The Golden Rule of Chinese Negotiation

Your Most Important China Negotiation Doesn’t Happen in China – It happens in your own HQ

When negotiating deals with Chinese counterparties, your most important set of discussions take place within your own company. You have to send negotiators to Shanghai and Beijing who know

Golden rule of Chinese negotiation -- have good goals
The golden rule of Chinese negotiation – Good Goals

exactly what your organization wants, what it is willing to sacrifice, when it will walk away – and where it will go when it does.  Often the most important asset in play is your company’s confidential information and technology, and if you are not ready to defend it you may lose before you know what’s happening. If you or your representative lacks the full support and power of the organization, then you are negotiating from a position of weakness. Your company can be leverage – or it can be a stumbling block – in China.  It depends on what you do before the negotiation begins. Unfortunately, too many American negotiators are walking into Chinese meeting rooms unprepared, ill-informed, and lacking the kind of organizational support that their counterparts have. It is a recipe for disaster.

Negotiating in China is a team sport.

Americans are rugged individualists. We still like the image of “strong silent type” who goes it alone, takes the lead when he must, and lets his actions speak louder than his words. Unfortunately, this romanticized view of leadership is a recipe for failure in China. The arch-typical American managers – focused on the job, committed to getting the deal done and aggressive about executing his mission – finds it is relatively simple to get Chinese counterparties to nod their heads and agree to vague deal concepts, but impossible to do real business. He returns home with a signed agreement that is not worth the paper it’s written on.

Chinese negotiation is a group affair – and a long term endeavor. Americans see negotiation as a sprint to the finish-line – there is a winner and a loser, and the quicker it’s over the better. Chinese negotiators are more like a football team moving down the field yard by yard. You’ll see quarterbacks calling the shots, running backs making heroic carries and receivers sprinting through the line to catch long passes – but it is still a team effort carefully choreographed and practiced. And just like in football, the real strategy is made before-hand by people who aren’t even playing.
Good goals lead to good deals

Have a goal. Decide on your goals ahead of time, and get all the key buy-ins before you start negotiating.    This is doesn’t seem controversial – except for American negotiating teams that often approach their first China deal as a learning experience because they don’t have the experience or resources to formulate a complete strategy. The problem is that that they share information and negotiate deals in spite of their complete lack of strategic direction or comprehensive business goals.

Partners or Teachers

Many Americans are still trying to figure out what they want (or what the best deal really is) when they start negotiating with a Chinese counterparty. They rely on partners, suppliers and clients as primary sources of information on everything from price levels to regulations to market conditions. Imagine that someone was coming from overseas to discuss a business proposal with your company, and he started the conversation by asking basic questions about the US market and business law. You may do business with him – but you are going to assume that you are negotiating from a position of strength and act accordingly. If they guy sitting across from you is your main source of business intelligence, then you are a severe disadvantage.

Next: Set up your deal options in advance. When to walk away, how to say goodbye – and where to go next.

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