Is it more profitable to be Loved or Feared in China?
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One of the most common questions/comments to come back from the report about western “worst practices” in Chinese negotiation had to do with the tension between developing good relationships with local counterparts and promoting one’s own interests. Which is more important in China – developing good relations or maintaining control of your own assets? While this has always been the negotiators’ dilemma (see Fisher & Ury; Lax & Sebenius; Malhotra, Bazerman or any of the other PON authors), it is particularly troublesome in China where guanxi and harmony are watchwords of business success.
Global Power or Culture Shock ?
One of the problems facing international negotiators is that they are receiving two contradictory sets of instructions and expectations. On one end of the spectrum are the Cross Cultural Communication (CCC) proponents who tell western managers that our obstacles can be overcome with greater understanding and better communication. If you are interested in examining CCC in more detail, I refer you to Andy Molinsky’s “Global Dexterity” . It’s an excellent book for international managers, but you should be warned: Molinsky gives advice about how YOU should change your communication to be better understood by others – and it is more useful for those whose goal is clarity than for those who wish to persuade.
Cross Cultural Negotiation (CCN) is about creating value. It’s got all of the same challenges as regular negotiation, but with the added cultural and national barriers. For those accustomed to taking a Win-Win approach and value-adding negotiation, CCN presents a host of new difficulties. Even win-lose competitors will find CCN more troublesome, but at least these negotiators are prepared for conflict and misunderstanding. It’s the Win-Win guys who have the most to gain – and the greater risk.
Western worst practices – Negotiating in China
The problem is that negotiation isn’t a subset or specialized form of communication. There is, of course, a great deal of overlap – and you can’t truly negotiate with communicating on some level. Communicators want to understand and to be understood. Negotiators want to further their interests – and in many cases that means keeping secrets and hidden goals. Westerners who try to build a deep relationship first and then shift to negotiating business deals are the ones that find themselves embroiled in the nastiest conflicts with Chinese counterparts. You think you are gently shifting from “guanxi-building” to “business-building” as part of a natural evolution of the relationship. Your Chinese counterparty, however, may see you as a crass, underhanded opportunist seeking to manipulate him through dishonesty and false friendship.
Resolving the Tension — Relationship and/or Negotiation?
Cross Cultural Negotiation techniques are best when you are trying to get the deal. Westerners traditionally seek to start with transactions and, once trust is established, build relationships. Chinese start by building a relationship first, and once trust is established, transact business. The two modes aren’t necessarily incompatible, but if your organization simply isn’t structured to start business by building trust first then you should be up-front about that from the start. Organizations that derive most of their value from technology, IP, methodology – or anything else that can be pirated or counterfeited – will find that building a trust-based relationship before they transact can be expensive.
On the other hand, managers who already have a China business deal in place can’t rely on contracts or signed agreements to compel the other side to perform. To succeed in China, the other side has to want you to be a success. That means communication and understanding – even within a legally structured relationship. You should build self-reinforcing deals that deliver more value to the Chinese side than they could achieve without you. The problem in China, however, is that you have to build an open relationship free of cultural miscues and obstacles just to understand what the Chinese side feels are valuable. Western managers that try to impose their own concepts of value often fail – and never understand why.
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