China mixes trade and politics in Europe – and underscores the futility of building win-win relationships.
The SCMP (among others) ran the headline: China, Europe reach deal to end Beijing’s anti-dumping probe of European wine just as Xi Jingping is winding up his European tour. This was a slightly less dramatic headline than “China takes firm stand against Russian land grab” which we are unlikely to see, or “Chinese economy shows new signs of weakness” – which are seeing far too much of.
If you have trouble remembering just what the China -EU Wine Dumping case was all about, think back to May and June of 2013 when the EU threatened to discuss hitting China with trade sanctions about Chinese dumping of solar panels, and China retaliated by claiming the EU was using unfair trade tactics to sell wine to China. Here’s the piece ChinaSolved ran on the subject last year: Living to Fight Another Day? China vs. EU is Bruising Loss
Patience is Your only Option when Negotiating in China
When I first arrived at college in Chicago, they told us “if you don’t like the weather just wait half an hour and it will change.” When it comes to Chinese trade negotiations, if you don’t like the policy just wait until Beijing needs a sound-bite or puff-piece, and it will change. Trying to compell a large Chinese counterparty to alter their decisions in the short term is futile. If you are negotiating with an SOE or a heavily regulated industry (which covers a lot of ground in China) then you have to understand when you are facing business objections and when you are encountering policy obstacles. If your bottlenecks are the result of policy, then you are not dealing with a rational counterparty motivated by self interest. You are waiting for frozen lakes to melt and seasons to change. It will happen when it happens — and not because you want it to.
Use the time to do two things:
1) Find something else to do -like develop new counterparties who aren’t hostage to policy mechanisms (which may involve leaving China — or changing your deal).
2) Plan for the inevitable policy shift that everyone knew was coming anyway – and be ready to mobilize your resources before your competition.
In the meantime – Cheers & Ganbei! With all the actual bad news in the China business press recently, at least we have a bit of fake good news to drink to.
If 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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