It’s particularly important when you have someone else representing you in China – and also when you have local partners. Remember that the definition of partnership in China is a lot broader than in the West, and for the purpose of negotiating it generally includes suppliers, distributors and employees. If you come into a Chinese negotiation with the goal of being RIGHT, you may very well win. If you want to be the richest guy in the room, though, you may have to take a page from the Chinese negotiating book – looking dumb but getting what you want from the deal. Americans tend to look like the smartest guy in the room – but end up giving up IP, assets and opportunity to “idiots” who grabbed value.
I still hear Americans cursing the incompetent, ignorant, backwards Chinese counterparty – whose stupidity resulted in him getting 99% of the value of a deal gone wrong. Well, maybe he wasn’t the dumb one. Did he have an interest in you succeeding? Was your deal structured in such a way that he had a financial incentive for figuring out a way to make the business work? Were you a short term partner but a long term competitor?
This is one of those issues that may pop up in a variety of negotiating cultures and situations, but is sure to be an issue in China – so be prepared.