Article for translators: Learning how to negotiate with the Chinese

Learning how to negotiate with the Chinese

By John Freivalds,
Managing Director,
JFA Marketing

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Whenever a client of ours comes back from their first trip to China to negotiate a deal I always ask “Did you remember not to say when you were returning?”

The three pillars of successful negotiating are: time, power, and knowledge. You can make a better deal for yourself if you have all three in your favor. The only thing I can really help a client with is knowledge. If they give away their “time pillar,” they have already lost a key negotiating advantage by giving their return time. Instead of saying when you will return say “as long as it takes.” If you give your departure time, you put yourself at a disadvantage because the other side knows you need to get something done quickly. With public companies getting things done “right now” is a big issue because every quarter they have to show some progress to their shareholders and skeptical analysts. But to be successful in China you can’t let them know what your time agenda is. So if you gain anything from these words, keep your departure time to yourself. By thinking that you will gain something by saying “I have got to get back” is really committing negotiating suicide particularly with the Chinese.

As to the issue of power, Western firms do have some in dealing with the Chinese. A recent UPS survey showed that the Chinese prefer American goods so they want them in their country. Chinese firms also want to have access to the US market whether to produce outsourced goods, or to increasing their own branded products.

That leaves the “knowledge pillar.” I hope that the following words can give you some insight as to how the Chinese regard the negotiating process. I will throw in some Chinese words and concepts which are part of our “guerilla linguistics theory” that our firm has developed over the years. This concept is used by many firms when they begin their negotiating process in another country and culture. By using common terms of the other side, they don’t really know what you do know or don’t know about their culture. I relish the fact that a number of firms have used the concept, the NY Times recently lauded the practice and firms like UPS and Jacobs Trading have used it. And yet when I first introduced the concept in 1994 the Modern Language Association wouldn’t accept our advertisement for the concept or the posters that represented it because it wasn’t “professional” enough; I framed the rejection letter.

THE CURRENT PRACTICE

For the most part when Western firms go to deal with the Chinese they follow the common practices of taking lots of business cards in Chinese with them, wearing a dark business suit, drinking the toasts, and negotiating in short sentences. But these actions can only get you so far.

While the Chinese opening to the West is of recent vintage, the Chinese have been around and trading for many thousands of years. Westerners are regarded as newcomers.

John Graham, writing in the Harvard Business Review, states the most important cultural concept to take into account in China is agrarianism. In contrast to the US and other Western countries, two thirds of the Chinese still live in the country side and retain their rural roots and values. “Rural living is communal, not individualistic, and survival depends on group cooperation and harmony.” Morality is part of the agrarian heritage as well and going out to a club with others is unthinkable. Don’t let the skyscrapers of Shanghai and Beijing fool you; it’s still a traditional society in more than a few ways. Take former CEO of General Electric Jack Welch’s words in writing his best selling book Winning, “…learn everything you can about China, because it will permeate every aspect of your business in your lifetime.”

“While the Chinese opening to the West is of recent vintage, the Chinese have been around and trading for many thousands of years”

One way of putting this in a negotiating context is that the Chinese are concerned with the means as well as the end. A good negotiation involves going back and forth, reaching a compromise with both parties, who are each holding a valid point of view. To say its “my way or the highway” as particularly American firms are wont to say won’t work. Just remember the ancient Chinese proverb “Merchants as folding screens must bend in order to stand.”

Some of the other differences are: Western firms are information oriented; the Chinese are relationship oriented. We are sequential (if this, then that); the Chinese are circular. We argue; the Chinese haggle. We live in a culture of cold calls, while the Chinese work through intermediaries. We like quick meetings, where the Chinese like a long courting process. In other words, Westerners are impatient while the Chinese are enduring.

My favorite insight on the Chinese negotiating style comes from author James Macgregor in his book One Billion Customers: Lessons from Front Lines of doing Business in China; he writes “The Chinese have a no ‘blush’ gene when it comes to negotiations. No matter how egregious the demand the Chinese can say it with a straight face. They will ask you for anything because you may just be stupid enough to agree to it. Many do. Western attorneys in China make a good living unraveling these contracts.” Don DePalma who just got back from China put negotiating a joint venture this way, “…don’t be surprised if your partner chooses to re-visit the agreement sooner than the renewal date.”

Finally language enters the fray. It is helpful to note that Chinese is a pictographic language. Words are really a sequence of pictures, not single words crafted by lawyers. It was Michael Harris Bond, a psychology professor at the Chinese University of Hong Kong who found that Chinese students are better at the big picture while Americans are good at the details. And the big picture for the Chinese is that a signed deal is just the starting point for a relationship, not the end point.

GUERILLA LINGUISTICS FOR NEGOTIATIONS

Guerilla linguistics can be defined as the art of giving the impression that you know more about a language (back to the knowledge pillar) than you really do. These eight terms define the elements that form the base of the Chinese negotiating style. To acknowledge them or even to say them, during a negotiation will go a long way towards you accomplishing your goals.

Guanxi- There is no equivalent term in English, but it is the concept that friendship can enable one friend to make substantial demands of the other.
Shehui Dengji-“The Just call me Freddy” informality usually does not work well in China.
Renji Hexie (interpersonal harmony). Having a hissy fit won’t get you any points nor will giving ultimatums, or to quote another Chinese proverb, “a man without a smile should not open a shop.”
Mianazi (Saving face) A person’s social standing and reputation rely on saving face. If you cause someone to lose face, you best tell them when your plane leaves as your negotiation is over and you are done.
Chiku Nailao (endurance). The Chinese are beyond famous for their work ethic. The one time I told a Chinese citizen when my plane l eft (I said 6:00 AM at 7:00 PM the night before to get rid of him) he responded “I will have my people work all night to get the custom made suit and ten shirts done by the time you need..” And he did!
Zhongjina ren – To deal with the Chinese you have to have an intermediary. The Chinese regard people as guilty instead of innocent until proven guilty. Thus you have to have a trusted intermediary make the first contact.
Zhenghti Guannina (Back to the pictographs) Chinese think holistically, that is they think about the whole or big picture while westerners break apart the deal into segments price, quantity, delivery etc. The Chinese might talk about these all at once and skip over some. It seems very circular to Westerners but remember they are the fastest growing economy on earth so get used to dealing with them and their way of negotiating.
Ganbei – This literally means “dry glass” and is a popular toast. Part of any negotiation is a ban quet and lots of toasts. While baiju, a potent liquor, used to be a staple at banquets, wine mixed with soda is increasingly becoming the primary toasting drink. Be prepared to give and receive lots of toasts.

This is part one of a two part article that I will continue with in the May issue of ClientSide News. As you can imagine, this is a vast subject and I will deliver more insights and depth on negotiating with the Chinese next month!

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