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China Negotiation Training, Page 2

Negotiating with Chinese in your Home Market

The Chinese are coming…to spend, partner and raise their kids in your neighborhood. Be ready.

Whenever I step foot out of the NYC area, I get questions about how American sellers should approach mainland Chinese buyers. New Yorkers think they’ve got it all figured out (though I’m Learn to negotiate in China with China Soovenot sure mainland visitors agree). That may just be part of the jaded NY passive-aggressive, semi-hostile attitude of “if you can make it here” that we show towards everyone – local and tourist alike. Mainland Chinese buyers and counter-parties, however, are becoming significant players in the mainstream US  economy. The first place we’ll see them is as spendy-vacationers and real estate buyers, but expect to negotiate with more Chinese who are buying companies, forming US-based partnership, being head-hunted by HR departments, and setting up stand-alone commercial ventures. Just because you aren’t going to China doesn’t mean you won’t be negotiating with a mainland Chinese counter-party in the future.

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Are Chinese Negotiators Long-Term or Short-Term? Yes

Chinese negotiators can be chess-match slow, or lightning fast.  The pace of your Chinese counter-party says a lot about your deal and relationship. 

A Chinese negotiator approaches each deal with two options in mind. His Plan A is a long-term Learn to negotiate in China with China Sooverelationship that will bring him many profitable transactions over a long time. He knows that this will require a lot of time and effort, but this is the Chinese recipe for success, and he considers the investment of time, effort and patience to be standard operating procedure. Plan B is a one-off, win-lose transaction.  One-time deals may not be the cornerstone of his strategy, but normal business operations require plenty of non-strategic transactions. Since he doesn’t plan on seeing the counter-party again, he should maximize profit immediately. Often that means lower quality production, inferior materials and little or no service.

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Chinese Negotiators Must Know the Enemies (and Procrastinators) Within

Mapping your internal China negotiating stakeholders

I was recently working with a US purchasing team of a European MNC buying from China. Their Learn to negotiate in China with China Solvedbrief 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.

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Strategize Globally, Implement Locally

Your strategy becomes my tactics – but you have to stay in control of HOW and WHEN

We’ve been talking about the importance of developing good strategies and understanding Sign up for the China Solved China Negotiation newsletterwhere strategy ends and tactics begin.  I’m using a simple but workable set of definitions — strategies deal with goals, asset development & allocation, and longer time frames.  Tactics are methods for reaching goals, deal with spending or earning, and usually take place within a shorter time horizon.

Strategies should be developed at the Board or CEO level, and integrate on a global level.  Tactics must support and address your global strategy, but have to be adjusted for local business envirnoments and current economic realities.

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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.

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Western Strategies and Tactics in Chinese Negotiation

Western negotiators in China shouldn’t try to decide on tactical issues before they develop workable strategies.

Western negotiators in China are more successful when they fully grasp the difference between Sign up for the ChinaSolved newslettertactics and strategy – and understand how to develop and implement them in their new business environment. Unfortunately, many foreign negotiators and managers in China spend so much time thrashing out tactical details and trying to clear operational bottlenecks that thought of constructing a practical, coherent China strategy is a fantasy. Chinese counter-parties benefit from the Westerners perma-fluster, and happily add fuel to the fire in the form of new crises, obstacles, and opportunities. Western managers complain of starting hundreds of projects but completing few and accomplishing even less.

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Chinese Negotiating Agendas Stated vs. Real (Part 5)

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. Sign up for the ChinaSolved newsletter 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.

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Chinese Negotiating Agendas Stated vs. Real (Part 4)

Using Trial Balloons in a Chinese Negotiation setting

We have been discussing ways of surfacing a Chinese negotiator’s actual agenda for the deal Sign up for the ChinaSolved newsletteryou are working on.  We’ve looked at the direct method of asking open-ended questions, and a less direct method of trying to read the truth behind their misdirection and obfuscation. The last technique we’ll talk about here is the trial balloon.

A trial balloon is an idea you float to test the other side’s reaction. It is somewhere between a direct question and passive listening for information. A typical trial balloon might be, “We’re considering setting up a WFOE (Wholly Foreign Owned Enterprise) in Pudong…” and then you stop talking. That’s important. Now you gauge his reaction – what he says and the non-verbal cues. He will probably be either positive and encouraging or skeptical and cautious. Follow up with an open-ended question that gets him talking – in broad terms at first – about what his thoughts are.

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Chinese Negotiating Agendas Stated vs. Real (Part 3)

Uncovering the Chinese side’s true agenda. Method 2: Learn to the Lies

Some readers responded to our suggestion that western negotiators should ask direct Sign up for the ChinaSolved newsletterquestions to uncover their Chinese counter-party’s real agendas  with skepticism. Won’t aggressive and competitive negotiators simply lie? Yes, some certainly will (and as some people pointed out, that is by no means a purely Chinese phenomenon – but since we are concerned with Chinese negotiation tactics, that’s where we will focus).

If you feel your Chinese counter-party is deceiving you, your next task is to answer these questions:

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Chinese Negotiating Agendas Stated vs. Real (Part 2)

Uncovering the Chinese side’s true agenda.  Method 1:  Ask Them.

Chinese negotiators pride themselves on being subtle and cunning.  Military and business traditions in China extoll the virtue of misdirection and multi-faceted strategies that obscure one’s true motives.  Unfortunately for western negotiators, this makes it very difficult to craft effective deal proposals.  It’s hard to be win-win with a counter-party who won’t reveal what a win looks like.

Westerners, however, must shoulder part of the blame for the communications-gap that plagues cross-border communication.  Sometimes we don’t do the homework, our language skills are famously bad, and we have a bad habit of trying to shoehorn western business models into a Chinese business environment.

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