Negotiating in China is a great interpersonal and business challenge for all the foreigners who want to develop pragmatic relations with the Chinese people. Relative literature and practical negotiation experience prove that cultivating trust is of paramount importance:
Negotiating in China: The Importance of Relationship Building
Although most Americans treat those they know better than they treat strangers, Chinese behavior towards insiders and outsiders tends to be more extreme than in the United States. A guiding principle in Chinese society is guanxi - personal relationships with people from whom one can expect (and who expect in return) special favors and services. Family ties are paramount, but friends, fellow students, and neighbors can also join the inner circle. As a foreigner, you can cultivate guanxi (关系) either by hiring people with close ties to your counterpart or by developing your own relationships with key contacts. The Chinese often go to great lengths to open doors for those within their social network and trust them to a degree that would surprise many Americans. When making pay allocation decisions, Chinese study participants treated insiders much more favorably than did American subjects, Michael Bond of the Chinese University of Honk Kong and Kwok Leung of City University of Hong Kong found in their research. The value that Confucianism places on interpersonal obligations underlies this focus on relationships. Your Chinese counterparts will trust you to fulfill your end of a deal, not because you signed a binding contract, but because guanxi obligates you to do so.
Apart from personal relations and business another important field is foreign policy and especially the U.S. – Chinese frame of foreign relations. There is no doubt that China is a super power with global influence and this fact is a true diplomatic and negotiation challenge for John Kerry:
As John Kerry takes the reins as secretary of state, no international problem will test his considerable diplomatic skills more than our difficult, complex, and unpredictable relationship with the other global superpower — China. Just how difficult was made abundantly clear on a recent trip to Beijing for a Harvard-Peking University conference on the future of US-China relations. Many of the Chinese government, academic, and business leaders I met maintain that Beijing desires a better relationship with the United States. They recognize the importance of our symbiotic trade and investment ties and respect our power. But they communicated another unmistakable message — China is intent on building its own power in every dimension — from its still-expanding economy to a new blue-water navy and state-of-the- art ballistic missile force. All this rests on a much more assertive foreign policy backed by nationalist bloggers and a population that believes China’s future as Asia’s strongest power cannot be denied. How should President Obama and Kerry respond? In his first term, Obama‘s most important strategic move on the global chessboard was his so-called “pivot” to Asia — the reassertion of US power in that vital region. As a result, the United States is strengthening its treaty alliances with Japan, South Korea, and Australia; building up Anderson Air Force base in Guam; and reinforcing defense cooperation with India, Vietnam, and Singapore. Washington has also rightly moved to protect the Philippines, Thailand, Japan, and others from Chinese muscle-flexing in the South China and East China seas. The strengthening of US alliances in Asia is sensible but amounts to only half a policy. In the second term, Obama and Kerry need to match this resurgence of American military power with an equally ambitious diplomatic strategy to try to engage China more effectively, especially its new leader, Xi Jinping. A policy that rests on the American military alone cannot by itself deliver the continuation of American primacy in Asia. We need to turn to diplomacy to convince an often difficult Chinese government to join in keeping the region prosperous and stable and to avoid the military clash neither of us can afford.
Understanding different foreign cultures is an important factor for ensuring successful communication during negotiations abroad. How are you going to behave during a Chinese banquet? Are you going to take the risk of stop drinking?
In many cultures, alcohol consumption plans a central role in thenegotiation process. Members of other cultures, particularly Islamic ones, adhere to strict abstinence; the presence of alcohol may offend these negotiators. Understanding such cultural norms and expectations – and knowing when a foreigner can deviate from them with impunity – can be critical for building a relationship and reaching agreement. In the West, alcohol is most often consumed to celebrate a deal. Elsewhere, drinking sometimes initiates a negotiation. It’s not uncommon, for instance, for Russian managers to begin morning talks with a series of vodka toasts. Similarly, in China, negotiations are often opened with banquets that include elaborate toasts to the new partnership. In these settings, a refusal to drink may be misinterpreted as a sign of low interest or lack of trust. (Though, in some parts of China, it is acceptable to stop drinking after the first two rounds of toasts.)
If your negotiation style is hostile to Chinese negotiators you are going to face many negotiation-war stratagems during negotiations. A very basic line of behavior is to show proven behavioral respect about the Chinese negotiation style:
Negotiation With Chinese – Cultural Influence and Best Practises …
Chinese has been an important business destination for western companies over the many years. China opened her markets to the world in 1978 for trade and since then it has been a favorite for many western business establishments. But doing business with Chinese firms is not an easy task as negotiating with them is quite difficult. Chinese culture and history has a deep impact on their business style and negotiation skills. Their cultural heritage, socio-economic and political changes, history of invasion and civil war had a deep and long lasting influence on business culture. Chinese culture is highly influence with Confucianism, a 2500 year old philosophy that is root of Chinese culture and ethics. The various virtues of Confucianism which are base of Chinese negotiation style includes:
- importance of interpersonal relationships,
- family orientation,
- respect for seniority and hierarchy,
- pursuit of harmony,
- avoidance of conflict
- concept of face
Another factor that influences Chinese negotiating style is Chinese war stratagems. Ancient Chinese war tactics and stratagems have influenced modern Chinese business thinking a lot. The 36 Chinese stratagems can be mapped directly to their negotiation tactics and they apply their war tactics to business field as well. The business strategies like attacking the opponent’s vulnerabilities, playing home court, manipulating friendship, hospitality, etc. against the foreign traders are influenced by the use of stratagems for handling hostile opponents.
Finally, negotiating in China is a great experience, if you are prepared!