The finer side of doing business in China

In my previous article, I offered some steps to negotiating in China. We covered important measures that you should take, such as getting to know your Chinese business partners and nifty tricks that Chinese negotiators might employ to gain the upper hand.

In this chapter, I turn the tables to provide you with pertinent advice on what you can do as a negotiator to ensure you come out with the best deal.

I’ll consider tactical strategies on how to play the game from your side of the negotiating table.

An important thing to remember is that the game is not only to be played by the Chinese side. This is your game too, and they will expect you to put on a good show. Be strategic, stay a step ahead, and remain on top of the situation at all times.

“I have to leave at 5pm …”

Plan for the meeting to be extended, but do not let them know. A common trick they will try is to wait until the final moment to get onto the main point of the meeting. The intention is that you will become flustered and make concessions, agreeing to things you never wanted to agree to in the first place.

I have heard far too often of last-minute compromises being made due to time pressures.

If you can build sufficient contingency time into the meeting schedule, without the other party’s knowledge, problems like this can be significantly alleviated, if not eliminated entirely.

Tell them that you are leaving earlier than you know you will. By doing this, you give yourself more time for the most important clauses and if you genuinely do have to be somewhere else afterwards, you can build plenty of contingency time in so that you do not get time pressured.

Identify the one in charge

It is not always clear in meetings who the main decision-maker is.

Indeed, the decision maker may not even be in the room during the first meetings. However, if you can identify this person then you know where to direct your main relationship-building efforts.

High-level executives of Chinese companies rarely actively participate in negotiations, their role being focused more on evaluating negotiations from afar, while the “hard” negotiations are done by lower levels.

In our dealings with a client in a city in Sichuan Province, the CEO of the firm never speaks about prices. It is simply not the “done” thing, and we certainly do not question this. He instead brings with him someone who does the  price negotiations on his behalf. This practice makes it very difficult indeed to identify the decision maker, but overt questioning is not the way to go about resolving the issue.

Persevere and look out for signs so that you can figure out who the decision maker is as soon as possible. Status very swiftly becomes clear during business dinners, for instance, so pay attention to the seating plan, to the behavior of others at the dinner, and to how toasts are conducted.

Please the bargain seeker

If you have ever been to a local market, then you will be familiar with bargaining. The seller names a price, and eventually with some back-and-forth negotiating and a bit of classic market banter, you bring the price round to a more acceptable value.

In Chinese business deals, you may often find yourself playing the role of the seller, albeit in (hopefully) a substantially more formal environment. Your Chinese partner will whittle away at you, manipulating the deal until it is reasonable to them.

If you start with too low an initial price, then you will rapidly see the deal deteriorating before your eyes as your Chinese partner starts to make demands that are way below what you originally asked for. You risk a stalemate, unprecedented concessions, or losing the deal entirely.

Start with a high value so that you are ready and willing to make the concessions that will invariably be demanded of you. 

There are added benefits to granting concessions to lower level employers, as they will be able to report this back to their employers. Their employers will likely be pleased with their employees’ performance and also with the leeway that has been made, and will wish to pursue further negotiations with you. All parties involved feel like they have the upper hand, so it is a win-win scenario.

Keep calm and carry on

Remain in control of your emotions. This may sound as though we are entering into the realm of counseling, but maintaining composure in Chinese business meetings is vital.

A meeting with a Chinese partner and a client in the food and beverage industry had us on our toes recently, when a representative for F&B felt the Chinese party was a bit offending. During a strategic “toilet break,” we were able to mollify my client somewhat and re-entered the meeting with renewed poise. 

Had our client actually done as he so wished and stormed out, we would not then have received that positive phone call from the Chinese partner, content with how the meeting had panned out. Relations, thankfully, remain strong.

Never lose your temper. This will lose you a lot of respect and will also damage the relationship you have worked so hard to forge. Maintain a sense of perspective and continue the meeting.

Get someone on board who knows the ropes

One of the most valuable assets to you in Chinese business negotiations is an intermediary: someone who can accompany you to a business dinner and discreetly point out the decision-maker; someone who is familiar with business etiquette; someone who understands Chinese business attitudes and can keep their cool when tensions rise in meetings; someone who has experience of the tricks of the trade and knows how to respond to them; someone who can provide translation services as and when they are needed; and someone who has a strong and varied network of useful connections.

The selection of a good intermediary is crucial, whether they are Chinese or a foreigner with vast experience with doing business in China, and will make it much easier to get in touch with the right people and consequently help you to achieve success in China.

Find an intermediary you can trust, who is familiar with the local business scene and practice, and who has a strong network of contacts. Their help will be invaluable to you. Picking the right intermediary can make the world of difference to successful business negotiations.

These steps provide a strong framework for conducting business negotiations in China, so that you can enter into negotiations with confidence, hold your shoulders high as you exude confidence in your abilities, and prove to your Chinese counterparts that you are at ease in the Chinese business environment.