You will need time, patience, flexibility and to pay strict attention in negotiations with Chinese business partners. Stay calm and be prepared for surprising changes of direction.
Participants in negotiations
If the Chinese firm is big assume that you will be sitting opposite a big negotiating team with precisely defined roles. You should go in with a correspondingly impressive staff of advisers.
Who does the talking?
Mostly there are one or several leaders of the negotiations. But frequently only prepared statements are presented until the other side has been heard. Then the Chinese leaders withdraw behind closed doors for further consultation.
Make sure that you express yourself carefully and guardedly in debates so that nobody present loses face. Never risk good personal relationships, because if you do negotiations will very quickly be broken off and the business relationship will be finished.
Consequently, differences of opinion are often cleared up in a small group and not in front of everyone. An intermediary may also be called on if the negotiations come to a halt. Only afterwards do you go back to the large gathering.
Small deceptions, tricks, and subtleties are regarded in China as reputable ways of moving the negotiating partner to mostly unconscious concessions.
International managers who notice that their Chinese business partners have reached their negotiating goals only by using tricks or simulations often feel they have been made to look foolish. They judge such cunning tactics as negative. Certainly, international negotiators also know a few tricks and ruses to move the other side to concessions. Still, usually, the moral basic attitude of the “honest merchant“ is paramount.
According to the Chinese way of thinking, deceptions are simply part of a good negotiating style and are regarded as neither dishonest nor immoral. Tricks and ruses that are used either by plan or intuition are even a mark of a great businessman!
Be particularly careful if your Chinese negotiating partner makes a lot of fuss about nothing or a mountain out of a molehill. Sham battles, distractive manoeuvres, intentional misunderstandings often serve to distract from other things, to win time, or simply to wear down the other side. And your Chinese partners will perhaps pretend to make painful concessions – an alleged negotiating victory that is meant to move you to give way on something else, perhaps something more important to the Chinese.
With Western negotiating partners the Chinese often assume correctly that they are under some time constraints to come home from China with good results. Therefore, some Chinese understand how to build up time pressure artificially by unnecessarily dragging out individual points of negotiation, and then shortly before the end of the conversations taking place they demand big concessions on the really important points.
Always plan generous time reserves for negotiations in China. Offer to delay your departure and go back to the negotiating table.
Haggling for the best price is a part of the Chinese style of negotiating. Never enter into negotiations with realistic prices, but count on the room to negotiate prices by 20, 30, or even more percentage points.
Never give in too quickly, either. Show stamina. A certain persistence marks you as a good long-term business partner. Refuse demands from the Chinese side politely and self-confidently. Or, make the Chinese silence your own: you can give a signal that your negotiating scope is getting narrow with a few minutes of silence.
Keep in mind that further concessions may once again be demanded after the agreement. Follow-up negotiations are not unusual in China.
If you’ve exhausted the scope for negotiating a price you can often make attractive additional offers to the Chinese side, e.g., training for their staff, unpaid services, or an invitation to a trade fair in another country. Price is not always the decider in China. Other advantages such as good personal relationships with business partners weigh heavily.