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Negotiating Business In China

Just like Confucious and Lao Tsu (who was the inspiration for Taoism) when negotiating for new suppliers or marketing to the Chinese you must remember that they are more conscious of seeking ‘the way’ rather than the truth.

There is always an underlying need to find the Yin and the Yang to create a better environment built on respect and morality.

It is likely that they will express their moral values in their negotiating style. Being more concerned in finding a means to an end, with the process, rather than defining the goal within any negotiation discussions.

The best outcome is obtained through haggling, providing opportunity for both sides to compromise, where everyone wins and no one loses. This process cannot be cut short (haggling is a pre-requisite) and a compromise allows both sides to hold equally valid positions. Western business mentality tends to argue the point strongly and get angry. The Chinese tend to haggle; in fact they believe this is the only way forward.

The Big Picture

Consider the Chinese Pictographic language. It is not essential that you learn Mandarin, but because the Chinese are accustomed to the many thousands of pictorial characters rather than letters they tend to think more in terms of an holistic approach to the processing of information. As a result Chinese are more capable of seeing The Big Picture, while non-Chinese tend to focus on details.

Xeno-cautious

The Chinese wariness of foreigners has been learned the hard way. Long and violent attacks over the centuries have had their toll from abroad and even civil wars. This leads to cynicism and contempt about the rule of law and rules in general.

It has been said that the Chinese trust only in their families and their bank accounts.

Personal Connections (Guanxi)

To the Chinese it is about social respect. He who knows the highest guy in the place usually wins.

The Intermediary (Zhongjian Ren)

Business deals in China don’t have a chance without the Zhongjian Ren. Suspicion will be the biggest issue you deal with on any first meeting. Western Business people tend to trust until we have reason not to. This is the complete opposite in China Business. Trust must be transmitted via the Zhongjian Ren. He must pass you along to his trusted business associates. Therefore it is important tht you seek the person or institutions that has personal links to your target or executive

It is crucial that Chinese interpreters need to be native Chinese, as only they can read and explain the moods, intonations, facial expressions and body language during formal negotiation sessions. As no one wishes to lose face or cause loss of face to any party, if you ask what they think of your proposition, your opposite number is likely to come back with kankan or yanjiu (Let us take a look – or Let us study it – even if they think the proposal stinks.

Shedhui Dengji (Social Status)

Formality is a must. Informality will not go down well in a country where Confucian values of obedience and deference to one’s superiors remain strong. This is especially heightened to Westerners, so never let the formalities drop. You will insult a Chinese Executive if you your rank does not equal or exceed his. It raises doubts about the sincerity of the approach and may lead to no further negotiation and any potential deal simply dying before it could begin.

Renji Hexie (Interpersonal Harmony)

Where Western Business can take minutes to size the opposition up, the Chinese may take days, weeks or even months getting to know and trust you. Be patient, as in the end it will lead to a long relationship together. It can include home visits, invitations to sporting events or other events, and long dinners during which everything but business is discussed. There is just no other way to break through. A toast may include the following “Let’s drink to our friendship! We will have a long cooperation! But if you are not drunk tonight, there will be no contract tomorrow.”

Zhengti Guannian (Holistic Thinking)

Chinese think in terms of the whole, while Western Business processes tend to break up complex negotiation tasks into a series of smaller issues: price, quantity, warranty, delivery and so on. The Chinese tend to skip over them and may never settle on any one thing. What they really want is long descriptions of background and context and will ask a thousand questions. Frustrating but necessary for success.

Jiejian (Thrift)

The Chinese save. They will also make their offers with more room to manoeuver than you may be used to. Remember the focus is ultimately on haggling and bargaining. Don’t be surprised at their base offering to any counter-proposal. It is a starting point.

Mianzi (“Face” or Social Capital)

Reputation rests on saving face. If you cause embarrassment or loss of composure, even unintentionally, it can be a disaster, so be careful to retain all sense of dignity and allow them to hold their head high on any deal and not feel hard done by.

Chiku Nailao (Endurance, Bitterness and Enduring labour)

Chinese are famous for their work ethic, but they take diligence one step further – to extreme. While we see talent as a key to success, they see Chiku Nailao as much more important and honourable. Be assured that the Chinese will have worked harder in preparing for the negotiations than you will.

Second they will expect longer bargaining sessions: throw in jet-lag and late-night business entertainment and it can be a very exhausting experience. The trick is to act slightly dumb and ask questions. A useful tip is to ask the same question again – I didn’t completely understand what you meant. “Can you explain that again?” – can expose weaknesses in the other party’s argument. Ask why a specific item is important rather than accept that it is.

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