Chinese Business Negotiation: Smartest Guy in the Room vs. Richest Guy in the Room.

Chinese negotiators talk dumb but get rich. Americans in China sound smart, but…

Americans believe that the richest guy in the room is usually the smartest – largely because CEOs view power as a product of intelligence. In China, however, the smartest guy is rarely the richest guy – and the richest often takes pains to appear a bit dim. You can trace this back to Sun Tzu  and the value that Chinese negotiators place on misdirection. Or maybe they are simply playing to the massive egos of certain American CEOs and decision-makers. Whatever the cause, it is something that Western negotiators have to build into their strategy when doing business in China. 

Red Forman tells it all.
You know what you are, don’t you?

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.

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