Chinese Negotiating Agendas Stated vs. Real (Part 4)

Using Trial Balloons in a Chinese Negotiation setting

We have been discussing ways of surfacing a Chinese negotiator’s actual agenda for the deal Sign up for the ChinaSolved newsletteryou are working on.  We’ve looked at the direct method of asking open-ended questions, and a less direct method of trying to read the truth behind their misdirection and obfuscation. The last technique we’ll talk about here is the trial balloon.

A trial balloon is an idea you float to test the other side’s reaction. It is somewhere between a direct question and passive listening for information. A typical trial balloon might be, “We’re considering setting up a WFOE (Wholly Foreign Owned Enterprise) in Pudong…” and then you stop talking. That’s important. Now you gauge his reaction – what he says and the non-verbal cues. He will probably be either positive and encouraging or skeptical and cautious. Follow up with an open-ended question that gets him talking – in broad terms at first – about what his thoughts are.

Be careful about how you use trial balloons in China, since aggressive counter-parties have been known to be very selective about what you hear and understand. Don’t talk about exclusivity, specific amounts of money, or concrete deal terms. Anything that can be construed as a firm commitment or direct inquiry will lead to problems. The purpose of the trial balloon is to get them to react and thus reveal their true feelings or intentions.

Some good subjects for a trial balloon with a Chinese counter-party are:

  • Setting up an operation in China
  • Having multiple partners vs. a single strategic relationship
  • Sharing or developing new technology in China.

Launching a balloon.
The steps to employing a trial balloon are simple.

  1. Make a decision about what you need to know from your counter-party. How would you like him to complete the sentence,  “I think you should …”
  2. Make your statement, beginning with the phrase, “We are considering … in China / Shanghai / Shenzhen.”
  3. Be quite and let him talk.

Step 3 is the important one.
Next: Analyzing the new environment.

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read here-smallIf you haven’t already read the report “10 Common China Negotiating Mistakes”, please download it.  We are in the process of developing an interactive online course based on the report, and are looking for 10 beta testers.  If you are interested, please get in touch.

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