China 101: Chinese Negotiation. 10 Top Tips for Chinese Negotiation (part II).

This is the second part of the article by guest contributor and Chinese negotiation expert Andrew Hupert. You may read the first part here.

10 Top Tips for Chinese Negotiation (Part II- tips 6 to 10)

6.  Have a strategy for getting information.
In Chinese negotiation, it is more important that you know the right questions than the right answers.  You have to know enough to assess his proposal and solution.  Western partners have a terrible habit of relying on their Chinese partner to keep them supplied with basic information about markets and regulations.  Plenty of great sources of information and knowledgeable contacts are available – make use of them.  Depending on a counter-party to keep you informed and up-to-date is suicidal.

7.  Beware the balance of power shift.
Chinese partners are known for purposely appearing weak and non-threatening at the start of a deal and manipulating the Western partner into injecting valuable assets or teaching vital information.  Once the Chinese side closes the gap, you can expect their negotiating style to become much more aggressive and demanding.  Guanxi relationships are a function of utility value, and once they no longer need you then they are going to squeeze you.

8.  Have a strategy for adding value.
They have to need you more than you need them.  Their learning curve will flatten much earlier than yours.  Once they understand your technology and your procedures, they will feel they no longer need you.  If you are dead weight, then it is worth it to them to get rid of you.  Know what your Chinese partner can’t do, and then make it central to your partnership.  Innovation, branding, new product development, and overseas sales are examples that have worked for Western partners in the past.

9.  Pick the right partner before you start negotiating.
Know what your strategic and operational gaps are, and then conduct a methodical search for a Chinese counterparty who can close the gap. Novices often find China overwhelming and tend to start negotiating with the first Chinese person they meet.  Most of the time the Westerner ends up giving away his business strategy and marketing plan to a potential competitor, without getting anything in return.  Know what you want from a local partner, and keep screening until you find an appropriate candidate.

10.  Trust with vigilance.
It’s possible to find Chinese partners who are honest and loyal, but your chances improve if they need you more than you need them.  Trusting the wrong person in China is fatal -but being too suspicious and controlling will alienate potentially valuable partners, staffers, and colleagues.  The Chinese side has to feel vested in the profitability of the enterprise, and see a clear path to their own success.  Striking the right balance between common-sense skepticism and healthy confidence in a colleague is a real challenge, but it often is the most significant factor to your success in China.

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