Cultural & Business Guide

Negotiation strategies

Introduction

Doing business in China is not an easy task and it is important to know the rules which form an invisible base in business professional settings. It is imperative that whoever approaches doing business in China is confident with negotiation techniques in order to maximize the potentials of their business trips.

The planning a negotiation session

When booking your negotiation sessions in advance, avoid all Chinese national holidays(Chinese New Year and Chinese National Day). You should forward documents in writing in advance to introduce your company to your Chinese partners.

Be aware that he Chinese plan meticulously, so it is expected that they will know your business, and possibly also you, inside out. Therefore make sure you also do the homework and get to know your Chinese partners well enough before your team starts negotiating with them.

In order to allow you to be in control of the flow of the meeting, always get an agenda from the meeting host in advance. Make sure to have at least thirty copies of your own proposal ready for handing out.

You need your best “concealed face” when negotiating with the Chinese because once they see you are uncomfortable they will exploit your weaknesses. Last advice concerns the choice of the interpreter: the best option is to find a good one from a specialized agency that can also find high skilled interpreters specialized also in technical language (e.g. medical, scientific). In order to achieve best results from the meeting session, remember to brief the interpreter with the last updates.

The right things to do during the negotiation meeting

First of all, if you know a few words in Chinese such as greetings, this is the right moment to use them, and certainly this is the best way to start a meeting. Your Chinese host is well aware of how hard it is to speak Chinese, thus they will surely appreciate your effort.

It is common sense to be patient and never show anger or frustration during a negotiation session. We all know decisions stemming from business negotiations will take long time, either because neither party is in haste to conclude them, or does not have enough information to make the final decision. Also, similar negotiations (with competitors) may be taking place at the same time.

Generally, in China late arrivals are seen as an insult. Therefore remember that punctuality is vital when doing business with the Chinese. Especially in a professional setting, not arriving on time for a business meeting can make the meeting host lose his or her face.

People in China usually enter the meeting room in a hierarchical order, so the head of your delegation should walk in the room first as well. If he or she does not do so, the Chinese will assume that the first member of your delegation walking in the meeting room is the head anyway.

Seating is unique too. Normally the host sits on the left of the most important guest.

Chinese business people will expect you to be well prepared for the meeting, and normally they come with a huge negotiation team, so do not be surprised when two dozen members of the opposing team walk in the room, but make sure you have enough copies of your proposal to hand out.

The Chinese are well-known for achieving “concession” in their negotiations, therefore always bear this in mind when formulating your own strategy. You must be willing to show willingness o compromise and ensure Chinese negotiators feel they have gained major concession . One known Chinese strategy is to show humility, deference and to present themselves as a vulnerable and. weak party You, the strong foreigner, will be expected to help the weaker party through achieving concession points.

When the meeting is finished, you are expected to leave before your Chinese partners.

More insights on Chinese negotiation techniques

First of all, the Chinese approach meetings differently, so rather than beginning with minor or side issues and working the way up to the core issue, the Chinese reverse this order. In other words, they begin with the core issue first.

Although to look at somebody while listening to him or her is a sign of showing respect in China, maintaining too much eye contact with a Chinese can be interpreted as a challenge, especially if the person you are looking at is of senior rank, especially the head of Chinese delegation.

Chinese businesspeople will often nod during conversations. Nodding, however, should not necessarily be interpreted as agreement or an affirmative answer. Rather, it is an acknowledgement of the speaker.

Do not misinterpret smiles. Besides commonly expressed warmth and delight, for the Chinese it may also be an attempt to maintain calm in a tense, uncomfortable or awkward situation.

Recognize that definitive responses are rarely given in the Chinese culture and that the word “yes” may have multiple meanings, such as it is so, it is correct, it is okay, and so on.

The Chinese are often reluctant to express disagreement openly. Therefore, they may use subtle gestures to signal disagreement in order to save the face of those with whom they disagree. In order to signal surprise or displeasure, the Chinese may breathe audibly and quickly through their teeth and lips. This gesture allows others to alter their behaviour.

Note: if your Chinese partners say, “not a big issue” or “the problem is not serious”, they actually usually mean that there still are problems or that the problems are serious.

There may be periods of silence at a business negotiation. Please do not interrupt these, and do not be the one breaking the silence.

The Chinese prefer to establish a strong relationship before closing a deal, so you might have to meet up several times with them to achieve your objectives.

There is no formal end to negotiations and “settled” points can arise again much later than they are unexpected. Scheduling and deadlines are set and expected to be respected, but requests for extensions and re-scheduling are not uncommon.

Regarding decision-making, the Chinese tend to extend negotiations far beyond the agreed deadline to gain some advantage for themselves. So your patience is highly appreciated and you need to be prepared for their delays. Try not to mention deadlines.

Remember a contract is considered a draft subject to change. The Chinese may agree on a deal and then change their mind. A signed contract in China is sometimes not binding and does not mean a closure of the negotiations at all.

Although not bringing presents is normal, since accepting gifts is considered bribery (illegal in the country), it is a common practice to exchange modest gifts with your new Chinese associates at the first negotiation session, because giving a gift can make you start a business meeting on the right foot. A good practice is giving a group gift from your company to the host Chinese company. Remember to present this gift to the leader of the delegation.

Above all, be prepared because a negotiation with Chinese usually proceed slowly, cautiously, patiently, without emotional display and seeking compromise. Be prepared for numerous meetings and very long negotiations, sometimes negotiations for an agreement can take ten days straight or even more if with many intermissions.

In conclusion, many business manners observed in the Western world are also followed in China, so as long as you pay attention to the particulars above, you will do great in China!

Bibliography

John L. Graham, Mark Lam, “The Chinese Negotiation”, Harvard Business Review OnPoint 5100, October 2003

Tony Fang, (2006) "Negotiation: the Chinese style", Journal of Business & Industrial Marketing, Vol. 21 Iss: 1, pp.50 - 60

Refkin Alan (May, 2012). “Doing the China Tango: How to Dance around Common Pitfalls in Chinese Business Relationships”.

Refkin Alan (August, 2011). “The Wild, Wild East: Lessons for Success in Business in Contemporary Capitalist China”.

Refkin Alan (May, 2012). “Doing the China Tango: How to Dance around Common Pitfalls in Chinese Business Relationships”.

External links

Project 2014-1-PL01-KA200-003591