Chinese Negotiation Tactics - A Comparative Study

Chinese Negotiation Tactics –
A Comparative Approach
Know Your Chinese Negotiating Counterparty

Agenda
1. Negotiating tactics – comparing
Chinese and US methods.
2. Western tactics

3. Chinese tactics

4. Counter tactics
5. Best Practices

Part 1:
Comparative Negotiation Tactics
Western and Chinese Approaches

Working Definitions
• Strategy :: goals

• Tactics :: methods / techniques

• Negotiation :: conversation with a business goal

Western Tactics
• Western tactics are designed to bring
about a transaction – immediate,
favorable terms.

• Most negotiation follows either a sales
pattern or a legal pattern – both end
with contracts.

• Western tactics feature pressure,
manipulation of value, and fear of loss.

Chinese Tactics
• Chinese tactics are about creating and
manipulating relationships.
• Chinese are more comfortable
negotiating from weakness to close
gaps, then switch to more aggressive
tactics.
• Chinese tactics center on gaining
position within a group, network or
relationship.

Part 2: Western Tactics
Goal: Sign a contract or agree
to favorable deal terms

Sample Western Tactics
• Atom Bomb – • Higher Authority
Armageddon • Linking issues
• Deadlines • Low-balling
• Divide and conquer • Lunch
• Full Disclosure • Trial balloon
• Good cop / Bad cop

@2012 All Rights Reserved. Property of Best Practices China ltd

Western Tactics:
Confrontation / WL
• Direct.
• Forces an emotional response to motivate a
specific action.
– Rush into a decision
– Pressure tactics
– Fear of loss – Hope for gain


Credibility
• Demonstrate credibility
– Lower risk
– Leverage credibility, reputation, or brand
– Reliance on external authority, agency or
benchmark


Stress Negotiation
From Strength
• Negotiate from strength
– Hide weakness (bluffing)
– Access other’s strength (higher authority)
– Exploit others weakness (now or never)


Part 3: Chinese Tactics
An orderly progression to
build a relationship

Chinese Negotiating Concepts
• Face
• Harmony
• Guanxi
• Relationship
– Balance of Power
– Balance of Power Shift


Guanxi and the
Balance of Power Shift – The BOPS
• Chinese often purposely appear weak or
dependent at the start of a relationship
– Become much more assertive and aware
when it is to their advantage.
• This is usually after acquiring technology
or funds have been transferred


Part 4: Counter Tactics


Overview:
Westerner Transact / Chinese Build Trust
US China
• Direct / Transactional • Indirect / Relationship

• Emotional Response • Trust => Exclusivity

• Raises pressure • BOPS Start by negotiating
from weakness.
• Transparency / Credibility • Misdirection / Reliance


Power Orientation
• Chinese are better at negotiating from
weakness.
– Clumsy or evasive when they have advantage.

• Americans are better
at negotiating from strength.
– Capitulate , trust the wrong people, and over-
compromise when weak.


Counter Tactics
1. Knowledge is power – develop your own
channels of information.
2. Add counterparties and complexity to
gain power. Always have a Plan B (and C,
D & E).
3. Give them what they want until it
becomes what they need.
4. Structure deals for success – not failure
5. Many small conflicts build a relationship.
One big conflict creates an enemy.

Part 5: Best Practices
• When doing business in China, you have to be
able to answer two basic questions:

– 1. What does the Chinese side want?
– 2. How are you going to give it to them?


What do the Chinese want?
• Capital
• Know-how
• Markets


How are you going to give
it to them?
The core decision for
negotiation


Structure Deals for Success
• American negotiators say, “what have you
done for me lately?”
• Chinese negotiators say, “what will you do for
me tomorrow?”

ALWAYS HAVE MORE VALUE TO OFFER!


Structure Smarter Deals
• If the Chinese feel that it is cheaper or easier
to work without you than with you, that’s
what they’ll do.
• If they feel it is more profitable to work with
you (for the long term), then they will.
• Chinese want to see a RISING payout over
time.


Constructive Conflict
• Many small conflicts build a relationship.
– One big conflict creates an enemy.
• Build relationships and guanxi by
engaging on a personal, emotional level.
– Once you have built a real relationship, it is easier
to talk about long term deals.
• If you have never settled a dispute with a
Chinese partner, then you don’t have
a real relationship yet.

Negotiate the contract
Negotiate the deal
• Negotiating contracts vs. negotiating deals
• Westerners see the signing of the contract as
the end of the negotiation.
• Chinese tend to see it as one of many milestones
in the development of a
relationship.
• Westerners feel that negotiations have a
beginning and end. Chinese negotiators see
them as more fluid and organic.


• Written by: Andrew Hupert
• Chinasolved@gmail.com
• www.ChineseNegotiation.com
• Twitter: @chinasolved
• Linkedin group: China Solved


Guanxi for the Busy American
• A professional’s guide to
building relationships in
China.
• Written for the Western
negotiator who needs
to transact and execute.
• Available on Kindle,
iBook and all major e-
formats.


Chinese Negotiation Tactics - A Comparative Study

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