What You Need to Know When Negotiating in China

Negotiating in China is a lot like running a marathon without knowing where the finish line is. Participants need endurance and perseverance to see the process through. Patience is key and you can only train for it through actual experience.

Americans think of negotiation as a process where complex issues are broken down into smaller ones that can be tackled in an orderly step-by-step manner. Once an agreement is reached, papers are signed to seal the deal. Soon after, a business relationship per the agreed-upon conditions begins.

Chinese negotiations, on the other hand, can give the impression that they go on and on in circles, jumping from discussing price, for example, to talking about quantity but without ever settling on anything. Add to this language and cultural barriers and they can become exhausting.

Before you come into a Chinese negotiation meeting, it is crucial you leave your expectations of how the process should go at the door. Such expectations will only lead to frustration and error in judgment.

Here are 10 things to remember when going into negotiations in China:

1. While learning Chinese may not be practical, knowing a few key polite phrases can give a good impression to your potential partner. Make an effort to learn some basic phrases before you hop on the plane to your business meeting.
2. Make sure you hire a seasoned translator and make sure the person is firmly on your side. A good translator is one that puts an effort into placing your words in a culturally appropriate context, not just passing along what you say.
3. Don't be alarmed if your first few meetings accomplish very little. The Chinese like to get to know who they are dealing with before jumping into business discussions. These seemingly fruitless meetings are their way of building a relationship and establishing trust with you and your company.
4. Once the negotiation game is on, it is not uncommon for your Chinese counterparts to present the same demand over and over and in many different ways to wear their opponent down. These demands may seem ridiculous and illogical. However, they are there to get you to take your eyes off the ball so that when it comes down to real issues you give in quickly without putting up much of a fight.
5. You may spend hours negotiating and coming to an agreement only to then have the person you are negotiating with call his boss. Then the boss enters the scene, objects to the agreed-upon terms, and the whole process begins again.
6. Remember, negotiations are never over. You may fly your president across the ocean, sign the deal, shake hands, and think it is all done, only to find out the next day they no longer agree to some aspect of the deal. Issues can arise and renegotiations can and often do take place at any given point in the process.
7. Take all promises made during negotiations with a grain of salt. Don't factor them into the negotiation process. The people you’re talking to may say they have government, sales, or supplier connections when in fact they don't. Such exaggerations are part of doing business in China. Unless they are followed by concrete demonstration, those who take them seriously do so at their own peril.
8. Have your own set of demands you can insist on and then drop as a show of compromise. While these demands may not be important to you, they give your potential partner the impression that you have taken a hit when you let them go.
9. It is important to appear confident. Eagerness to close a deal may embolden the Chinese party by making them think they hold all the bargaining chips. Take your time on decisions.
10. Make sure you have enough time within your visit to proceed in a leisurely manner. Get some rest before you jump into meetings, especially if you are suffering from jet lag. It is hard enough to focus on the issue at hand in slow, protracted business negotiations. It is near impossible when you are tired from the journey there. Just in case, budget for subsequent visits because you may not get a chance to accomplish everything in your plan. Remember, everything takes longer in China.

Doing business in China means putting your company in an opaque culture that is more times than not shrouded in secrecy and suspicion. Trust and relationships are built over a period of time. Westerners generally put a lot of faith in contracts. For the Chinese, they are often not worth the paper they are written on without a good relationship between the parties involved.

The fact that the Chinese business culture is fraught with suspicion should be a lesson for every company planning to do business in the country. Companies aiming to enter the Chinese market must remember that laws governing corporate partnerships and joint ventures are weak and unevenly applied, almost always to the disadvantage of the foreign company. Therefore, picking the right Chinese business partner and negotiating the best possible terms are essential to your success.