Is it Better to Negotiate With a Bad China Strategy – or No China Strategy?

Adjusting your negotiating strategy too much for China is bad, but surrendering the agenda is even worse.

You have to adjust your business plan to reflect the realities of the Chinese business Learn to negotiate in China with China Sooveenvironment. If you change your negotiating strategy and business plan too much then you aren’t expanding your business to China — you’re creating a new operation that doesn’t integrate with your global operation. Change your business model too little, and your business doesn’t stand a chance in the hyper-competitive China market.

Your best course of action is to develop a plan that makes sense BEFORE you start negotiating. Good negotiators don’t talk and think at the same time. (In case you’re wondering, think first – then talk.) In the language of negotiation, you’ll create a new goal system, identify an ideal counter-party profile, and set a sensible bottom line or BATNA  . You’ll consult with experts and knowledgeable advisors – WHO ARE NOT YOUR COUNTER-PARTIES IN AN ONGOING NEGOTIATION – and do the groundwork that will give you some good insight into the Chinese business, legal and market environments. You’re entire universe of internal stakeholders will get input and buy into the new plan. Most important, you will have a roadmap of how the China business will integrate with your global operation.

But if you’re reading this, then that ship has probably already sailed. If you are like the countless international negotiators who learned about Chinese business “on the job” (present company included) then you are confronting a different set of challenges.

You Thought You Had a China Strategy… but now it seems woefully inappropriate and incomplete.

So what do you do when you’ve already started talking but now you don’t know where you’re headed?

You’ve got three options, and while none of them are great, one is worse than the others. Imagine your China business model is a car you are driving down a highway – and suddenly the engine starts making funny noises and you have trouble controlling the speed and steering. What are your choices? Well, you can pull over, pop the hood and fix the engine. Or you can try tinkering with the works while barreling down the highway at full speed. And since “This is China” you can jump into the back as your Chinese partner slides into the driver seat to take control.

The Blindly Optimistic Choice
Reading this right here, right now – you’re thinking that it’s an easy choice and you’ll do the smart thing and pull over until you figure what you’re doing and where you’re going. After all — only an idiot would hit the gas when he couldn’t see where he was going. . . Yet novice Western negotiators in China are dangerously optimistic, and this is just fine with their Chinese counterparties. Americans tend to think that our methods will ultimately work out and the Chinese side seems so amenable and respectful that we don’t seem to notice that the more we talk the less control we have of the process. Between our native confidence and the encouragement of our new Chinese partners, we just keep our foot on the gas and tell ourselves that we are getting the hang of this. Chinese negotiators have a habit of not being openly critical or giving direct refusals, so the Western side finds it easy to imagine that everything is going well – and there is no reason to waste all of that time and effort by applying the brakes and reassessing the situation. We try to power through and stay the course – and end up like Best Buy (or Google, eBay, Mattel, Home Depot… you get the idea).

The Other Worst Choice.
If stepping on the gas and powering through when you are having engine trouble is dangerous, then trying to fix a faulty machine while you are moving is even worse. This happens to companies that try to make adjustments to their negotiating position or business policy while they are actively engaged in a deal or running a business. Not only are you moving at full speed, but now you have to take your eyes off the road to start fiddling with controls and reading instruments. In many cases this isn’t the fault of the front line negotiator or manager – someone back in HQ is demanding that he maintain forward momentum while simultaneously fixing the problem. I remember working with a major international electronics firm where the Sr. VPs had spent half a year (and a small fortune) building “guanxi” relationships with Chinese distributors and strategic partners in an effort to make inroads to the Chinese consumer market. Front line purchasing and sales teams based in HK and Singapore, however, were still working off the firm’s standard playbook – which insisted on constant cost-cutting from suppliers and tight margins and high targets for distributors. Those hard won, expensive relationships didn’t last long, and now the company’s China strategy was in tatters. The solution was to maintain the aggressive front-line targets, but be more friendly and polite during negotiations. The mixed signals only made things worse, and shifted blame from the C-suite (who had the tools to deal with the problem) to the front line (who looked for new jobs).

The Worst Worst Choice
Western negotiators have one last card up their sleeve – but unfortunately it is a suicide king.  When the strategy, goal system, or business model that you had originally intended to use proves to be ineffective – you start taking advice and suggestions from the very people who have the most to gain from your troubles. You start relying on counter-parties, partners, distributors, suppliers and key staff for your basic data, market information and strategic planning. While I’m a great fan of getting local advice and a wide range of inputs, you’ve got to be realistic and sensible about where that information comes from. Once you have a negotiating strategy or business model that makes sense – and that might not happen on your first try (particularly if you are transplanting a Western model directly into a Chinese environment) – then you can get local advice about the best methods for reaching those goals. But if you let your counter-parties (and yes, in China that may very well include your key staff) set your operating goals and negotiating agendas, then you are sure to end badly.

It doesn’t matter how smooth the ride is or how great your gas mileage is if you aren’t headed to the right destination. And that’s exactly what happens when you let your Chinese negotiating counter-party take control of your strategy.

Next:  Strategize Globally, Implement Locally

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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