Home / Successful negotiation – how is it done?
Project part-financed by the European Union
Negotiating is often a major part of doing business. Get it wrong and you could see an entire deal collapse. But get it right and your company might just come out on top.
Here, Eugene Chang, China Britain Business Council’s China business adviser, looks at some basic negotiation principles that are particularly relevant to the Chinese situation, but could also be applied to negotiations in other countries.
Because any negotiation is a complex interaction between several individuals coming together often for the first time, and from different backgrounds and negotiating positions, it is inevitable that even with the best preparation the outcome is – more often than not – unpredictable. That said, there are some universal principles, taught in most business schools, which hold true for any negotiation. However, it is useful to highlight some success factors which I think are particularly pertinent when dealing with Chinese negotiators:
Western businessmen are prone to making decisions much quicker than the Chinese. All too often I have had to pull back my Western colleagues and advise them not to get to their bottom line so quickly. The Chinese are more used to protracted internal collective discussions and ultimate decision-making by the top leader. They also need time to understand some business concepts which are new to them but second nature to us.
China was a totally planned economy 25 years ago. The concepts of a Western-style limited company (shareholder equity, return on investment, due diligence and corporate governance, for example) are still new to many Chinese managers.
Much is made of deliberate time-wasting by the Chinese since they know the ‘foreigners’ are raking up huge hotel bills and have a plane to catch, but my experience is that the protracted time necessary for negotiations is just a consequence of unfamiliarity with many joint venture concepts, the slower pace of life and the slower decision-making process in China.
Another point to bear in mind is that excessive pressure from your superiors to close a deal can seriously weaken your negotiating position since you are then much more likely to make impulsive concessions.
This is a key factor in any negotiation but more so in China where personal relationships and feelings are held to be so important. I remember a case when a sales manager had a natural flair for explaining things on a whiteboard, so much so that the Chinese negotiation leader called him a ‘professor’, and believed all he said, even when explaining why he had to increase his prices by 5 per cent! If you can demonstrate your expertise and experience then you will get respect. Similarly, if you have participated in some prestige project in China, do not be afraid to make something of that, because the Chinese will be impressed. As a friend of mine said rightly, the Chinese will buy into the person, rather than into a company or product.
The converse applies. If the Chinese take a dislike to you for some reason (for example, for showing disrespect, or for having a bad temper, or for being arrogant), then you won’t earn their respect, and they won’t give you the business.
You will meet many people around the table and you will have to judge quickly who are the key players. Sometimes you will only meet this person at the dinner table but he or she will have been briefed on your performance during the negotiation. The ones who ask the most questions are not necessarily the most influential. It is no use pressing a Chinese negotiator on a particular point if he or she is not a key decision-maker. This will only lead to a lot of time wasting and frustration. Either wait until the key decision-maker is present or give the Chinese side time to have their internal discussion.
Although the general manager of a factory may be leading the discussions with the foreigners, he or she may still have a board chairman, various local government leaders and a parent company in Beijing to contend with – the so-called ‘mothers-in-law’ in Chinese, who contribute little value-added to any discussion but have the power to cause no end of disruption. (As a corollary, the Chinese side will often admire the fact that you can make decisions over a wide range of issues without having to involve a huge team of colleagues).
Certain behaviour in China will take some getting used to and should not affect your judgement or attitude towards a person, such as the habit of spitting (though this is not so common these days), taking mobile phone calls during a meeting or smoking without asking if you object. Just remember that Chinese people find it disgusting that we can blow our noses into a dirty looking-handkerchief and then put the damp rag back into our pockets.
Play up your foreignness when appropriate. There is still some extra respect given to foreigners, the ‘big noses’, especially further away from the coastal cities. Being a foreigner will mean you can gain access to senior officials, and also get away with some behaviour which would otherwise not be accepted among Chinese themselves, such as not addressing senior managers by their proper titles, raising your voice in anger and poor table manners. Being able to say a few words in Chinese or to use chopsticks will earn you brownie points.
Never treat or talk to persons across the table as though they were inferior. I cannot do better than quote here from G. Wade Rule’s Rules of Negotiation, in which he states his belief in the need for a basic humility when negotiating. “Do not infer, when I stress fairness and humility in foreign negotiations, that these are intended as substitutes or alternatives to being businesslike, firm and making the very best possible arrangement. Remember this, most of the countries you may deal with have centuries of history and negotiating experience behind them. Foreign countries have great national pride, an understandable sensitivity concerning their sovereignty, and a great body of custom and usage that has been built up through the centuries. All of these factors must be understood, respected, and considered in any negotiation, but they need not minimise nor alter a sound, common sense, business-like approach to any question under negotiation. Such an approach will, I assure you, gain a healthy respect from them if handled with humility and understanding.”
