438 / DEVELOPING YOUR TECHNIQUE
Negotiating internationally
Understanding the differences
You are likely to experience significant differences
in several key areas when you engage in
international negotiation:
Agreements Western negotiators expect to
conclude the process with a comprehensive
bulletproof legal contract. In other regions, and
notably in Asia, memorandums of understanding
(MOAs), which are broader but less substantial
agreements, may be more common.
Time sensitivity In countries in which a
“doing” culture is prevalent, people believe
in controlling events and managing time
strictly. In some countries, time is not
viewed as such a critical resource, and
negotiations can be slow and lengthy.
Degree of formality Negotiators from informal cultures
tend to dress down, address one another by their first
names, maintain less physical distance, and pay less
attention to official titles. In contrast, negotiators from
formal cultures tend to use formal titles and are mindful
of seating arrangements.
In today’s global economy, ever more business deals are made across
national borders. Negotiating international deals is a challenge because
you must be familiar with the complexities of the immediate negotiation
context, such as the bargaining power of the parties and the relevant
stakeholders, as well as the broader context, which may include
currency fluctuations and government control.
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NEGOTIATING INTERNATIONALLY / 439
POLITICAL RISK
While some countries have long traditions of an abundance of
resources and political stability, others have scarce resources
and are marked by volatile political changes.
IDEOLOGY
In individualistic cultures like the US, the purpose of the business is
to serve the interests of its shareholders, but in collective cultures,
the business has a larger purpose: to contribute to the common
good of society.
CULTURE
Different cultures have starkly different cultural beliefs about the role
of individuals in society, the nature of relationships, and the ways in
which people should communicate. These have a fundamental effect
on how you need to approach a negotiation.
INTERNATIONAL FINANCE
Currencies fluctuate and affect the balance of expenses and profits.
The stability of the currency your investment is made in affects the risk
to you. Many governments also control the flow of currency, limiting the
amount of money that can cross their borders.
BUREAUCRACY
Business practices and government regulations vary from country to
country. In some countries, the government bureaucracy is deeply
embedded in business affairs, and businesses are constantly required
to secure government approval before they act.
POLITICAL AND LEGAL SYSTEMS
Different countries have different tax codes, labor laws, legal
philosophies and enforcement policies, laws that govern joint
ventures, and financial incentives for attracting business
investments.
Factors to consider in international negotiations
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440 / DEVELOPING YOUR TECHNIQUE
Negotiating in Asia
Succeeding in any international
negotiation means taking the time to
understand the complex negotiating
environment, being sufficiently flexible to
be able to change your ways of working if
necessary, and learning to work within
different governmental bureaucracies.
The overall cultural and business
landscape in Asia is especially unfamiliar
to Western organizations. With the
region’s rapid rise in economic
prominence, however, every manager
needs to be aware of how it differs.
The Asian style
of negotiation
RELATIONSHIPS (“GUANXI”)
TRUST FROM THE HEART
FAIRNESS
FACE
LEGALISM
DECISIONS
EMOTIONS
BE PATIENT
Indian negotiators are
more concerned with
getting good
outcomes than with
the efficiency of the
negotiation process,
and may negotiate for
weeks or even months
to get the best deal.
Never put pressure on
your counterpart to
reach agreement
more quickly or you
may lose the deal.
Tip
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NEGOTIATING INTERNATIONALLY / 441
Chinese business leaders invest heavily in making interpersonal
connections and creating a dependable social network, known as
“guanxi.” They prefer to do business within their trusted network.
The Confucian teaching xinping qihe, meaning “being perfectly
calm,” makes it difficult for Western negotiators to “read” their
counterparts and to know where they stand.
The concept of fairness is based on needs: those who have more
should give to those with less.
Asian businesses like to do business with trustworthy individuals
rather than faceless organizations. The lengthy process of building
trust is based on openness, mutual assistance, understanding,
and the formation of emotional bonds.
Dignity and prestige are gained when individuals behave morally
and achieve accomplishments. Face is a formidable force in the
Asian psyche that negotiators in Western organizations must be
particularly aware of.
You risk insulting your Asian counterpart if you emphasize
penalties for not honoring commitments in detail. Contracts are
short and merely a tangible expression of the relationships being
created. They are not treated as “fixed” legal instruments.
Although Chinese and Japanese societies are hierarchical, they
use the consensus style of decision-making. Lead negotiators
refrain from dictating a decision in order to preserve
relationships and give face to others.
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442 / DEVELOPING YOUR TECHNIQUE
Acknowledging differences
Asian culture is characterized by concern
for people’s feelings. It emphasizes
interdependence, cooperation, and
harmony, while Western culture tends
to be more competitive and achievement-
oriented, and rewards assertiveness.
Like Asian culture, in South America
good relationships are vital, but so is
emotional expression.
Asian and South American societies
tend to give a higher priority to collective
goals; self-sacrifice for the good of the
whole is a guiding principle. Also, there
is a greater acceptance of unequal
power distribution, and relationships
are built based on differences of
status, age, and gender.
Avoiding uncertainty
Another cultural differentiator is
the level of comfort of individuals
in ambiguous situations. Business
people in China and Japan like to avoid
uncertainty, preferring structured and
clear situations in which they are able
to make decisions after careful
evaluation of a large amount of
information. Contrast this with some
Western societies, where people are
more comfortable with ambiguous
situations and are prepared to make
quick decisions based on a limited
amount of information. In South America,
people may be deliberately ambiguous to
avoid being directly negative.
Be aware too that there are
differences in communication styles:
Asians may be “high context” (indirect,
implicit, and suggestive), while those
from the West are “low context”—more
direct and specific.
Understanding emotions
South American business people often
seek to form close, friendly relationships
at the outset of any negotiation. They
may talk and express their emotions
with a level of intensity that many Asian
and European cultures avoid.
MAKE A CONNECTION
Present your partners with
a long-term vision of the
mutual benefits of a deal,
stressing your personal
relationship rather than
legal obligations.
Tip
Business people in China and
Japan like to avoid uncertainty,
preferring structured and
clear situations in which they
make decisions after careful
evaluation of information
Asian and South American
societies give a higher
priority to collective
goals; self-sacrifice for
the good of the whole
is a guiding principle
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