ChinaSolved’s Least Wanted List #6: Don’t Confuse Cordiality with Win-Win Negotiation
Coasting on past successes or good starts is a terrible idea when doing business in China. Successful business negotiation in China is about developing good goals and staying focused on business objectives while building cordial relationships. There is no auto-pilot switch in China – during the negotiation process or when working with long-term partners. The more successful you are, the more problems you’ll have. Whether you have been doing business with Chinese associates for years or are negotiating your first deal, you can’t take anything for granted. Americans start off as tough guys and gradually build a relationship. Chinese start off with a relationship and get tough when it serves their purposes.
Long Term Relationships Don’t Run On Auto-Pilot
This is particularly true of your dealings with Chinese partners, key hires and suppliers. The best way to understand this is to look at a Chinese business relationship like a potted palm tree in the lobby of your office. If you dump 5 gallons of water on it twice a year and ignore it the rest of the time, it will die – either drowning or from neglect. If you give it a few cups of water a couple of times a week, it will thrive. Likewise, if you only pay attention to a Chinese partner or associate when you have a problem or a new set of requirements, then your relationships will wither and die.
Don’t Confuse Chinese Hospitality for a Meeting of Minds
Chinese negotiators are expert at making you think that a breakthrough is always just one concession away. First-time negotiators in China are often pleasantly surprised at how well things seem to be going in the early phases. The Chinese side is congenial, enthusiastic, engaged – and seems really interested in building a long-term win-win relationship. American and Europeans often compare their first business trips to China as a whirlwind romance – they are meeting wonderful people and having a great time. They don’t notice that nothing substantive is being discussed until their final meeting. That’s when the mood suddenly shifts and the Chinese side becomes aggressive about deal terms and technology sharing. By then, however, it’s too late to find alternate counterparties or develop other options.
5 Rules to Avoid Getting Blindsided in Chinese Negotiations
Don’t get caught by the Balance of Power Shift when negotiating in China. Chinese negotiators talk win-win when they need information, data or technology from you, but get much more aggressive when it comes time to deliver.
- Know what a success looks like. Chinese counterparts will try to convince you that a cordial relationship is the true goal of a negotiation, but you still need to transact business. They walk in to a negotiation with a wish-list of goals that may have nothing to do with money – including tech, brands and customer lists. You have to know exactly what you want from the Chinese side, and have a way to measure your progress and their performance.
- Understand what they want and how they plan on getting it. The Chinese side wants more than just a convivial banquet guest, and it’s your job to figure out what they consider a win. What do they want from you, and how will they get it? There’s nothing wrong with sharing technology, know-how or even contacts as long as you are getting paid for it.
- Focus on more than a contract or document. Western negotiators in China have a bad habit of thinking that once they have a signature on the dotted line that their job is over. Don’t expect a document to compel performance in China – particularly if you are looking for sales and marketing. “Best efforts” agreements don’t usually work out well in China. You need to develop a self-reinforcing deal structure to ensure performance.
- Learn to juggle. Western managers preferred discussing one problem at a time. Chinese negotiating teams are more comfortable tackling a number of issues as once, leaving off one conversation and picking up a new one when it’s convenient. Be prepared and be proactive. Don’t sacrifice your negotiating agenda by passively allowing them to decide what you’ll discuss and when. You have to find a balance between acting too bossy about sticking to your itinerary and helplessly surrendering the initiative to your passive-aggressive hosts.
- Avoid saving the worst for last. A favorite tactic of Chinese negotiators is to delay the nuts & bolts discussion until the very last minute – particularly when you have a plane to catch. While they are wining & dining – and focusing on “building the relationship” – it is natural for you to send optimistic reports back to HQ and over-sharing sensitive information. Unfortunately this makes you vulnerable to high-pressure tactics and unfavorable deal terms forced on you at the last minute. Make sure that you don’t let them completely control the timetable.
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