By Jack Leblanc
At 9AM I walked into the meeting room with yesterday’s dirty jeans and sneakers full of reddish mud, and still feeling very tired. Not really the image I wanted to convey. Old J however had already explained the situation and most of the people in the room by now knew me pretty well from past meetings. As expected, the discussion went back and forth between technical explanations and price. Like the experts they were, the import-export people, headed by Mr. Zhang, made junk out of the price structure I tried to maintain. I gave way too fast for nothing in return. I hadn’t really learned my lesson. At the same time we were discussing an English-Chinese contract with many paragraphs written in lawyer’s lingo that gave me dreadful headaches. Although Jan had given me the authorization to sign, he had to agree to each and every line before he’d give me the go ahead. Here I was, the wannabe China businessman, sometimes lost on the commercial terms of the contract but having to keep up appearances. The negotiations had been pretty intimidating and I felt as if I couldn’t really keep up. Luckily Jan was a good and patient man – he had to be, so near to closing the deal. By noon we finalized that day’s discussions and I was told that I’d be contacted again the following day. As I left the building the Americans passed by, all in their smart Wall Street striped suits, ready for the kill. The HK guys accompanying them sneered at my muddy shoes and dirty pants. I couldn’t care less, although in my mind it was now 2–2 with the psychological advantage to the visitors.
The contract was faxed to Jan who would review it and give me his comments during the night, and the following day I would have to defend his sometimes-cryptic ideas. Old J was not really of any help either, as the only thing he wanted from me was a lower price, and furthermore was not at all concerned with the contract’s contents. As the days crawled by, at least six versions of the contract went under review, a kaleidoscope of possible payment terms were proposed and rejected by both parties, quantities of glass per container shrank and grew, delivery terms were stretched or squeezed as was seen fit, and damages on faulty payments, non-timely delivery or bad product quality took on psychedelic proportions. When Jan realized that no shipping company in Europe was willing to insure the goods to this ‘unknown’ inland destination of Chongqing, even the port of delivery changed several times, moving from Chongqing to Shanghai, Guangzhou, Ningbo and back again. Not to mention the fact that I had to navigate my way through paragraphs of Chinese that also changed on a daily basis, trying to match the English version. At that time the Internet was unknown, a laptop a rich man’s gadget, and a PC word processor an archaic unfriendly creature. All this resulted in contract proposals that were literally cut and glued together with strips of fax paper, slivers of typewriter printouts and handwritten sections. A real work of art that each afternoon was duly retyped by a pretty secretary on the import-export company’s two mechanical typing machines: One for the Chinese text and one for the English version.
As the import-export people kept us on edge about their choice of partner for the glass deal, the Americans were becoming restless, nervous and fed up. They threatened to leave Chongqing by Saturday if no decision had been made. As if to call their bluff on this artificial deadline, Saturday went by without any meeting. On Sunday, when asked to come over for final discussions, I saw the American team still present, obviously backtracking on their threat to leave beautiful Chongqing. Apparently it was not that easy to walk away from a million-dollar contract.
In the meantime, eight thousand kilometers away, Jan was also getting a bi t edgy, having to work over the weekend and unaccustomed to such lengthy and – in his words – miserable discussions. Myself, I stopped keeping track of my mental score of the home team versus the visitors. It might well have been 15–19 for all I knew. That Sunday, we still couldn’t close the gap that was separating Jan’s idea of the contract’s contents and those of the import-export company. Pricewise, we were already twelve percent below the initial price Jan had given me.
Mr. Zhang & Co. undeniably knew how to play hardball, and it was certainly not the first time they had squeezed the last drop out of a price negotiation. They were pros, working all the levers at their disposal. We just had to dance along to their daily melody while invisible strings pulled us to the beat. I had to be back in Beijing on Monday evening, but could always feign a stomach ache to stretch my time. Jackson meanwhile informed me that the bank director, vice-mayor, and import-export people had been invited by the HK-US team to one of the top restaurants in town. All this followed by a super deluxe karaoke bash and more… All three services rendered for the sake of building a better society. I couldn’t compete with such extravagance; I’d have to work another year in Tsinghua to cover the expense.
Time quietly ticked by. The only activity that could be detected in the daily discussions was the emptying of overloaded ashtrays; nothing indicated any preferential leaning towards either group. Jackson, meanwhile, was working behind the scenes and already had arranged several private dinners with key individuals. For obvious reasons I was persona non grata at the dining table. Then on Thursday morning, thirteen days after arriving in the Pearl of Sichuan, Old J took me aside and gave me clear instructions to give way on the following points: In case of discrepancies in the contract the Chinese version prevails, and the L/C [Letter of Credit] would be opened with twenty percent down payment, fifty-five percent against shipping documents and twenty-five percent on arrival of goods. We would also need to have a bank guarantee valid for one year for a value of twenty percent of the goods, and we had to give another five percent discount.
‘No problem. I think this is acceptable’, I said, faking it. Entering the meeting room, everyone seemed to be gearing up for the final sprint, the cigarettes all lit, the teacups chock-full of chrysanthemum flowers – this meeting had another aura to it, it was somehow different.
‘Jieke, we think we can trust you, I hope you won’t disappoint us. We need you to agree on the following and the contract is yours,’ and up came all of Old J’s points.
My speech in response could be distilled into the following: ‘We’ve gone a long way, we’ve been talking about this glass for over a year and honestly speaking I’d love to give you what you want, but I simply can’t. You’ve dragged the price to the bottom of the Yangtze River; you’ve requested so many concessions and Jan has gone (hesitantly) along, I’m worn out working the fax at night and waking up early to prepare for the meetings, I can’t give you anything more but a lunch.’ Silence in the meeting room, you could almost hear the tea ooze from the tealeaves and the smoke rising from the cigarettes; the bank director stared at Mr. Yu and Mr. Zhang, basically saying: ‘It’s your call , I’m fed up too, I have other things that need tending to.’
Mr. Zhang finally spoke up. ‘Well if that’s the case, let’s go and have lunch, there’s nothing more we can accomplishing this meeting room. ’ During the meal, the room filled with rocket-fuel fumes, everyone remembered the good times they’d had in Europe, and no business issues were brought up until the very end, when I initiated a final push: ‘We can deliver the goods you want, but you’re asking for the impossible. We’ve become close friends, it’s a pity we couldn’t ink this into a contract’.
At this, the bank director hinted to Mr. Zhang that he should speak a few words. ‘Yes we are old friends, but you have to know that China is very poor, we need to be very careful how we spend our country’s money. We can’t just go with every proposal that might suck money out of the motherland.’
‘I understand, but I believe that none of us want to cheat the Chinese government. If that were the case I wouldn’t be able to sleep at night.’ ‘Jieke, you know the devaluation has forced us to be more careful with the hard currency that is allocated to us, we need to make sure we comply with the government’s regulations on how the resources are used.’ On this final note, we decided that there was still some room for discussion and moved back to the meeting room, filling the afternoon with smoke and jugs of tea.
Finally, after four more hours of discussions touching on almost everything in the contract, we came to the following conclusion: ‘The L/C would be opened with twenty percent down payment and eighty percent against shipping documents. A bank guarantee for a value of ten percent of the contract remaining valid for three months after shipment and a two percent discount on the price’. From the import-export company offices I called Jan to ask him if this would be acceptable.
Crackling in from the other side of the line came: ‘I’m tired of this haggling, we’re selling glass here, not camels. They can have the glass on those payment terms, but no more discounts. Don’t call me unless you’ve signed the contract!’ Off I went to the meeting room, to tell them that Jan was about to call off the deal , and conveyed to Mr. Zhang that basically all contract points could be agreed upon, but a further discount would be impossible.
At that Jackson asked me to leave the room for ten minutes for some internal discussions. An hour later, a beaming Jackson came out: ‘Mr. Zhang is ready to sign the contract!’
Later I understood that Jackson purchased the glass with the help of the Bank of China, which loaned him the money. Jackson then made a handsome profit selling it to the Hong Kong construction company, whose overall profit margin was seriously dented in the process. This transaction helped many people live a more comfortable life.
Jack LeBlanc, author of Business Republic of China, Tales from the front line of China’s new revolution.