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China: How to negotiate and other Chinese business practices

By Marian Stetson-Rodriguez, president, Charis Intercultural Training

You’ve got the meeting set up in the Pearl River Delta region. Congratulations. With visa and bilingual business cards in hand, a Mandarin phrase book with a practiced toast, and appropriate gift for your Chinese host, what’s next to seal the deal in China?

Old China hands and any Chinese will tell you to invest in relationships. Chinese culture is relationship-driven (guan xi) and people-oriented. Friendship first, then business will follow.

Relationships in China are based on mutual trust and respect; equality, commitment and common goals, communication and compromise. It takes time and effort to build relationships, which Western companies (Motorola, Vodaphone, Intel to name a few) have found to be the case. (OEM Exclusive: Request list of EMS/ODM providers anywhere in China or the greater Asia region)

In Chinese culture, communication is a continuous process, critical for building relationships, in addition to the exchange of information.

Below are insights that successful expatriate managing directors; leaders of global teams, and explorers of business opportunities follow to build business in China.

Communication strategies

  • Persuasion – There may be sensible and intellectual discussions, but individuals know their place in the team or organization (hierarchy), e.g., contributing or deciding role. They know when to stop or when pushing too hard may be offensive or counterproductive.
  • Feedback– Chinese generally do not volunteer information or give feedback. If you want feedback, ask persistently and politely.
    • Negative feedback – Chinese do not want to convey bad news. Giving negative feedback is perceived as confrontation that causes loss of face.
    • Positive feedback – This is well received if done in a low-key way and shared by the team. Chinese prefer to receive praise privately. Similarly, Chinese are not comfortable giving praise.
  • Self-glorification or promotion – Expressing one’s attributes or accomplishments runs contrary to Chinese values of modesty and humility. The norm is to be self-deprecating, and any praise should come from others.Sending a company letter ahead of your meeting that gives bio data with accomplishments (academic titles, positions held, major deals or projects completed) of the visiting team members is appropriate.
  • Confrontation– Chinese avoid confrontation altogether. This is done to save face and preserve group harmony (as confronting can translate to there being a winner and a loser). Individuals should discuss different viewpoints and try to build consensus.This holistic culture does not compartmentalize work and personal feelings. Its important to note everything is personal.

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Negotiation strategies

  • Chinese negotiating style – While Westerners are generally results-oriented (focusing on tasks at hand, specific terms and conditions, and time efficiency) Chinese are relationship-oriented. They focus on harmony and flexibility, and are patient in getting the job done. They do all they can to avoid ‘tong chuan yi meng’ which translates to ‘same bed, different dreams’. Chinese are known to be tough negotiators. (See, also: “Chinese authority Dr. Kerry Brown on China’s issues and western ways“)
  • Building trust – Begin to build trust based on mutual respect, modesty, equality and harmony. Chinese are not comfortable being rushed, or jumping right into business discussions without proper introduction. They believe getting to know each other and building trust is necessary in negotiations.
  • Rationale – Chinese take time to understand the reason, logic and motivating factors in a holistic manner – connecting the dots. They must be convinced there’s a win-win deal to be made. They think long term. A bottom line approach or a quick fix may be perceived as simplistic and short-term thinking.
  • Cultural priorities – In negotiations, Chinese cultural priorities are relationship first followed by rationale, and legal. Check your cultural assumptions in relation to these priorities – they may be in reverse order.
  • Style – Chinese listen more than they talk. They may appear to be delaying, but they are gathering pertinent details on issues and personalities. The indirect, unemotional style accompanied by vagueness allows room for maneuverability and outs. Silence is ‘constructive ambiguity’. It is rude to interrupt. To build a productive relationship each side must accept different styles of team building and group dynamics.
  • Compromise – Chinese know what they want and are willing to compromise. ‘Give and take’ is a means to achieve harmony in Chinese culture. As such, compromise is not considered weak or giving in.
  • Revisiting agreed items or terms – It is not unusual for Chinese to revisit items previously discussed and agreed upon, and try to renegotiate. If this happens, graciously enter into talks, be flexible and well prepared for what you are willing and unwilling to do, and prepare your organization that there may have to be changes.

 

READ
Project management and effective electronics manufacturing (more here)
Increase your knowledge of electronics manufacturing contracts
Considerations when manufacturing electronics in China
Electronics sourcing and planning knowledge

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