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Conflict management

China Business Cross-Talk:  Two Views on Doing Business in Today’s China

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Mario Cavolo and Andrew Hupert take two different views on China’s emerging business environment.

China’s economic and regulatory policies are a work in progress that are constantly evolving.  Lately the pendulum seems to be swinging against the interests of multinationals, but the reality defies easy answers or rash generalizations. presents for your consideration two different views on recent developments and future directions of Chinese economic policy:

China’s Evolving Business Environment Favorable to Some

Mario Cavolo, Vice President – Media/PR Training; Scott PR China, and author of China: The Big Lie? published by Long River Press, North America

Mario Cavolo reminds us that not all the China business changes are negative – and some beneficiaries of recent policies are the good guys.

Any worthy China watcher has noticed the increasingly unfavorable trend toward foreign entities present here, whether it is reporting on security issues with Microsoft and Apple or the recent position papers by the European and American Chambers delivering a somber rather than upbeat view of the current business environment in terms of ease of doing business. It’s not all bad, but we wish it was better.

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China and EU Resolve Wine Dumping Charges — Just as Xi Jinping Winds Up EuroTrip

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 Learn to negotiate in China with China Sooveslightly 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

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Good Deal Structures Lead to Successful Chinese Negotiations

Smart Deal Structures Make Negotiating in China Much Easier (still tough though)

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Westerner negotiators with experience and a successful track record inChina structure their deals AND China business models completely differently than newcomers do. They take longer, spend a lot more time in the early stages, know a lot more about their counter-party and never try to force out-of-town rules onto a Chinese game. That doesn’t mean they do things the ‘Chinese way’ – they do it the ‘Smart-Westerner-in-China way’.

What do smart westerners in China do differently than newcomers?

1. They are in it to win it, both during the negotiation and in the all-important post deal phase.

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Cross Culture Communication vs. Cross Culture Negotiation in China

Is it more profitable to be Loved or Feared in China?

Thanks to everyone who downloaded & gave feedback on the ChinaSolved Report:  10 Common China Negotiation Mistakes.  (It will be available for free until Chinese Spring Festival – click here for download ).

One of the most common questions/comments to come back from the report about western Sign up for the ChinaSolved newsletter“worst practices” in Chinese negotiation had to do with the tension between developing good relationships with local counterparts and promoting one’s own interests.  Which is more important in China – developing good relations or maintaining control of your own assets?  While this has always been the negotiators’ dilemma (see Fisher & Ury; Lax & Sebenius; Malhotra, Bazerman or any of the other PON  authors), it is particularly troublesome in China where guanxi and harmony are watchwords of business success.

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Don’t Train Your Own Competition: Chinese Negotiation Training Topics

ChinaSolved’s Least Wanted List #5:  Training Your Own Competition

It may be true that Chinese businessmen are long-term planners, but that doesn’t mean that they intend to work with you forever.  You may be a bit player in their grand epic story – and your role could be to supply them with technology, new products or business methodology.   Know who your potential competitors are, and don’t treat them like partners.

Sign up for the ChinaSolved newsletterNegotiating in China is as much about managing relationships as constructing business plans.  Plenty of Western entrepreneurs and managers have had solid ideas that failed because they lacked suitable local partners – or had the wrong partner.    You also have to remember that in China, the practical definition of “partnership” is much broader than it is in the West.  You may run a WFOE or department of a western MNC that doesn’t have any Chinese equity partners, but from a practical operating perspective you can still be locked into a variety of exclusive partnerships or critical supply relationships.   This discussion isn’t about legal details – it’s about negotiating with Chinese counterparts.

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Mission NOT Accomplished – Chinese Negotiation Training Topics

ChinaSolved’s Least Wanted List #3 – Calling the negotiation a done deal just because they signed on the dotted line.

10 China Management Risks You Can Eliminate by Training:  China management behaviors you need to eliminate # 3. Declaring “Mission Accomplished” too soon.

Sign up for the ChinaSolved newsletterChinese negotiators focus on the relationship – not the contract. In the West we stop negotiating when the paperwork is signed. In China negotiations start at “Hello” and end when your relationship is over. Experienced negotiators know that a signature or verbal agreement doesn’t end the bargaining – for some deals it is more of a beginning than a conclusion. Plan accordingly, and you may be able to turn the situation to your advantage.

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How to Make a ChinApology

Here are some tips for Western managers making their first ChinApology:

ChinaSolved logoDanone’s Dumex baby forumula division is the latest MNC to get caught in Beijing’s ever-widening anti-corruption net. Last week was Bayer, and before that Sanofi. The Euros are certainly attracting all the wrong sorts of attention in China these days, but it’s just a matter of time before the Americans start showing up in the headlines. We’ve discussed how to reduce risk through smarter relationship-building and why it’s important to audit your China operation – but for some of you that ship has already sailed.

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Risk Reduction in Chinese Business: Relationships

Western managers who delegated the “guanxi” or relationship-building function need to audit their China operation.

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Ever since I published the  eBook – Guanxi for the Busy American  – I’ve been on the receiving end of an endless stream of jaded Old Hand derision and criticism.  It usually takes the form of a fast-paced 2-Step.  First they declare that they are tired of hearing the overworked and

misused phrase, “guanxi” and they don’t bother with it anymore. The next step is to delegate the entire relationship-building process to a trusted Chinese associate or agent.  (A typical response to any mention of the g-word:  “I don’t bother with guanxi nonsense since it isn’t really necessary and never helps westerners anyway.  Instead I have, over the years, built up a strong relationship with my Chinese partner/lawyer/director/wife/classmate.”)

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You Can’t Spell “Success in China” Without HR

Risk Reduction Starts With Internal Negotiation

If you are not training your senior managers and mid-level supervisors to negotiate relationships internally, you are exposing your China operation to unnecessary risk. To quote from the book – The Fragile Bridge: “Conflict in Chinese business comes on without notice. By the time you know something is wrong, it’s probably too late to fix the situation…”

Success in China business is all about HR.

Managers in the West don’t generally consider HR something that has to be negotiated. Senior managers in the US have gotten used to high levels of unemployment, having multiple qualified applicants for every job and being surrounded by experienced managers living in mortal fear of losing their position. In China the situation is different. If you are looking to hire unskilled factory hands in Chengdu or inexperienced grads in Shanghai, you still have the pick of the litter. But experienced managers who can function in an international business are in short supply – and they know it. You’ll spend more time, money and effort in China negotiating for things that aren’t even up for discussion back home.

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