the partnership is over.  The Western side eventually gives up and goes home — or escalates the conflict and tries (in vain) to assert claims of ownership or authority.  Either way, the result is the same for the Chinese negotiator.  The Western players exits the scene, and the Chinese side stays put — but now free to make use of their former partners’ technology, designs, know-how — and maybe even their capital.

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