ChinaSolved’s Least Wanted List #2 – Failing to Negotiate with Your Own HQ
China management behaviors you need to eliminate # 2. Building on a Weak Foundation
Your most important China negotiation takes place in your own HQ. Unless your Board and bosses are 100% committed to the China business, you will spend too much time explaining and reassuring your own people. Your Chinese negotiating counter-parties will sense it – and take advantage of your weakness. And if you are the main engineer behind the China operation, then you have to make certain that your plan is the guts of the machine – and not just window-dressing prettying up a Chinese operation.
Internal negotiation works both ways.
If you are doing the negotiating, then you occupy no fewer than 3 distinct roles. First, you are the point man on the field who must represent the home office and execute in their best interests. Second, you are responsible for gathering pertinent information and moving it through your organization to maximum advantage. This is going to involve a good deal of internal negotiation before hand – if you try to start sounding alerts about new opportunities or uncovered dangers without appropriate groundwork, you’re going to face bottlenecks and unpredictable outcomes. Third – you are the relationship builder. This is a delicate role under the best of circumstances and it’s particularly challenging when someone back in HQ thinks that he has already established the personal relationship when he banqueted his way through Shanghai 18 months ago. If you are running point, you have make sure everyone on your team – from the big bosses back home to the local staff supporting you – are all working off the same playbook.
Top Down –Senior strategists have to understand the mechanics of business in China. China deals terms aren’t “set and forget” and you can’t use US or European operating systems as a template. We love those senior managers who set bold strategies for entering the China market – just so long as they remember that for every press release there will be 10,000 ground-level micro-decisions that must be executed properly. If you aren’t actively supporting your own people in the field then you are undermining them – and yourself.
Bottom Up – Front line negotiators are the New China Hands. Front line negotiators in China have switched roles over the last 10 years. You used to be mouthpieces on the factory floor or hagglers in the marketplace. Now you are you are reporters, representatives, relationship builders and master communicators. You have to figure out a way to train you own people up the line to understand their options and risks in China.
Tactical Leverage & Defense.
If you have the power of your entire organization behind you, then you operate from a position of strength. If you don’t have a unified front, however, the Chinese side will stall until the last minute and pressure you with a bad or unenforceable deal. Front line negotiators in China need the power to do three things:
- Change the deal. If your front-line negotiator can’t change deal terms, make decisions about quality levels, features or demand to speak with different counter-parties then he can’t make deals effectively.
- Change the partner. If you can’t walk away, then you can’t really negotiate. Negotiating power arises from your ability to bring in alternate counter-parties.
- Change the timing. Chinese negotiators use time strategically – they speed up the pace to get you engaged and then slow it down to put pressure on you to make concessions or agree to unattractive terms. If your front-line negotiator doesn’t have the power to extend the timing of the negotiation, he is likely to come home with an agreement that isn’t worth the paper it’s printed on.
Successful negotiators in China are the ones who can leverage the strength of their organization. Westerners who get caught between demanding bosses back home and Chinese partners don’t do well.
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