5 Chinese Negotiating Styles
By Andrew Hupert
Management consultants and academics who look at negotiation sometimes place counterparties on a matrix of 2 dimensions – concern for others’ goals and concern for one’s own goal.
Competitive negotiators care only about their own needs and nothing for the counterparties. They are Win-Lose negotiators.
Accommodators are those that care more about their counterparty’s needs than their own. Salesmen with important clients fit into this category of Lose-Win negotiators.
Compromisers are the ones that try to work out differences and arrive at an equitable distribution of scarce resources. They look Win-Win, but many negotiators consider them Lose-Lose.
Avoiders are those that prefer not to negotiate at all. Anyone who has told you that your idea violates company policy or that the boss who makes that decision is out of town for the next 6 weeks may be a great example of an Avoider.
Collaborators make up the last category – and these are the guys who want to push envelopes and think outside of boxes to build new business. If you want to buy a couple of household items and the counterparty wants to start a manufacturing JV with an R&D center, then he is probably collaborative in his approach. They talk Win-Win but if they don’t have the resources or capacity to follow through they can actually be huge drains of time, cash and patience.
You will meet each of these negotiating archetypes in China – but things will not be quite what they seem. Two cultural factors influence how each negotiating style will appear in China:
1) Relationships are currency to Chinese negotiators, and the banquets, dinners, KTVs and visits are not just meeting places – they are deal points. Refusing to participate is insulting – but letting them make the arrangements all the time reinforces the notion that you are playing on their home court (i.e.: weak, ignorant and vulnerable).
2) They all had read Sun Tzu’s “Art of War” in junior high and now swear that it governs the placement of every delicate strand of their grand strategy. In fact the only thing many of them remember from the book is the part about deception being a good tactic.
What impact does this have on Chinese negotiating style?
Competitors will often appear to be very accommodative – offering to bend over backwards to help you. They may even be very flexible on certain issues – particularly schedules, timetables, sales targets and other things that can’t be easily enforced later. Don’t fall into the trap of negotiating solely on price with competitive counterparties – access to information and audited financial data, quality standards, supply chain and personnel issues are what will make or break your deal with these sharks.
Accommodators exist in China, but you have to be doubly careful here. Beware of counterparties who look helpful but are really plotting to slaughter you for your gold fillings. But wolves in sheep’s clothing aren’t your only problem here. In China kindness can kill as passive colleagues and counterparties smile and nod as you blunder into disaster. In Shanghai and Shenzhen the situation has gotten better, but you still shouldn’t assume that people will warn you about mistakes and dangers that are obvious to everyone else.
Compromise is an integral part of China’s consensus-oriented culture and your counterparty may look like he’s really searching for a fair solution. It’s possible – but he also may have anticipated your naïve willingness to sign a deal and will employ the meet- in-the-middle” technique more commonly seen at one of China’s many ‘fake markets’. Here they set a price 400% above their real target, and will try to compromise you down to a mere 200% overcharge. Don’t start negotiating when they call out a number. Learn the market and control the parameters of the discussion at the start. (I.e.: Just because they say 500 doesn’t mean you are required to shout back a counter offer.)
Avoiders are common in China, and are most likely to show up in the middle of modern international corporations and the heads of State Owned Enterprises. China’s Imperial legacy lives on in its bureaucracy, and you may find it extremely difficult to meet the real decision-maker face-to-face. Every situation is unique and it may be worthwhile for you to pursue some long-shots…BUT if you can’t get a satisfactory answer to basic questions before you sign a deal you’re probably going to have a lot more trouble afterwards.
Collaborative negotiators are your greatest hope and your worst fear in China. On the one hand a true value-adding partner can open doors and supply vital market information. The problem is that lots of Chinese counterparties like to talk like the boss even if they don’t have the power to back it up. The result is a lot of big plans that don’t ever amount to anything. China novices have been known to build these optimistic notions into internal business plans – and later face disappointed senior managers who want to know what happened to the budding China JV. Beware.
Andrew Hupert, Chinese Negotiation
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June 13th, 2008 at 1:58 am
[...] do you say “compromiser” in Chinese? Five negotiating styles and the impact of cultural factors on these styles when doing business in China. [China Expert [...]
June 17th, 2008 at 5:26 am
[...] Check out this article on the China Success Blog: Chinese Negotiating [...]
November 24th, 2008 at 7:15 am
Let’s generalise further. The negotiating tactic of ‘looking like you are compromising’ is evident in wet-markets, and boardrooms across China. They start high, you start low, and, what-do-you-know, the final price is ‘half’ of what you both first offered! Of course, if you are aware of this tact, then start much, much lower, or much, much higher – depending on your position.
So what about ‘collaborative’ types?
As China is a ‘resource-limited’ thinking country, few are taught that the ‘pie’ can be enlarged. The #911 double-decker bus that runs down Huaihai road is a perfect example. Due to bad scheduling, the second bus will be seconds behind the first, AND will be completely empty. Meanwhile, the first bus is sardine-can-like.
So while Chinese are seen as compromising, I would say that they are predominately competitive.
November 29th, 2008 at 5:51 am
Hello, I think Andrew’s analysis is definitely a western scientific approach to Chinese negotiation. However, Chinese business negotiation is not a science, but an art with close link to how the Chinese are brought up, and to the “Yin & Yang”, with changes over time and space.
Hence, I am not sure if you could easily categorize Chinese negotiation style.
For example, when you want to buy something from a Chinese supplier, it is common to start off with a hard negiotiation and ends the deal with the Chinese supplier would say “I am selling you at no margin, but for long term relationship, I will do the deal with you. But please give me a better price next time, OK?”.
Is it true that the deal is a loss to the supplier? Most likely not.
Similarly, if you are dealing with a Chinese customer, price hagging and “unfair” price competition is part of the negotiation. The Chinese customer would tell you that “A” supplier is quoting at $15, what is your price? When you say “$14″, the Chinese customer would go back to “A” supplier to ask for even lower price. And this goes on and on.
What style is this? Win-loss to you? May be. It depends how you negotiate your way out of this situations, judging from the time and space you are in. A closed deal may not be closed even if the contract is signed or the PO is recieved.
Cheers …. Hing Nan
December 1st, 2008 at 4:15 pm
Hing Nan,
That style is classified as ‘positional negotiation’. In China there is a common belief that ‘price is the most important factor’. Yes, I am suggesting that it is not. Perhaps 10 years ago, but these days the Chinese consumer buys because of their ‘need’ (Brand/Trust, convenience, comfort, etc). The Chinese negotiator that only debates of price is comparing apples with apples, and that only works with commodities. It doesn’t work with mobile phones, cars, clothing, restaurants, time, hotels (the list goes on).
So the ‘positional’ style of negotiating is popular in China, but it isn’t a negotiating tactic that I endorse. Ultimately it ends up with lose-lose, and some angry customers.