ChinaSolved’s Least Wanted List #3 – Calling the negotiation a done deal just because they signed on the dotted line.
10 China Management Risks You Can Eliminate by Training: China management behaviors you need to eliminate # 3. Declaring “Mission Accomplished” too soon.
Chinese negotiators focus on the relationship – not the contract. In the West we stop negotiating when the paperwork is signed. In China negotiations start at “Hello” and end when your relationship is over. Experienced negotiators know that a signature or verbal agreement doesn’t end the bargaining – for some deals it is more of a beginning than a conclusion. Plan accordingly, and you may be able to turn the situation to your advantage.
Chinese see negotiation differently than Westerners. Chinese negotiators see business negotiation as strategic & never-ending. It doesn’t ever really end because it’s not supposed to.
One of the main contributors to US-Chinese business conflict as described in the book The Fragile Bridge – Managing Chinese Conflict is a fundamental difference in the way Westerners and Chinese view negotiation. Western managers see negotiation as the prelude or early phase of a business operation. For most American and Europeans, the true source of value isn’t the negotiation itself, but rather the operation or process being negotiated. We bargain to get the business started, but the once everyone agrees to the details of the operation then the real money-making activity begins. There are a few specialist industries where negotiating is strategic – such as real estate and finance – but for most industries negotiation is considered part of the start-up phase or final sales.
Western managers see the negotiation phase as having a definite ending. Most American bosses see the negotiation phase as a necessary evil – the quicker you can get it over with, the better.
Chinese managers have a different take on the negotiating process.
They tend to operate with tighter margins and more fluid operating environment, so they never pass an opportunity to maneuver for advantage. Americans stop negotiating when the contract is signed – Chinese don’t.
Negotiation is the basis of relationship – not a delegated function.
For Chinese businessmen, one of the most disconcerting aspects of international business is the specialist negotiator. Chinese build their negotiating teams from different levels and functional departments of the company, and those same people stay involved in the ongoing business – even if you don’t see them. Westerners tend to use specialists like lawyers, business development managers, and salesmen who may expect to drop out of the process once an agreement is signed. Chinese view the negotiation as part and parcel of the relationship-building process. When the people they know disappear from the scene, the Chinese can suspect that something is wrong.
Post negotiation bargaining is normal in China.
Post-agreement negotiation on the part of Chinese partners shouldn’t be perceived as dishonest or exasperating.
Westerners have to realize is that the Chinese side doesn’t consider post-signing negotiation to be immoral, underhanded or dishonest in any way. In fact, until recently Chinese businessmen considered them the victims of clever foreign tricksters trying to hold them accountable for paper agreements signed months ago. Chinese negotiators have started taking contracts more seriously in than they did a few years ago, but never-ending rounds of bargaining and renegotiation are still quite common.
Arrange for the post-negotiation negotiation in advance.
Budget for renegotiation in terms of money, time and bandwidth In China the negotiation continues forever – if you both still breathing then you are still negotiating. It’s not enough that you understand this – your entire team must also be prepared for lengthy negotiations and post-signing renegotiation. You know it is going to happen, so build it in to your basic plan and budget accordingly. Make sure your bosses and clients understand as well.
Prepare your own post-negotiation wish list that will enhance your position
Have a wish list and up-sell strategy. There is no way to prevent the renegotiation, but there are ways to profit from it. You can count on the Chinese side reopening negotiation — but they may not be prepared to you to counter with your own demands. Don’t try to hold back the tide — learn to ride it for you own ends.
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