China Business

Antidotes to Chinese Negotiating Tactics, Part Four Of Three

US-China contract negotiating

This is part four of our three part series on how to negotiate with Chinese companies.  Yes, you read it right. Part one is here, part two is here, and part three is here. We originally planned a three part series, but when a reader alerted me to a post by Andrew Hupert on how American negotiators are viewed by their Chinese counterparts, I could not resist piling on a part four.  So here goes.

In Hupert’s post, entitled American Negotiating Culture – Through the Eyes of the Chinese Counter-party [link no longer exists], Hupert writes how Chinese companies see their American negotiating counterparts. Hupert has taught Chinese negotiating tactics at NYU’s Business School, conducted extensive research on the subject, and recently wrote a book on it, entitled, The Fragile Bridge: Conflict Management in Chinese Business. In other words, when it comes to negotiating with Chinese companies, he knows whereof he speaks. And his speaking says that how Chinese companies view American companies influences negotiations between them. So if American companies can better understand their own negotiating tendencies, and more importantly, how their negotiating tendencies play out to a Chinese audience, they can better handle negotiating with Chinese companies.

Hupert’s article sets out the “American cultural quirks” with which Chinese companies have to deal when negotiating.  Remember the below is how Chinese companies view American negotiating tactics; it does not mean their views are accurate.

  • First and foremost, we are the only negotiating culture that leads with the lawyers. Europeans consider negotiation to be an exercise in diplomacy while Asians consider it the province of paternalistic company leaders to build lasting relationships. American negotiators –- even when the salespeople and purchasing managers — are fixated on contracts and legal institutions (like courts and regulations). Asian negotiators believe relationships are the key to business and contracts are merely written records of agreements between individuals. Americans put more weight on the document than on the human bonds between business leaders.”We wrote about this in The Lawyer’s Role In China Business Transactions.
  • Americans are the only negotiating culture that believes liability can be assigned in advance through a contract. This is one of the many aspects of international negotiation that has become “normal,” but it still strikes traditional Asian negotiators as strange that Americans consider contracts binding even as the market environment changes. Asian negotiators in general, and Chinese in particular, feel that as the external situation evolves, so must a business relationship. Many Chinese partners have been bewildered and disappointed when their American partner waved a piece of paper in their face instead of responding fairly and maturely to new market realities.
  • Americans believe negotiations end. To Chinese, the negotiation is part-and-parcel of the business relationship. As long as the counter-parties are still engaged in business, the negotiation is supposed to continue. What’s the point of taking the time to build a connection if you aren’t going to grow the relationship through continuous give and take?
  • Americans want to decide everything in advance and put procedures ahead of human decisions. Chinese (and most other Asian) negotiators understand that conflict and differences of opinion are inevitable, and their business agreements usually assume the leaders or concerned parties from each side will work things out informally. American contracts, with their penalty clauses and rigid requirements, are not only insulting and arbitrary, they seem designed to undermine any kind of positive relationship.
  • Americans love deadlines, timetables and schedules, even when there is no business rationale for them. They can be arbitrary and illogical.
  • American negotiators are adversarial and rude. Americans insist on running everything and taking control of situations. Americans coming to China and try to sell inappropriate products and services at ridiculous prices. American technology and designs are nice enough, but it is not fair to expect us to pay over and over for the same thing – even after we figure out how to make the same thing.

According to Hupert, American companies should at least recognize Chinese companies are “struggling just as hard as you are to manage the yawning gap between the cultures.”

What do you think?

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