Gashaw, Tirualem Awoke ID: 092sis13 Submitted to: Professor Jasper Kim Chinese & European company water negotiation International Negotiation: Theory and Practice Gashaw, Tirualem Awoke ID: 092sis13 Submitted to: Professor Jasper Kim

The case 03/06/2007

Contents Introduction Case briefs Final agreements Analysis Good strategies Bad strategies Lessons and Conclusion

Definition: Negotiation is 1. Introduction Definition: Negotiation is A field of knowledge and endeavor that focuses on gaining the favor of people from whom we want things Is a fact of life Is a basic means of getting what we want from others Two types of negotiations, soft and hard negotiation

Cont… Negotiation cab be done knowingly and unknowingly. Strategies applied in the negotiation makes the whole process and the result effective. Agreement may not be possible always because of conflict of interest.

2. Case brief The main issue urban water supply system providing potable water to around one million people in china Four sub issues: water charges, the demand for water, the formula to calculate annual water tariff revisions and the new company structure

Interest HCL is to set up a joint venture with the municipality’s water company on a 3:1 ratio, and to operate the facilities on a twenty five-year contract by purchasing the facilities. PAQ: to increase its investment in China and to have a contract with HCL to construct a water plant treatment plant for the system.

The BATNA (Best Alternative Trade Negotiation Agreement) The agreement to discuss on the table The better your BATNA, the greater your power. BATNA is the backbone of negotiation

Final agreements Both parties agreed on the following issues: the municipality would not be in the joint venture, inflation-adjusted tariff, foreign exchange should represent less than 5% of investment and be used no more than 10 years and shareholding structure was 3:1 with PAQ and HCL respectively.

3. Analysis 3.1. Good aspects of this negotiation information about other visitors who have the same interest with PAQ/Competator PAQ create good environment by preparing dinner several times Reduced the number of negotiators because Being too many in negotiation may delay the agreement or sometimes impossible because of several ideas coming from different directions They goes from simple to complex issues

Cont…. 3.2. Bad aspects of this negotiation Failure in their first negotiation because of less preparation There was intervention of ranking officials Reduction of the number of participants They spend too much time to reach in agreement; reduces efficiency. They both did not understand each other Communication problem, with out communication, no negotiation

Conclusion The negotiation was fast for the second time due to enough preparation on the issues in both parties. Both parties would learn from their previous experiences, will help them in the next negotiation and if they meet in other negotiations there might be no problem. PAQ would show how they are trust people later after negotiation, because trust in negotiation is the very crucial factor.

Cont… The number of issues raised was too many; they should discuss in different days to avoid confusion and mistake in decisions Was generally successful negation 03/06/2007

The end! Thank you