Post-agreement negotiation is the scandal of the week in DC, but it’s a way of life for negotiators in China.
Western negotiators with China experience are all too familiar with a situation that MSN and Fox are just discovering. Not all deals are set in stone after the signature is on the bottom line. The Democrats in Washington are shocked and outraged that the healthcare deal they thought was a “done deal” is up for debate again. Western negotiators in China have been to this rodeo before, but still find it challenging and frustrating.
ChinaSolved presents a pragmatic, ideology-free guide to managing the post-agreement negotiation in China.
5 Tips for Managing the Post-Agreement Renegotiation in China
- Don’t panic or freeze up. This is happening. Deal with it. Participants and pundits alike seem to think that they can get endless mileage out of the moral outrage and shock of being called on to renegotiate. This is a victory for the other side. Anger and surprise merely telegraph to your opponent that they have connected with a damaging blow. You’re negotiating a business deal – not squabbling in front of the Vice Principal about who should edit the yearbook.
- Have new variables of your own. The worst thing you can do is make it a battle of a thousand cuts – and that’s what happens when you are so overcome with outrage and umbrage that you dig in your heels and refuse to negotiate. A simple “NO” is the easiest target for your counterpart. You are much better off responding with your own modified wish list – things that THEY thought had been settled. In China, this might mean revisiting performance benchmarks, sales targets, quality procedures, and distribution of key positions. How do you know what to use as a re-negotiation variable? It’s the deal points that they needed the most and want to give up the least.
- Raise the cost of the post-deal renegotiation. If it’s free and profitable then it won’t ever stop. Make the renegotiation more expensive, inconvenient and dangerous than the initial negotiation. That may include demanding a new set of representatives from their side, changing the venue to the US or a neutral third location, asking them to contribute more in terms of cash or performance, or delaying the timetable.
- Go over their heads. There’s a good chance that this is a minor delaying tactic – but it’s also possible that this has been planned from the very first meet & greet. Either way, you can raise the stakes and get more visibility by going directly to the highest ranking person you have met on their side. You can let your direct counterpart know, or you can blind-side him. Won’t that make him lose face? Very possibly – but that’s the point. The worst that will happen is that this deal will fall apart. If you play it right, though, there’s a chance you’ll strengthen your relationship by cutting out the gatekeeper.
- Reassess your BATNA. Many inexperienced Western negotiators get locked into the mindset that they should have a single close partner in China – and that losing this connection will set them back to square one. The truth is that you have learned a great deal about China and your industry over the course of this negotiation – so this might be the perfect time to broaden your partner search or change your deal fundamentals. At the very least, the post-agreement negotiation is your chance to reassess your deal, your partner and your situation. That’s why you shouldn’t be too quick to respond or react. The post-deal negotiation isn’t just overtime – it’s also a time-out. Use it wisely.
Post-deal negotiation is a behavior, not a tactic.
If you see it once, you’ll see it again. The more you react, the greater the incentive for the Chinese side to repeat it over and over. When it comes to managing renegotiation in the long term, you’ve got three options:
- Find a new partner. This isn’t always possible.
- Fight by inches every time – and struggle to limit your losses.
- Learn to profit from non-stop negotiation. You know it’s coming, so build a strategy around it.
Chinese negotiate the relationship, not the contract.
The Chinese perspective is that as long as you’re still talking, you’re still negotiating. Two can – and should- play the game. Make sure you always have more to ask for – and new variables to offer. If lock your sights on a single set of variables, you are guaranteed to lose some ground.
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