Chinese Negotiation Style

All negotiators, Chinese, western or any other, fall into 1 of 5 categories, or TYPES

Management consultants and academics who look at negotiation sometimes place counterparties on a matrix of 2 dimensions – concern for others’ goals and concern for one’s own goal.

  1. Competitive negotiators care only about their own needs and nothing for the counterparties. They are Win-Lose negotiators.
  2. Accommodators are those that care more about their counterparty’s needs than their own. Salesmen with important clients fit into this category of Lose-Win negotiators.
  3. Compromisers are the ones that try to work out differences and arrive at an equitable distribution of scarce resources. They look Win-Win, but many negotiators consider them Lose-Lose.
  4. Avoiders are those that prefer not to negotiate at all. Anyone who has told you that your idea violates company policy or that the boss who makes that decision is out of town for the next 6 weeks may be a great example of an Avoider.
  5. Collaborators make up the last category – and these are the guys who want to push envelopes and think outside of boxes to build new business. If you want to buy a couple of household items and the counterparty wants to start a manufacturing JV with an R&D center, then he is probably collaborative in his approach. They talk Win-Win but if they don’t have the resources or capacity to follow through they can actually be huge drains of time, cash and patience.

You will meet each of these negotiating archetypes in China – but things will not be quite what they seem. Two cultural factors influence how each negotiating style will appear in China:

1) Relationships are currency to Chinese negotiators, and the banquets, dinners, KTVs and visits are not just meeting places – they are deal points. Refusing to participate is insulting – but letting them make the arrangements all the time reinforces the notion that you are playing on their home court (i.e.: weak, ignorant and vulnerable).

2) They all read Sun Tzu’s “Art of War” in junior high and now swear that it governs the placement of every delicate strand of their grand strategy. In fact the only thing many of them remember from the book is the part about deception being a good tactic.

What impact does this have on Chinese negotiating style?

Competitors will often appear to be very accommodative – offering to bend over backwards to help you. They may even be very flexible on certain issues – particularly schedules, timetables, sales targets and other things that can’t be easily enforced later. Don’t fall into the trap of negotiating solely on price with competitive counterparties – access to information and audited financial data, quality standards, supply chain and personnel issues are what will make or break your deal with these sharks.

Accommodators exist in China, but you have to be doubly careful here. Beware of counterparties who look helpful but are really plotting to slaughter you for your gold fillings. But wolves in sheep’s clothing aren’t your only problem here. In China kindness can kill as passive colleagues and counterparties smile and nod as you blunder into disaster. In Shanghai and Shenzhen the situation has gotten better, but you still shouldn’t assume that people will warn you about mistakes and dangers that are obvious to everyone else.

Compromise is an integral part of China’s consensus-oriented culture and your counterparty may look like he’s really searching for a fair solution. It’s possible – but he also may have anticipated your naïve willingness to sign a deal and will employ the meet- in-the-middle” technique more commonly seen at one of China’s many ‘fake markets’. Here they set a price 400% above their real target, and will try to compromise you down to a mere 200% overcharge. Don’t start negotiating when they call out a number. Learn the market and control the parameters of the discussion at the start. (I.e.: Just because they say 500 doesn’t mean you are required to shout back a counter offer.)

Avoiders are common in China, and are most likely to show up in the middle of modern international corporations and the heads of State Owned Enterprises. China’s Imperial legacy lives on in its bureaucracy, and you may find it extremely difficult to meet the real decision-maker face-to-face. Every situation is unique and it may be worthwhile for you to pursue some long-shots…BUT if you can’t get a satisfactory answer to basic questions before you sign a deal you’re probably going to have a lot more trouble afterwards.

Collaborative negotiators are your greatest hope and your worst fear in China. On the one hand a true value-adding partner can open doors and supply vital market information. The problem is that lots of Chinese counterparties like to talk like the boss even if they don’t have the power to back it up. The result is a lot of big plans that don’t ever amount to anything. China novices have been known to build these optimistic notions into internal business plans – and later face disappointed senior managers who want to know what happened to the budding China JV.  Beware of partners who move too fast when negotiating in China.