Negotiating in China is much different than what most people are used to. There are so many different types of tactics that companies in China will work with to wear you down to get the advantage they want. Many people expect similarities from negotiating in other East Asian countries like Japan and South Korea. In China, though, the process is grueling, fast paced, and for many of us, uncomfortable, but if you utilize the advice in this post during your negotiating process, success is virtually guaranteed.
One of the first aspects businesses must understand about China when doing business there is the aspect of “guanxi” (关系); or social relationships.
One of the biggest differences between US and Chinese culture is the behavior toward social “insiders” and “outsiders”. Chinese seem to be more extreme in seperating those within their circle of influence from strangers, leading to sometimes lobsided business deals. For an American company to cultivate “guanxi” Harvard Business Law recommends hiring people with close ties to Chinese counterparts or by developing their own relationships with key contacts. This helps build trust in the Chinese, creating a sense of responsibility on both sides to do the other well.
The aspect that informs the reality of “guanxi” in China is the idea of Confucianism and its role in the workplace. This sociological ideology focuses on interpersonal obligations and respect for elders/ superiors. Your Chinese patners will trust you, not necessarily because of your contract or anything else we value in business deals in the west, but because “guanxi” obligates you to do so. This is due, in part, to China’s underdeveloped legal system.
So far, we’ve addressed the aspect of relationship building before the negotiation process even begins, but what about the actual negotiation meeting(s)? How can businesses get the most out of their negotiation dealings to ensure they are getting the best possible solution? This question we will answer in part 2!