Mapping your internal China negotiating stakeholders
I was recently working with a US purchasing team of a European MNC buying from China. Their brief was all about reducing costs and turn-around time, and I expected them to ask me about tactics and strategies for influencing their Chinese counterparts at factories and distributors. But instead, they wanted to know about how to clear bottlenecks and accelerate processing time – within their own organization.
Their frustrations were not with the Chinese suppliers (who they were learning to deal with) or with their direct reporting line (who felt they were in the same boat). They were being slowed down by departments not directly affected by supply chain process – like finance, legal and sometimes even HR. It seemed that every time there was a change in personnel or a new internal procedure, someone somewhere in the company had to learn about China for the first time. The bottlenecks weren’t killing them, but it was a delaying the supply chain process by a day here and half a day there – which really added up. When the purchasing managers had to go back to their Chinese counterparts with adjustments to deal terms or requests for information, it weakened their position and made them look disorganized – especially when the front-line negotiators didn’t know the people within their own company or why they needed to make changes or get new data.
Map your Internal Stakeholders
Stakeholder analysis should be concerned with three groups of people – those who you need to say YES, those who can say NO – and those who can say MAYBE.
The YES men
Who needs to initiate a deal or give the OK to start negotiating? This may be you, your team leader or someone within your operating group.
The others who must give approval are usually pretty easy to spot. If you are buying, then someone from finance is going to be involved. US firms are usually going to include someone from legal. Manufacturing and QC are certainly involved – either as direct drivers or internal clients.
Internal stakeholders who must approve a China deal are the easiest to identify and their agenda is usually pretty clear.
The NO men
Internal stakeholders who can veto or block your China deal are your next concern. When Chinese negotiations threaten existing relationships or power structures there will be obvious sources of friction, so look at sales teams with strong ties to suppliers in other markets and anyone else whose network is harmed. Marketing people tend to be unenthusiastic about “Made in China” manufacturing. QC/QA managers may be supporters of a “re-sourcing” effort to shift manufacturing away from Chinese factories. Unions and worker groups have traditionally tried to block deals involving China.
The MAYBE men
The most dangerous group of internal stakeholders, however, is the MAYBE squad. The problem with this group is that they may support a China deal, they may oppose it, or they may delay it. These are the analysts, the compliance people, the mid-level lawyers, the R&D or engineering teams, and HR. Because they are not directly involved in the supply-chain or marketing teams that traditionally drive China deals, they may not have the budget for whatever adjustments that your China deal will require. Does the factory or supplier you have been negotiating a purchase from use child labor or unsafe processes? Your head of HR or Legal my slow down your deal while you collect new information – and ask a series of awkward questions to your counterpart. Cost-cutting may require your engineers to travel to China on their own – which makes you and Legal nervous about the security of you IP. Payment terms may require new approvals in Finance.
The MAYBE men aren’t out to sink your deal (necessarily), but they have jobs to do too – and if you push back against their requests it raises red flags and makes your deal smell funny.
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.
A New Stakeholder Map for China
Your new internal stakeholder map will include 3 types of people – those who must approve, those who can say no – and the new group that can delay or derail your deal by requesting more information or adjusting deal terms. You know how to handle the YES and NO groups – but if you want to streamline your China business you should also pay attention to the MAYBE people as well. The best way to handle this is to mobilize your supporters higher up in the organization to co-opt departments that aren’t direct beneficiaries of your China deal. That might include budget for HR and legal compliance, or involving engineers earlier in the process.
If you can’t delegate this job up the ranks, you will have to take direct action. It’s up to you to give all of your internal stakeholders the opportunity to voice concerns and make their requirements clear as early as possible. This may seem like a counterproductive move that will cause more delays, but it’s important for you to know what types of information and procedures your organization requires. What they see as a routine request may end up undermining your negotiating position if it surfaces at the last minute. You will be in a much stronger position with your Chinese counter-parties if you can include requests for data and basic information early. This will not only help you with the all-important internal negotiation, but may even strengthen you hand with your Chinese counterparties if handled properly.
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