Negotiating Successfully with Chinese Businesspeople

Negotiating in China is as much an art form as singing Beijing Opera or designing a courtyard garden. Your negotiating skills will be tested again and again, and attention to perfecting the details of your negotiating technique can bring you respect and fortune.

Understanding communications

Negotiating any project requires highly proficient translation services; a major project may require primary and confirming translators. Regardless of the quality of the translation, you may find that most jokes, any subtle or eloquent speech, and very emotional or dramatic presentations do not translate at all well. Remember that in China “yes” usually means “I understand”; “no” (spoken by them or by you) may mean that negotiations have completely failed; and “we will consider your ideas” can mean either “no” or “we have to ask the boss,” depending on who says it.

The bargaining game

Bargaining is a sport in China, and a rather arduous sport at that. Initial positions are usually very heavily padded to allow extended negotiations that may resemble a chess game without perceptible rules, and China’s CEOs are the grand masters. Negotiating Chinese-style takes time. Often the first few meetings will seem like little more than social engagements, as participants share information about families, home towns, and leisure activities. But these meetings are not inconsequential—they begin the process of forming connections so essential to Chinese business. The rule is “friends first, business later.”

Meeting the right people

Your guanxi network should target an introduction with top decision-makers, because in China, meeting with lower-level staff is not very productive and is an indirect way of saying “no thanks.” A meeting with a second-level manager can have the opposite meaning, and might provide an opportunity to explore bottom-line positions and “pre-negotiate” delicate issues in order to reduce the risk of failed negotiations at the higher level.

Starting with the easy issues

Don’t over-strain any new relationship by tackling the most difficult issues at the outset. Start by presenting your strongest argument for reaching agreement on the least controversial issue. Your secondary reasons supporting an agreement should follow, until all your evidence is presented. Once you have agreement on that first “gateway” issue, you can forge ahead with more controversial points.

Firming up the project

Expect successfully negotiated projects to begin tentatively, with a memorandum of agreement or a nominal transaction, and to accelerate as experience and trust is gained. But once agreement has been reached, even on very large projects, the Chinese side will often act with surprising swiftness, assembling materials, equipment, financing, personnel, government approvals, and everything else that is needed to make the project happen immediately. Successful—and even sometimes less than successful—negotiations are normally followed by a long night of dining and socializing.