Chinese Negotiating Style: Commercial Approaches and Cultural Principles Written by Lucian W. Pye Presentation by Lisa DeMello

Point of This Book  1.Minimize future misunderstandings in Chinese commercial negotiations  2.Provide guidance for government- to-government negotiations

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”

Summary (cont.)  5.Resist temptation to believe that difficulties may be caused by one’s own mistakes  6.Try to understand Chinese cultural traits, but don’t believe that you, as a foreigner, can practice them better than the Chinese.

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

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.

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.

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.

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.

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.

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.

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.

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.

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

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

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

The End  Questions:  ??????????????????????