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chinese negotiating behavior, Page 2

We Are Not #1 !

Experienced China negotiators know why China doesn’t want the title: World’s Biggest Economy.

China is trying its best to avoid the glare of international scrutiny again – but this time it’s not about censorship, corruption, or human rights. The World Bank is trying to hang the mantle of “world’s largest economy” on China’s brawny shoulders – and Beijing is having none of it.

10 China Negotiating Mistakes - Buy the eBook on Kindle
Learn from the expensive mistakes of expat negotiators who have come before you…

Regular readers of ChinaSolved are familiar with the successful Chinese negotiating tactic of BoPS  – or Balance of Power Shift. Chinese negotiators frequently enter a deal situation by purposely placing themselves in a subordinate position. They are known for their humility, cordiality, and polite flattery – “your company is so accomplished, your technology so advanced, your brand so famous.” You aren’t treated as an equal partner — you are “LaoShi”, the honored teacher who leads and offers guidance. Before you know it, you have guided your polite new junior partners right to your best technology, your proprietary business methods, and maybe even your customer lists. That’s when the balance of power shifts and suddenly your humble Chinese counterpart becomes a good deal more assertive. Once a Western negotiator has outlived his usefulness, the partnership either dissolves completely or becomes much more competitive in nature.

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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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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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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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Chinese Negotiating Agendas – Stated vs. Real

To negotiate successfully in China, you have to figure out what their true motivations and goals are.  That’s not always easy.

What do Chinese negotiators want?

Sign up for the ChinaSolved newsletterChinese negotiators usually have two sets of negotiating agendas and motivations. One you see – one you don’t.   The one you see is probably very closely aligned with your own deal points and negotiating goals.  In many cases, novice western negotiators are pleasantly surprised to hear that the Chinese side’s negotiating agenda is so close to their own that it seems to be rephrasing of their introductory email.  It very well may be.

The Chinese agenda you don’t see is usually some combination of technology or other IP, financial assets, or markets.  In the old days it was always money, and then for a while technology was the most important thing. But now it’s a combination of technology and your client list. As the Chinese expand overseas you will still hear a lot of talk about branding and marketing tie ups, but what they really want is overseas real estate, businesses, farms, or other real assets – and client lists. They can buy the real estate but they’ll have to get the client list from you.

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