Applying Negotiation Skills During The Five Stage Program To Ensuring Successful Transactions In China

1. Negotiation objective

For many the objective of negotiation is a substantive result and material gain. In China the transaction is about the relationship and there is no other way to succeed in doing trade than through a close partnership, so consider investing a lot of time in this pre-negotiation stage.

The aim of negotiation is not the signed agreement and unforeseen circumstances are resolved through the relationship; the agreement is more a sign of the meaning to do business together than a legally binding document. Trust is the foundation of the agreement and the fact that you have signed a contract does not actually imply that the transaction is closed; it implies that a relationship has been recognised.

2. Negotiation attitude and communication style

The Chinese negotiation style is one of collaboration and problem solving whilst still fixed on profit.

The communication style is expressed by using titles, following protocol and being very respectful and alert in conversation. Always start with a formal approach, using first names and relaxed style is risky and can be viewed offensive and viewed as an act of disrespect.

When you negotiate, read between the lines to determine the exact meaning. It is unusual to be told a direct no and you will more likely be told "it is difficult" which in fact does mean you must not pursue it. Do not expect to receive direct clear answers, because you will try to fix a situation that "is difficult" when in fact it can't be fixed.

3. Time perception

A lot of time is expended in developing a relationship which is a sign of respect and which is expected to be reciprocated. For Westerners time is valuable and the Chinese usually take advantage of this fact. Preparation is therefore vital, create alternatives and let your counterpart know that they are is not the only party who can walk away from the table. Do not forget that "tomorrow" or "next week" often doesn't literally imply the following day or week; instead this could mean "in the future".

4. Negotiation approach

What for most Westerners may appear to be innocent mingling is in fact their way of collecting information.

Chinese negotiators are competent in the art of positioning & framing, the intricacies of pricing and the use of time as a negotiation tactic. They have good negotiation skills and will often use negotiation tactics to embarrass or shame the other party in order to create pressure and gain the upper hand. Take the blame if a problem arises whether you are responsible or not and do not counter with disrespect.

Your entire team is advised to attend the appointments and it's very important to arrange for someone with a rank of authority within your business to make the introductions and to accompany you during meetings. Without obvious official support, you will be sending out the wrong message about how seriously you view the negotiations.

5. Team based negotiations

The Chinese almost always negotiate in a team. It is not always clear who the manager is and who has total authority to decide matters. Although decisions are made by consensus, there is normally one leading authority who may not be very involved during negotiations. Gain the attention of their lead negotiator and direct your most persuasive and logical discussions towards him. The rest of the team usually plays the role of an advisory body.

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