As discussed yesterday, Mianzi and Guanxi are essential skills to develop when doing business in China, especially when it comes to negotiating deals with your Chinese counterparts. In order to cultivate cooperation between your business and your Chinese partner, there has to be the development of a strong, trusting relationship. Americans tend to be more aggressive and emotionally explosive than the Chinese; this can be disastrous to the negotiation process because it can cause distrust or worse, for someone to lose face. The many years of wars and conflicts that have taken place between China and foreign countries have caused the Chinese to distrust foreigners, making the development of trusting relationships of utmost importance for the negotiation process.
When Americans enter into negotiations they tend to have quick meetings, to be informal and direct when communicating, make cold calls, and present all proposals up front. On the contrary, the Chinese have long meetings, communicate formally and indirectly, use intermediaries instead of cold calling, and they expect all explanations first before hearing proposals. It is obvious that American and Chinese negotiation processes are completely opposite; Americans negotiate as to establish the best deal and the Chinese negotiate to form a long-term relationship. Probably the most difficult obstacle for Americans to overcome during the American-Chinese negotiation process is patience. Remember that patience is a virtue – the Chinese will wait and wait while the Americans grow tired and wary ultimately leading to the Chinese achieving more of what they want and the Americans get the bottom end of the deal.
When supply chain and logistics managers are looking to do business in China, they really have to recognize the importance of understanding the Chinese negotiation methods. A negotiation is meant to end in a long-term business relationship, and that will take time. The best way to get what you need and want is to understand the negotiations will take more time, patience, understanding, and tolerance than you are usually accustomed to. Be thoroughly prepared with all the details and numbers pertaining to the negotiation, otherwise your lack of preparation may be used against you. At the end of the day, make sure that you are 100% confident with the contract because upon revisiting it once, it opens the floor to revise and renegotiate all aspects of the contract.
Finally, be prepared to continue negotiations after hours. Americans are used to leaving the office at 5 PM and continuing official business the next day, however, the Chinese like to take the final decisions to the dinner table and then onto karaoke!
(FYKI – it would probably be in your best interest to keep your pants on)