Successful negotiators have to master two complementary skills – analysis and planning. The trick, however, is that you have to analyze your counter-party, and then adjust your own plans, methods, and behaviors.
Not the Way We’re Wired
Although this sounds simple enough, it is actually counter-intuitive in practice –and quite difficult. When I started my career in finance, one of the first rules I learned was “buy low, sell high”. The next thing I learned was that the vast majority of investors ended up doing just the opposite – buying at the top and selling low out of fear. Negotiators are prone to making the same sort of emotional blunder. Negotiation is a messy, emotional process, and when there is conflict or stress we revert to our base instincts. We analyze our own agenda and try to adjust our counter-party’s behavior. This is how we humans are wired
Culture, strategy and tactics are all parts of a single whole. They form a continuum. When they are not aligned, you run the risk of failure and conflict. Unfortunately for many Westerners negotiating in China, the people making strategy are often divorced from the deal-making process. They may have a very loose grasp of Chinese culture in general, and often lack any specific knowledge about the people sitting across the table.
Strategic Goals –
What are the end games?
Many negotiators enter the process with goals and strategic plans that are far too vague – particularly in China, where they don’t know the landscape well enough to make informed decisions. Every negotiator should have a good idea of where he wants his organization to be in 3 or 5 years, and how he plans on getting there. Now your job is to determine what your counter-party wants, and what HIS end game is. If you long term interests are in conflict, then you have to re-assess this deal’s viability.
Does he want your technology or IP? Does he plan on competing with you in China, your home market, or other key markets? Do you both plans on calling the shots in the China operation?
If your end goals are in conflict, then it could mean that your business plan is flawed, or maybe you have picked the wrong partner. Either way, you have to make some very serious adjustments immediately. Far too many Western businesses have tried to ignore this simple reality and continued hammering away with the wrong deal or the wrong counter-party.
Tactics – Conflict is forever.
Even if your strategic goals can be aligned, you still have to analyze and adjust when it comes to tactics. No one gets more honest, competent, or accommodating as the pile of money on the table grows. People don’t change – but we are great at fooling ourselves into thinking that our counter-parties will see the wisdom of our position and adapt it.
No plan survives the initial meeting, and timetables are the first component of the plan to change. If you have a firm schedule for your China deal, you have already lost.
Some Americans like to open strong and gradually soften their position. Chinese negotiators tend to start off broadly optimistic and focus on relationship.
Unpack what they mean when they talk about “cooperation”, “mutual commitment” and “trust-based partnership”. Don’t just smile and toast. Do they mean giving up your technology, transferring assets, or granting unilateral exclusivity? It’s your job to know this.
Are you having a hard time “reading” your counter-party or getting a straight answer to basic questions? If you have had several meetings but still don’t know who makes the decisions or what they really want despite your best efforts – then stop. This isn’t an accident, and it’s not going to stop. Can you work with this for the long term? If you are buying containers of plastic parts or tons of chemicals, then you might be able to live with this. If you are relying on them to represent your brand or
To get the right partner you have to be the right partner. What are you willing to do to accommodate the Chinese side? Should they trust you? How are you backing up YOUR grand claims? What’s in this for them? Are they employees following your instructions, or high-level managers adding value with connections and innovative solutions? If all they care about is your tech, brand or markets, you need to present them with a roadmap – or they’ll supply their own.
Tactics are how you interact. “Cultural differences” is a phrase heard during business autopsies, not anniversaries. Surface your differences and deal with them early.
Relationship—It’s a business decision, not a high school crush.
North American and North European negotiators think that successful transactions lead to close relationships. Chinese negotiators (and most of the rest of the world) think that close relationships lead to successful transactions. Relationship isn’t emotional or familial – it’s business. Thick contracts and risk-averse lawyers are appropriate in NY, but in Asia they undermine trust and create an adversarial atmosphere. Chinese do use contracts, but they tend to be thinner and make their appearance later. If you show up with lawyers too early, you might be leaving empty handed.
Never confuse etiquette with alignment. Your hardline opening offer may disqualify you as a suitable partner. To attract and maintain good partners, you have to be a good partner. That may mean changing your standard operating procedures – especially when it comes to equity splits, IP sharing, and marketing cooperation.
Strategy, Tactics, and Relationship are all part of the whole. They have to work together. If one leg is shaky, then the structure will collapse. Successful negotiation in China is about developing the right plan, picking the right partners, and executing the right relationships.
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