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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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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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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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Negotiate Lower Risk in China

Western negotiators in China can lower their risk with smarter negotiation techniques.

Negotiating in China used to be about reducing costs, but since the crash of 2008 it has been about accessing the market and integrating supply chain.  Since both of these goals require substantial and long-term commitments, the job of negotiators in China has fundamentally changed.  Nowadays, negotiating in China is about reducing risk.

Rule Number 1: business intelligence is your responsibility.  Not your counter-party, supplier, partner or even key staff.  You don’t have to have all the answers, but you do have to know the right questions — and have some way of assessing the answers you are getting.  That is not something you’ll grow into or pick up over time.  If you are too busy to learn about China and develop your own channels of business intelligence and market information, then you are simply too busy to succeed in China.  It IS that simple.

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