Negotiating In China: 10 Rules for Success

As part of any good negotiating knowing the rules is a great place to start, but with China you need extra support. With the economic growth that China has seen more and more companies are negotiating with Chinese businesses it is a good idea to know the top rules for success.

1. Manage the Expectations

Maintaining a public appearance that everything is harmonious and going smooth is a key trait of Chinese business culture. Rarely will they disagree with you or your company in public and look to keep up appearances independent of how the negotiations are actually playing out. When you are treated with a great deal of respect and lavish compliments you may be tempted to believe that the negotiating will be easy or that you have an agreement before it is signed. In China, it is important to understand the difference between the business pleasantries and the negotiating. Understanding the true intention behind the words will get you much further than expecting a cake walk in the board room.

2. Develop a negotiating strategy

Working with a Chinese company through a negotiation period can be a long arduous battle that gets drawn out for much longer than expected. There is no such thing as phone negotiations and business still runs with face to face meetings. As memories can fade or change over time it is important to keep detailed and accurate meeting notes as you work through your strategy. The more that you can detail your notes the better you can leverage them later, especially if you can get the other side to sign off on the notes as well.

3. Chinese Businesses use a team of Negotiators

As with most meetings and business interactions there is a key decision maker even if there are five or more people at the negotiating table. Figuring out which person is the real decision maker can give you a better idea of how to focus your negotiations.

4. Build a negotiating team that incorporates Chinese business people and the Government

Having these people on your side at the negotiation table can give you the edge that you need to effectively compete with the Chinese negotiators across the table. Leveraging any business relationships that you already have in China, such as other businesses or governmental agencies can help support your negotiations.

5. Keep in mind the relativity of money

Most Chinese business people have a lower cost perspective to money than people that have grown up in America or Europe. When you go to China and see a 100 yuan bill you may instinctually covert that to about $15 USD, where as a Chinese person sees a $100 bill in the same note. This may cause a negotiating stumbling block, as they have a fundamentally different cost perspective.

6. Respect Goes a Long Way in China

Making sure that you keep the cultural norms in mind when you are doing business with the Chinese will keep you from embarrassing yourself or ruining a deal before you even get into the negotiation room. Respect is a big part of the way that business is done in China. By taking the extra effort to show the utmost respect to your Chinese counterparts you will be able to get to know them on a more personal level. This will translate into a better deal for both parties and make the whole process more personable. Leaving your ego at the door and just trying to connect with your potential business partners will help to take the negotiations to a more amicable place. Just remember to stay respectful if you end up going out for a session of baijiu drinking.

7. Use your listening skills and Sleep on any big decisions

As previously mentioned the negotiations in China tend to be drawn out in comparison to the speed of business in the Western world. Take full advantage of this slower pace by listening and digesting all of the information that the Chinese negotiation team is willing to present. Truly listening and then taking an extra night to sleep on any big decision will help you to make more informed decisions with a clearer head. The opportunity to take this extra time is a gift that you should definitely take advantage of.

8. Keep cool when they start pressuring about artificial deadlines

As the process takes a longer time you may be tempted to get frustrated and start pushing the process forward. This practice rarely ends with positive results and may be playing into the Chinese’s negotiation team’s strategy. It is far more advantageous for you to take you time and try to cooperate while still sticking to your negotiation strategies.

9. Try to Keep the Negotiations Reasonable

Again if you are getting frustrated or just want to turn up the fire on the negotiations this may bring them to a halt without much discussion on why. The Chinese negotiation team prefers to talk out and discuss with reason all of the decisions, but if you jump to an unreasonable stance without it, the whole process will start to break down. Take advantage of the extra time for communication and fully cooperate within your negotiation strategy.

10. There are plenty of other businesses to negotiate with

Keeping the option for doing business with a competitor of the company that you are negotiating with will allow you to stay more indifferent and less emotional during the negotiations. Using this in conjunction with your outcome strategy will allow you to negotiate in a way that can leverage the situation instead of feeling pressured to agree to disadvantageous terms.

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By Michael Garcia