How to Handle Chinese Negotiating Tactics

The increase of China in the past few decades as an economic superpower has brought with it a myriad of complications for foreign negotiators. The Chinese have a style of business that can be very different from the Americas, Europe or the rest of Asia, and the increasing need for business partnership leads to increasing negotiations. What used to mainly be negotiations for manufacturing has now become about licensing, technology, or service partnerships and increasing integration with Chinese business. By being aware of the negotiating tactics that they use you can have a better understanding and prepare for the meetings in a more productive way.

The first thing that you have to consider is the role of the Chinese government and its internal conflict in regards to foreign business partnerships and licensing of technologies. While the Chinese government welcomes the Western expertise they are apprehensive because of the potential for disruption of their control.

The doubt is mirrored by many of the Chinese companies that are trying to strike deals in the service sector. As is already known, the industrial companies bargain hard, but the service sector of China seems to be working the negotiation process even harder. There are a few tactics that they employ during these negotiations and here they are so that you can be aware and take the necessary precautions.

Wearing you Down with Endless Issues

This is by far the most common negotiation tactic that Chinese companies use and there are two variants. The first is a process, by which the Chinese side raises a series of issues, and upon resolution they raise another series of issues that are unrelated; this process never stops. The second variant is for the Chinese company to make a series of unreasonable demands, while at the same time refusing to address any of the concerns you may have. These variants are both done with the intent to wear you down so that you simply concede.

Artificial Deadlines

While this may be an obvious manipulation to most people, the Chinese continue to use it because it works. At the beginning of the negotiation process the Chinese side sets a fixed date for execution of the contract; with seemingly enough time for a good faith agreement to be met. This works by the Chinese side ensuring that no agreement has been reached by the date and hoping that you will concede out of embarrassment. Even if it seems as everything is ready to go, a day or two before the signing they may come up with a “demand by government regulator” to revise the contract.

Once Invested Keep Your Guard Up

The final major technique is to come back to the negotiation after the fact. This involves signing the contract and then waiting until the project is underway. Then the Chinese approach the lower level management or employees that are actually working on the project and claim that certain key provisions must be changed. This can be claimed by saying that the change is mandated by law, government regulators or banks and insurance companies. Often this gets passed up the ladder at corporate and the changes get signed off as minor alterations.

Negotiations with Chinese businesses are difficult and time consuming, but if you are well prepared it can be made a lot easier. Keeping your eyes open to the negotiating tactics above will give you a sense of what you are up against and will make you aware of what they are trying to accomplish by doing them.