When approaching business meetings or negotiations in China, remember that the entire procedure is a little like a team sport.
In most companies, employees are team members for life. China itself is a huge national team that values cohesiveness and national identity above all.
It is important to pave the way for the first negotiation or presentation, to see your Chinese counterparts without a fixed agenda (that can be in your strategic plan).
This process can take several months. Older Chinese can attend whole meetings without a substantive issue being discussed. Trust has to develop before bargaining begins.
LET THE NEGOTIATIONS BEGIN
When negotiations finally occur, the Chinese do not necessarily pursue a win-win line, but rather one of ‘fair play’ for those that have dealings with them.
They are particularly attracted to value-enhancing investors, such as those with expertise in accounting, marketing, technical systems and know-how. Ultimately, they tend to look for good long-term relationships.
Once you reach the negotiating or presentation stage, be patient and listen. Bring along our own interpreter if legal or technical issues are to be discussed.
Present written material in both English and Chinese, using simplified Chinese characters, and be very careful that translations are accurate.
You will likely face a team of negotiators across the table. A key challenge will be to identify the real decision maker in the group — there is usually only one — and the individual or individuals who can influence the decision maker.
Since established Chinese companies are still hierarchical in nature, and Confucian in their respect systems, the final decision maker may not even be in the room.
USING GUANXI AND CHINESE TEAMS
Always make an appointment and arrive on time. Face-to-face meetings are always preferred to other, more impersonal methods such as email. The most senior person in your team should be introduced first.
It may appear that negotiations are proceeding very slowly but the main purpose of the first meeting is to get to know each other as the foundation for building a further relationship.
You should use your guanxi, or the relationships that you have developed with the local government, to develop support for your position.
A capable Chinese team of your own can also help to bridge cultural differences and assist you in understanding the nuances of what is being said by your counterpart. A good team can also develop useful back channels with the other side that can smooth negotiations.
APPLY DUE DILIGENCE AND FAIRNESS
Remember that the Chinese negotiating process is set up to gather information and steepen their learning curve. You will therefore have to be extremely careful about what you are offering in terms of technology exchange and intellectual property protection.
Sometimes the guanxi system can shut down abruptly if it seems that you cannot offer this kind of value-added exchange or that you are no longer deemed useful.
If you come into negotiations in China with a potential partner and simply hope to wing it, or to just learn the ropes from the partner without doing any other kind of due diligence, you are asking for trouble.
There are potential ‘bad partners’ in China that are intent on stealing your intellectual property and technology right from the start. If you have a good local team and have prepared yourself carefully, you can quickly identify these bad partners as asset raiders and save yourself a lot of time and money.
Above all, be fair-minded, diplomatic and reasonable. If your Chinese counterpart believes that you are being unreasonable, they may not openly say so, but your negotiations are likely to stall and go nowhere.
If you disagree with your counterpart, don’t simply reject their position out of hand but carefully explain your reasoning.
Trying to impose your own deadlines, threatening to abandon the negotiations, or indulging in displays of anger will undermine the sincerity of your position and cause irretrievable loss of face.
And losing face is the no.1 mistake you must avoid to succeed – both in China and across the diverse markets of Asia.
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