Chinese Negotiating Style: Commercial Approaches and Cultural Principles

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Chinese Negotiating Style Commercial Approaches
and Cultural Principles

• Written by Lucian W. Pye
• Presentation by Lisa DeMello

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Point of This Book

• 1. Minimize future misunderstandings in Chinese
  commercial negotiations
• 2. Provide guidance for government- to-government
  negotiations

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Summary

• 1. Practice patience
• 2. Accept as normal, prolonged periods of no
  movement
• 3. Practice control against exaggerated
  expectations
• 4. Expect the Chinese will try to influence by
  shaming

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Summary (cont.)

• 5. Resist temptation to believe that
  difficulties may be caused by ones own
  mistakes
• 6. Try to understand Chinese cultural traits,
  but dont believe that you, as a foreigner, can
  practice them better than the Chinese.

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Sources of Difficulties

• General Difficulties are
• Problems that come from new relationships, and
  lack of experience on both sides
• Capitalist vs. Socialist economy
• Conflicting cultural characteristics

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Difficulties (cont.)

• Cultural Factors are
• Chinese culture shuns legal considerations, and
  instead favor ethical and moral principles.
• The Chinese do not separate business from
  politics.

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Ambience of Negotiations

• The Home Court Advantage
• As hosts, the Chinese are in a position to
  control both the agenda and pace of
  negotiations.
• With this the Chinese gain the advantage of
  surprise and uncertainty in agenda arrangements.
• These situations tend to create anxiety and
  awkwardness in negotiation opponents.

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Negotiations (cont.)

• When Friendship Clashes with the
• Desire For the Best
• The Chinese view that all successful negotiations
  should include mutual trust, respect and
  friendship.
• Chinese dwell of the subject of friendship and
  its reciprocity is a prerequisite for doing
  business in China.
• The search for only the best conflicts with
  friendship, and usually wins out.

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Opening Moves

• You Show Your Hand First
• In Chinese negotiating, they insist that the
  other party reveal its interests while the
  Chinese mask their interests and priorities.
• The first step is a description by the American
  company of its entire line of products and
  services, and how they may be a value for the
  other parties goals.

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Opening Moves (cont.)

• Ambiguity About Letters of Intent
• The Chinese seek agreement on general
  principles and often takes form of signing a
  letter of intent.
• The future importance of these letters are
  affected by the Chinese attitudes toward
  publicity about agreements with foreign
  companies.
• Announcements of negotiating success may
  influence investors and reassure top management.

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The Negotiation Session

• Exploiting the Faults of the Other Party
• Most Chinese are raised and taught through
  negative reinforcement or shaming.
• It is a standard tactic to make use of any
  liabilities, mistakes and misstatements of the
  opposing side.
• They feel that it strengthens their position by
  superiority.

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The Negotiation Session (cont.)

• In Horse Trading There is Always a Loser
• The Chinese are highly suspicious of being
  outsmarted.
• They are convinced that in any situation there
  must be a winner and a loser.
• Even when both are benefiting, one will benefit
  more, so there is still a loser.

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Emotions in Negotiations

• Blending of Xenophobia and Xenophilia
• Xenophobia are deep feelings of distrust and
  distaste for most things foreign.
• Xenophilia is the alluring attraction of the
  industrialized world, particularly foreign
  technologies.
• The right balance can be difficult to achieve.
• The best solution is to be sensitive to the
  problem and not be surprised by changes in
  attitude/mood.

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Emotions (cont.)

• Face and Guanxi
• The heavy use of shame is used as social control
• The Chinese are sensitive about losing face
• They establish friendships, and use these bonds
  to make demands
• The Chinese and Americans view sincerity
  differently
• In China sincerity etiquette, polite
• In America sincerity honesty

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In Conclusion

• 1. The Chinese need time to digest all
  information
• 2. They have a long-range view and are less in a
  hurry to make decisions
• 3. The Chinese distrust fast talkers who want to
  make quick deals
• 4. Know Chinese cultural differences, but be
  yourself

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Recommendation

• While this book is not always politically
  correct, it does provide useful guidance for
  conducting negotiations in diverse cultures.
• Just over 100 pages
• Easy to read and follow in an outline format

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The End

• Questions
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