Business Negotiation

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Business Negotiation Business CultureGreater
China Roadshow, Cambridge21 February 2007

• Chris Cotton, Regional Manager, China-Britain
  Business Council
• David Owen, International Communications Manager,
  
• UKTI East of England

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• Dont Expect
• Business in China to be easy it isnt!
• Business in China to be impossible it isnt!
• Do Expect
• Hunger for business
• Interest in what you have to offer
• Demanding and canny negotiators

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Challenges of the China Market

• Distance, time and cost
• Cultural perceptions strangeness, business
  practices
• Concerns over getting paid / making a profit
• Lack of reliable data market information
• Tendency to view China as a single market
• Inadequate representation / hiring keeping good
  employees
• Corruption bureaucracy
• Intellectual property rights
• Opaque under developed legal, regulatory tax
  framework
• Standards
• Political situation
• Dont suspend normal judgement just because its
  China!

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Where in China?

• Treat it as a Continent, not a Country
• Guangdong Province 85 million people
• Sichuan Province 83 million
• Jiangsu Province 74 million
• Zhejiang Province 47 million
• Chongqing 31 million
• Shanghai 17 million
• Beijing 14 million
• Focus on one area only, initially

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Western Region
Bohai Rim
Yangtze Delta
Pearl River Delta
Main Centres of Economic Gravity
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Some of the Influences . . .

• Foreign baggage - not just Westerners
• Legacy of the Cultural Revolution
• The Big Flip from Capitalist running dogs to
  toeing the line as a paid-up member of the WTO
• Structural reforms breaking the Iron Ricebowl
• City sophisticates vs rural traditionalists
• The desire to get rich quick . . . . aka
  corruption

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Some of the Influences . . .

• Basic Confucian values relevant to business
  culture
• 1. The concept of face
• 2. Importance of interpersonal relationships
  guanxi
• 3. Family and group orientation
• 4. Respect for age and hierarchy
• 5. Avoidance of conflict and the need for harmony

Kong Fu Zi aka Confucius
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Some of the Influences . . .

• Political
• The Communist Party
• Suppression of dissent, eg. Falun Gong
• Dismantling state sector gt100m unemployed ?
  instability?
• Risk aversion
• Contradictions of a socialist market economic
  system
• Communist bureaucracy vs market economy progress
• Social stability at the expense of a pluralistic
  society

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Business Culture Formal Meetings
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Business Culture Formal Meetings
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Business Culture Formal Meetings
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Business Culture - Meetings
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(No Transcript)
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Building Relationships

• Guanxi
• lit connections, relationship
• Doing business through value-laden
  relationships
• If you dont have it, find someone who has
• Keep contacts warm communicate!

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Business Culture - Banquets
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Business Culture - Banquets
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Business Culture

• - Do
• Take some mementos / souvenirs / company gifts
• Some small, some slightly larger (tie / book /
  bottle)
• Have some room in your suitcase accept
  reasonable gifts
• Wrap in red or gold
• Take photos and send them back to your hosts
• Dont
• Give clocks or knives
• Wrap in white
• Refuse reasonable gifts

BB
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Basic Recommendations

• 1. Do your homework.  Before anything else, carry
  out proper, in-depth research on the market for
  your product or service in China.
• 2. Gain an appreciation of the cultural niceties
  of doing business in China.
• 3. Visit the market.  See firsthand the
  opportunities for your company in China.
• 4. Cultivate the best contacts you can in China
  and take time to develop and nurture this
  network.
• With the right product or service, small or
  medium sized companies have as much chance of
  success in China as big organisations.

Relax, be yourself - Enjoy it!
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Business Negotiation Business Culture

• Does your Chinese contact have a personal as well
  as a business agenda? (eg particular interest in
  an area of your discussion)
• What are the relationships at play between
  members of the Chinese negotiating team?
• What relationships are at play between your agent
  and the negotiating team?

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Business Negotiation Business Culture

• Do not underestimate the ruthlessness of Chinese
  negotiation, especially when coated with effusive
  friendliness
• Ensure you understand what the next steps are
  after the negotiation (as they may not be
  obvious)
• Dont expect everything to be signed off or
  agreed at once

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Business Negotiation Business Culture

• Learn to read between the lines the Chinese are
  masters at this
• Try to verify in subtle terms whether Chinese
  claims can be substantiated (is there
  exaggeration involved)?
• The Chinese are humble whilst being proud of
  success dont be afraid to state your strength
  and competitiveness

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Business Negotiation Business Culture

• Chinese negotiations dont always have clear
  marketing plans
• Be prepared for some direct personal questions
  these are often not considered rude
• Chinese documentation can sometimes come on
  manky paper but is still valid

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Business Negotiation Business Culture

• Negotiation styles can vary between generations,
  so be prepared for rapid shifts of style
• Getting things in writing is always desirable but
  sometimes difficult
• Be prepared for the little huddles older style
  negotiations relied on group agreement

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Business Negotiation Business Culture

• A meeting never lasts as long as the agenda
  states it continues in several other forms
  (meal, subsequent exchanges etc)
• Some of the Chinese team will turn up without
  knowing why exactly they are there (but will not
  be concerned about this)
• Get to know the boss (and his family, and his
  hobbies, and)

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Business Negotiation Business Culture

• The Chinese have a great sense of humour, and
  will laugh along with you
• but dont be Monty Python and make fun of
  yourself, your colleagues or your business

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Business Negotiation Business Culture

• The Chinese tend to hold the British in high
  regard, so use this
• In many respects Chinese character is close to
  British character (aversion, humility,
  politeness)
• The Chinese admire strength and ambition, and
  genuinely strive to be better than their
  neighbour it is not a society for the
  weak-hearted

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Business Negotiation Business Culture

• The Chinese are extremely welcoming, and
  genuinely so
• Business and social meetings can see completely
  different types of behaviour
• Be prepared to have to go back to China for
  follow-up
• If something is wrong on the Chinese side, they
  will be reluctant to admit it

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Business Negotiation Business Culture

• Young (20-35) Chinese negotiators are completely
  different from their older counterparts
• Retirement is a nebulous concept in Chinese
  business, and elderly representatives may at
  times be present
• Management styles vary hugely from
  western-educated to old state-owned mentalities