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China negotiation training, Page 2

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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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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Chinese BATNA is a Moving Target

Western negotiators in China must conduct 3 BATNA analyses over the life-cycle of their deal.

China negotiators who are conducting a BATNA analysis have their work cut out for them.  Best Sign up for the ChinaSolved newsletterAlternative to No Agreement scans are more complicated and unstable than in the West.  In our last post   we looked at the factors that make BATNA analysis more complicated in China than in the West.   Now we will look at the broad categories of issues that negotiators must anticipate during 3 phases of a Chinese deal – the pre-bargaining preparation stage, the negotiating period, and the post-agreement renegotiation.

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Introduction to China BATNA Analysis

BATNA with Chinese characteristics is much more challenging than western negotiators realize.

BATNA – or Best Alternative to No Agreement — is the bedrock of preparation for a negotiation.  Westerners don’t always do proper analysis of the China operating environment, and the result can be negotiating the wrong deal with inappropriate potential partners. Sign up for the ChinaSolved newsletter

What is BATNA?

BATNA is what you’ve got when your negotiating counterparty gives a final, definitive NO to your proposal or counter-offer.  It’s the state you find yourself in when the negotiation ends without a deal.  The BATNA is not an action plan – it is what you already have.

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A New Approach to Preparing for a Chinese Negotiation

In the West, negotiation is the prelude to business.  In China, negotiation IS the business.

Westerners have to stop fighting the clock when negotiating in China.  It is killing us.  Every time Sign up for the ChinaSolved newsletteryou tell your Chinese counterparty when you are returning home, you give away all of your power.  They know your self-imposed deadline – and they know your HQ expects you to return with a signed contract.  This does not make for a powerful negotiating position.  Make your own travel arrangements, be vague about your schedule, and if you can fix it so that you are going to another city in China after you leave them, then so much the better.  Remember – Chinese negotiators are more afraid of you teaming up with another Chinese business than going it alone.

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STEEPLE Analysis for Chinese Negotiation – a 360 Degree Scan (Part 2)

STEEPLE analysis is a simple framework for conducting 360 degree analysis of a business environment that is essential for China negotiators.

In our last post we introduced the idea of using a STEEPLE analysis to analyze the Chinese Sign up for the ChinaSolved newsletterbusiness environment and prepare for negotiation.  STEEPLE (alternately treated as a PEST or PESTLE framework) is a systematic approach to scanning a market or business environment – and it is a crucial step for western negotiators working in China.  Last time we focused on CSF – Critical Success Factors – which are the key variables that will impact on your effectiveness in China.   If you are having trouble identifying the CSFs that you should be focusing on, perform a thorough STEEPLE analysis, making note of the areas where you have the most questions, obstacles, and problems.   More likely than not, those trouble areas are your CSFs.

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STEEPLE Analysis for China Negotiation (Part 1)

Train your negotiating teams to perform a STEEPLE scan of the Chinese operating environment.

Introducing STEEPLE analysis to find your Chinese CSF – Critical Succes Factors

A STEEPLE analysis (which is very closely related to a STEP, PEST or PESTLE) is a systematic method for scanning the business environment. When operating in your home market, it may Sign up for the ChinaSolved newsletternot feel necessary, since you are probably very familiar with all the key variables affecting your organization. In China, however, a systematic approach to scanning the business environment is crucial. First, newcomers to China simply don’t know what they don’t know. A STEEPLE framework gives you a 360 degree view of the Chinese operating environment and is likely to yield more questions than answers in the early stages – and that’s a good thing. The second benefit of a STEEPLE scan is that it forces you to confront an unfamiliar situation with naïve and fundamental questions. In China, assumptions are deadly and generalizations can lead to catastrophic decision.

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