Before entering into negotiations with Thai partners, it is important to find out exactly who has what decision-making powers. Hierarchies in Thai companies are difficult for outsiders to understand.
Decision-makers are basically those who are at the top of the hierarchy. However, decisions are not always made directly. Often the necessary information is passed on from bottom to top and often via various branches within the hierarchies of individual departments.
On the one hand, you should sit at the negotiating table with the right people from the beginning. On the other hand, it can be useful to be in contact with many managers at different levels in advance in order to positively influence the passing on of information.
The seating arrangements in the negotiation room are not left to chance: both negotiation teams will sit at either side of the conference table. High-ranking decision-makers on the host side sit in the middle, usually with a view to the door where the negotiating partners from abroad are placed. Those who are equal in the hierarchy usually sit directly opposite each other.
Since negotiations are only conducted with a counterpart of equal rank, it can also happen that several smaller rounds of negotiations take place at the same time, in which experts from both sides with the same position negotiate individual points. The results are then passed upwards into the big round of negotiations.
It may also be the case that the actual decision-maker does not actively participate in the negotiations. The results of the negotiations are then passed upwards for the final decision.
In line with their way of speaking, Thai people negotiate in a circular manner. Individual points of negotiation are touched upon, quickly dropped when controversial issues come up and taken up again later. Instead of discussing different views for a long time and thus endangering the harmony in the room, it would be better to change the subject.
Similarly, it is very important to emphasize common ground and agreements that have already been reached before carefully bringing up a controversial point.
Of course, the Thai negotiating style is also goal-oriented, but there is more time and space for the search for flexible, relationship promoting solutions. It is therefore helpful to tune in carefully during negotiations in order to identify new aspects that can then be followed upon.
When negotiations come to a standstill, sharing a meal together can work wonders. Do something for the relationship, engage in small talk and create a pleasant atmosphere before returning to the negotiating table.
Under no circumstances must you vent your displeasure. This would only lead to loss of face that would be very unpleasant for both sides. So make sure that you suggest a break in time and do not lose self-control and become confrontational!
Price negotiations in Thailand can be very lengthy. As a rule, major concessions are expected to be made. You should therefore plan for some necessary leeway to negotiate prices. Don’t ever assume that realistic prices will shorten the negotiations.
It often happens that real negotiations only take place shortly before your departure. Many Thais know about the tight time constraints that foreigners are under and use this on purpose to achieve the price they want.
Verbal agreements are of great importance in Thai business culture as it is based on relationships. However, it is not uncommon to deal with these agreements in a rather relaxed manner, especially if the personal relationship is not maintained satisfactorily and falls by the wayside!
Written contracts offer a certain degree of security, but are subject to change in Thailand as needed. If conditions change, your business partners will expect to renegotiate. Do not jeopardize good relations by refusing to return to the negotiating table!