Business in China is different: Carry a Snickers
Any foreign business — especially from the West — setting up in or dealing with China needs to learn a new way of doing business if they want to master the art of making successful deals here.
Negotiations in China can be a lot different from the way they are back home, and success depends on how well executives can adapt to the Chinese way.
But some Westerners, in particular, may be more familiar with cold-faced, briefcase-clutching, pen-in-hand, over-in-an-hour negotiations.
Maxxelli Consulting offers some tips on negotiating in China to help foreign businesspeople exude confidence and prove to their Chinese counterparts they understand local ways and are at ease with them.
Building relationships
The contract is only a small component of Chinese business deals and is by no means the most crucial element. Instead, it is the overall relationship that drives current and future business relations between two parties.
You should strive to establish relationships with business partners that are firmly grounded in respect, reciprocity and trust. It takes time to create this atmosphere and tone. But to do business without them is unthinkable.
1. Care for your connections. It is not enough to simply build an initial relationship with a client and then assume the hard work is over. Once relationships have been forged, it is vital that you maintain and nurture them.
Whether this means going for the occasional tea with your business partner or going for repeated cocktails with them in smart bars, you need to demonstrate your dedication.
One of my associates has become trapped in a cycle of fortnightly feasts in various Chinese restaurants with one of his clients, yet he still claims doing so to keep the relationship sweet is worth its weight in gold.
Put in the time to show your clients that you value the relationship you have with them, and maintain regular contact with them. As a result, negotiations will be a far more pleasant experience.
2. Tap into what is of value to your business partner. A useful tactic is to ascertain and provide services that will be invaluable to your business partner — and, more importantly, to their family.
Once you know these, you will be well placed to offer further advice and services. They may not be directly related to the business deal, nay they may be utterly unrelated, but they are certain to be appreciated.
If you take the time to build strong, personal relationships, then exchanges like these will come naturally.
This is the Chinese game: Play it well, and you will swiftly reap the rewards when it comes to negotiations.
3. Exercise due diligence. Pay heed to exactly who will be sitting on the other side of the table, and try to determine why they are sitting there.
As you become more experienced in negotiations, you will be able to assess this by the nature of the discussions, helping you gauge how much you should let on, and how much you should refrain from sharing.
The usual company checks used by default in the West simply will not suffice in China, and you need to be wary of companies who are there purely to harvest information.
Use your local Chinese network to find out more information about prospective business partners. Learn about their financial status, their prospective plans and their background in the industry.
What to expect: Nifty tricks to look out for and be prepared for
There are a multitude of clever tactics that local businesspeople will use in negotiations to gain the upper hand.
This is when you really need to be switched on as to what is going on around you and be prepared for any curve balls that might come your way.
The following three are some common ploys that we have witnessed being used during negotiations.
1. Do not let them wear you out. Negotiations take a long time, and Chinese businesspeople have been known to deliberately make them last longer by laying down issue after issue that may appear to have waning relevance.
They will notice any weaknesses you exhibit, so if you are visibly tiring of abstract negotiations, they will play on this and use it to their advantage.
Stamina is key. Snickers bars can be found in abundance in China, and when you feel your grit is lacking, a sugar boost can really rally you. I always have some Snickers bars hidden somewhere, and eat them during any short breaks that come my way. Just be sure not to repeat one mistake I made, and put them somewhere where they might melt … that was, indeed, a memorable meeting.
It is always astute to turn up to meetings prepared for a long and drawn out affair, and armed with discreet sustenance for when times get tough. And, whatever happens, do not lose your temper.
2. “Let us just revisit that point once more …”
You may find that previously agreed on clauses will be put on the table again as if they are being reopened to debate. This is an oft-employed stunt that can be used to make you change your stance. As frustrating as it can be, do not buckle.
Stick to your earlier stand to prove the fortitude of your conviction. I recall a particular deal where after two days of grueling negotiating, we eventually settled on an agreement. The papers were signed, and a 10 percent down payment was received.
We enthusiastically scheduled the next meeting with the client, excited at the prospect of progressing. However, our client had other ideas: within minutes of arriving he was pushing us to reopen negotiations over prices. Brick wall … Head ... Bang.
Stay firm, and keep your resolve. Make sure they know that once an agreement has been made, it is final and no longer negotiable.
3. Saving the best bits until last. In the West, patience is a virtue. In Chinese business negotiations, it is nothing short of a necessity.
Not only will you need patience to endure and prevail through the previous two frustrating gambits; you also need restraint to ensure you do not act prematurely on anything.
Negotiating is a very delicate affair, and brashness can really damage your position. One of the worst things you can do is dive straight in with what you want to gain from the meeting, as this will likely displease your Chinese partner and put them off further negotiations.
Let meetings progress naturally, because the real meat of the meet will almost always come at the very end.
Even when the meeting is over, and you think everything has been decided upon, rest assured you are not done negotiating — not even when the contract is signed are the negotiations complete.
You can only breathe a sigh of relief when the money is in the bank. And, as discussed earlier, even then the Chinese may try to revisit decisions.
This is partly tactical, in an effort to frustrate you and wear you down. But it is also just another difference between negotiations in the West and negotiations in the East, and you must be prepared to endure it.
Again, this cannot be stressed enough: Do not lose your temper. Calm persistence will take you far in Chinese negotiations.
In our next article, we’ll consider tactical strategies on how to play the game from your side of the negotiating table.
