How to negotiate with the Chinese

During the last years, the Chinese economy has gone through a rapid development with an impressive growth rate and increase in international trade. Norwegian companies are very much aware of the huge business potential China represents.

At the same time however, Norwegian managers and directors in China have experienced that it is not an easy task to do business in China. The Chinese are experienced negotiators who know how to cut corners at every turn.

Tough negotiators

– There is no need to be “Mr. Nice Guy” when negotiating in China. The Chinese are tough negotiators but they highly respect a counterpart who also knows the tricks of the trade, states Henning Kristoffersen.

Kristoffersen has, from his background as of a social anthropologist, studied negotiation tactics and business culture in China for years.

He has more than 20 years of experience working in China and with the Chinese. Altogether, he lived in Shanghai for 4 years subsequently managing the Nordic Centre at Fudan University and BI’s Liaison Office taking care of BI's part-time MBA programme.

The BI Norwegian School of Management China-expert has recently published his book ”Modern China” (“Det nye Kina” for the time being available in Norwegian only) that gives a practice-oriented introduction on how to do business in China, Chinese economy, culture and politics.

Rapid changes

When it comes to doing business in China one is usually told one has to be patient. Things take time. At the same time there are few people returning from China with the impression that the Chinese work slowly.

In the course of last 12 years more than 4000 buildings of more than 20 floors were raised in Shanghai.

– It’s hard to find similar examples of high-paced development elsewhere, states Kristoffersen

The Chinese market is rapidly changing and viable business-concepts have to be implemented quickly. Nobody knows this better than the Chinese.

Chinese etiquette and culture

According to Kristoffersen it is useful to know Chinese tradition and etiquette when doing business in China such as mastering your chopsticks, greeting people correctly with the use of business cards and knowing when – and how to give gifts.

-It shows that you are interested in Chinese culture, and this will be appreciated. Making mistakes however, is rarely fatal.

Kristoffersen claims that most Chinese are very lenient when it comes to forgiving foreigners who sin against Chinese customs .

-It is potentially a big advantage to exhibit knowledge of Chinese etiquette, but there is a very small risk involved if one should make mistakes.

Negotiations in China

Kristoffersen has developed 11 useful tips to increase the probability of succeeding when negotiating with the Chinese:

1. Be patient and spend time building relations. In the meantime one should not forget how fast things can shift in China. Be prepared to to act quickly if opportunity knocks.

2. Take the Chinese bargaining culture into consideration. Make sure you always have something more to bring to the table.

3. Always remember the ‘home’ advantage. Invite your Chinese partners to your country.

4. Focus on the informal negotiations that go on all the time. Do not use up all of your energy on what’s goin on during for formal negotiations. Remember that most things can be negotiated and re-negotiated.

5. Use social settings to gather information. Do not spend all of your time worrying about all the potential landmines one can stomp on when it comes to Chinese etiquette.

6. Double-check all the information you receive with your own Chinese connections. It is not always true when someone says that “this is impossible in China”.

7. Look at the contract as an agreement of intention that needs continuous follow up.

8. Make sure you are communicating with the right person – the one who makes the decisions. If you fail to do so you might risk that while you think you are negotiating, you are actually just giving out information.

9. Keep in mind the Chinese notion of “Face”. Do not embarrass your Chinese relations. Focus on ”Giving face”

10. Keep in mind that your temper is an efficient tool when you feel the need to draw your line.

11. Before you do business in China you need to get at least one Chinese contact that you trust 100% and who is willing to help you.

Reference:
Kristoffersen, Henning (2008): ”Modern China” (“Det nye Kina” for the time being available in Norwegian only), Universitetsforlaget.