China Negotiates Like a Little Girl Part II -Dealing with a Petulant Superpower

Negotiating for the win with Panda Boo-Boo

China negotiates like a six year old girl – and it works.   More specifically – YOUR six year old.  It knows you can not abandon it in the mall just because it’s throwing a tantrum.  You are stuck with China

Sad Panda

When China is upset, it’s your problem

– and China knows it.   So China is free to complain about “hurt feelings” , insults – both real and imaginary, – and to blame private companies for international political developments.   When China is having a bad day – it’s YOUR problem, whether or not it is your fault.

Americans negotiate like Daddy.  Strong. Imposing.  In control.  Unfortunately, everyone – including the pouting six year old – knows that Daddy isn’t really strong, imposing or in control.  He’ll cave in every time – and everyone knows it but him.

Europe is like the poor beleaguered Mom.  A subtle mixture of wisdom, inner strength and moral manipulation.  Oh – and lots and lots of wine in the kitchen when no one is supposed to be looking.  Europe wants to take America’s side in multilateral negotiations, but is quicker to give in.  After all, Europe is shut up at home all day with the JVs (Carrefour) and the consumer markets (Ikea) while America gets to gallivant around with its WFOEs (YUM) and MNCs (GE).  While America may talk tough, Europe has to be more pragmatic.  No one wants to end up like that Danone-Wahaha couple down the street.  

So how do you negotiate with a Panda Boo-Boo – the petulant superpower?

  1. Negotiate internally in advance.  Set limits and have a plan for enforcing them.  The ChinaSolved/ChineseNegotiation first rule of doing business in China is that your most important negotiation doesn’t take place in China – it happens at your own HQ.   You have to decide on what you want, what you’ll accept and what you can’t live with BEFORE you start talking with your Chinese counterparty.  When you sit down with a Chinese negotiator you want the power of your organization behind you – not working against you.
  2. Know your weaknesses.  Americans are obsessed with negotiating from strength. We equate a strong bargaining position with victory – but it’s not necessarily so.  Turn the tables on your Chinese counterparty by making his relative strength part of the discussion.  Make a point of portraying yourself as David and him as the brutish Goliath representing the might of the PRC.   Label him the bully – and don’t be afraid to escalate conflicts early.  If you stay at the table too long, you give up the tactical ability to walk away.
  3. Complicated is good.  In most activities, simple is best.  When negotiating, however, complexity helps.  Adding new variables is good – but when China is involved, adding new actors is better.  Chinese negotiators always demand one-to-one, bilateral negotiation – but you shouldn’t be so quick to accede.  Sec. of State Hillary Clinton scored points when she attempted to turn the South China Sea conflict into a multi-party discussion instead of a series of one on one talks. Americans and Germans who like organized agendas and step-by-step discussions often do badly negotiating with Chinese.
  4. Have another favorite.  Many a manipulative parent has found the key to negotiating with a petulant child is to play one side off another.  China Inc. is not the monolithic lone actor that many Westerners seem to think it is.  Build a broad enough network to enable you to conduct multiple negotiations in different parts of China.  Chinese negotiators usually aren’t afraid of you walking away from the table – unless you are walking to another Chinese partner.
  5. Walk away.  There are two ways to walk away from a Chinese negotiation.  Slow & friendly (if you plan on coming back) or quick & quiet (if you are going for good).  The ability to walk away is your ultimate source of power in China.  Your knowledge, technology, brand and wealth don’t make you strong in China – they make you a target. .  Know your limits.  If you are using this as a tactic then you should be firm but friendly, don’t make anyone lose face, and say that you hope there is a chance to work together in the future.  Allow them to call you back to the table without looking too desperate or arrogant.  You only get one of these per negotiation – so make sure you are getting a valuable concession out of it.  If you walk away for good be certain you have a Plan B in advance.

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