Analyzing the New Business Environment
Once you have some idea about their real goals and agenda, then you have to revisit your initial deal proposal and re-evaluate based on the new information. Do you still want to be in business with these guys?
American negotiators like to start out tough and aloof – gradually getting more cooperative as they get to know a potential partner. Chinese take the opposite approach – opening with a friendly and harmonious attitude, but getting more demanding at the end. Once you are successful at digging beneath the surface and learning more about your Chinese counter-party’s true motivations and goals, you are in a position to perform two crucial analyses.
1) Variance between Stated and Real Goals
The first thing to gauge is the variance between his true objectives and his stated goals. If your counter-party is more aggressive and ambitious than he let on, but it’s merely a matter of degree or timing, then you don’t have to worry too much. Lies of omission, degree, and scope are normal in a negotiating situation – if he plans on eventually acquiring technology or possibly expanding into your markets at some point in the future, then you may take it as a positive sign. There is room to grow together. An ambitious partner is better than a complacent, directionless one. Good negotiators are supposed to hold back some information, and doing business with a naïve dolt is never a good idea. If you were able to surface his true intentions by engaging in an honest, open dialogue then so much the better.
If, however, his real goals bear no relationship to his stated agenda – or worse, are at odds with what he has been telling you, then you may have reason to reconsider this arrangement. This is particularly true if he has his sights set on your technology, designs or other IP – but doesn’t plan on paying for it or cutting you in on the real deal. If you learned most of your information about him from figuring out what he was lying about or hiding then you should be concerned. The problem isn’t a partner who doesn’t tell the truth – it’s one who thinks he can get away with lying to you at will. It simply won’t end, and China doesn’t offer you the legal or structural protections you need to safeguard your interests. No one gets more honest as the amount of cash on the table grows larger, so when you determine that your counter-party is a crook you should get as far away as fast as you can.
2) Goal Congruence Analysis
Once you understand more about his true goals and you still think he is someone you could potentially work with, then you have to re-assess his suitability based on his real agenda. I remember meeting an American team from Silicon Valley in Shanghai to discuss a partnership with a Chinese technology firm. Everybody loved everybody, and it seemed like a marriage made in heaven – except for one thing. The Americans were adamant about retaining 100% control of their technology while the Chinese group clearly wanted access to it. They brought it up several times at every meeting. I advised the Americans to pass. The Chinese side was being very honest – they were going to acquire the technology they wanted, one way or another. The Americans either had to reconsider their business model and figure out some way to share their IP, or break off the conversation with this group and look elsewhere for distribution in China. Everyone was being honest with one another – but their goals were clearly in direct opposition. It was a recipe for disaster in the long term, no matter how much they seemed to get along with one another.
Western negotiators have to determine the real agenda of the Chinese side and then reconsider the deal terms based on the true agenda – not the initial proposal. While this seems to be common sense, the fact is that many American and European negotiators have so much trouble finding suitable partners in China that they tend to hear what they want to hear – and believe that they can maneuver their way to a winning agreement. All they are doing is putting their assets at risk and setting the stage for conflict, loss and frustration.
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