The Chinese people's main goal in most negotiations is to establish a relationship for future business opportunities. Guanxi is more important in these cases.
The Chinese will spend considerable time on bargaining, drafting agreements, and even sharing personal lives to build guanxi.
Chinese do not want to "lose face," and they also do not want to make you "lose face." Therefore, they will rarely disagree with you in public. Negative replies are considered impolite in China.
"No big problem" usually means "There are still problems".
Do some research of the market. Search the target products on Made-in-China.com, and figure out the price of the market.
1. How are Chinese business negotiating styles different from western business negotiating styles?
Different cultures have different values and morals, their unique methods of doing things are applied to the way they handle business.
(1) The use of guanxi
In the West, relationships grow out of deals. In China, deals grow out of relationships. Unlike western business relationship which remains professional and aloof even after a long time, Chinese business relationship inevitably becomes a social relationship.
The Chinese not only prefer to work with persons they know and trust, but also think they have the obligation to do business with their friends rst. In addition, Chinese guanxi can indirectly link you to new acquaintances and information resources with the meeting of new people.
For westerns, no matter how much experience you have in western business management, the right "Guanxi" in China will make all the di erence in ensuring success. The inevitable risks, barriers, and set-ups will be minimized when you have the right "guanxi" working for you.
The Chinese's main goal in most negotiations is to establish a relationship for future business opportunities. Guanxi is more important in these cases.
To build guanxi needs time and resources, not only money. Small talks before negotiations would be the best way to break ice. The more you share your personal life, the closer you are in your business relationship. Sometimes, a lot of time is spent discussing matters outside of business. Gift-giving is necessary too, which is considered an important way of showing courtesy. Gifts should always be exchanged for celebrations, or thanks for assistance. It shows you care about your Chinese counterparts.
(2) High-context communication
High context culture and the contrasting low context culture are terms presented by the anthropologist Edward T. Hall in his 1976 book Beyond Culture.
In a high context culture, many things are left unsaid, letting the culture explain. Words and word choices become very important in higher context communication, since a few words can communicate a complex message very effectively to an in-group (but less effectively outside that group), while in a lower context culture, the communicator needs to be much more explicit and the value of a single word is less important.
Chinese cultures rely more heavily on high-context communication, while Western countries including United States, Canada, Australia and European countries tend toward low-context communication.
There are clear implications for Chinese business communication. The Chinese might not give you direct answers. You need to find the implications in his/her reply. For example, "Yes" in China can be a way of indicating that one understands or acknowledges a proposal, but not agree with it. If the proposal is unsatisfactory, the Chinese response is likely to be indirect, consisting of such statements as "I'm not sure", "It's under study", or "we will think about it."
(3) Never make quick decision
The Americans think time is money and a good decision is a quick decision. Meetings start and end on time, with an agenda and a plan of action. There is no time for socializing.
A Chinese entrepreneur can make a relatively quick decision. But most decisions take much longer. Deadlines are viewed as a moving target and not as an absolute commitment. Unlike the Americans, they view quick decisions as a form of incompetence. They prefer slow and methodical decisions making process. They will spend considerable time on bargaining, drafting agreements, and even sharing personal lives to build guanxi.
The Chinese are very risk averse. They think the slow process of negotiations will secure their deals.
(4) The importance of hierarchy
There is a strong emphasis on hierarchy in China society and Chinese business culture. Much of this emphasis on hierarchy can be traced to the philosophy of Confucius, which is the root of Chinese culture and has influenced Chinese people's lives for hundreds of years.
The Chinese are often more sensitive towards rank and seniority. Age and experience are given much more credit than in Western culture. The Chinese will share opinions with their colleagues. They will discuss together like the Americans, but it is always the senior executive who makes the final decision.
Ensure you bring a senior member of your organization to lead the negotiations on your behalf. The Chinese will do the same.
2. How to identify who makes the final decision?
The senior member of the Chinese organization, or the final decision maker, would be the first one who is introduced to you, the first one who speaks, and the one who sits in the middle of the Chinese counterparty.
You can find it from the title of their business cards too.
3. Why are Chinese people renowned for being tough negotiators?
Chinese businessmen are renowned for being tough negotiators because they may deliberately make negotiations painful and lengthy for their counterparties. It can be very di¬ cult, complex and longwinded for a Western person to figure out how to get it right with Chinese negotiators.
Sometimes you have told the Chinese side that you are at your bottom line, but they are unwilling to take you at your word.
Because in Chinese business culture, Chinese businessmen's primary aim in negotiations is "concessions". Always bear this in mind when formulating your own strategy. You must be willing to show compromises and ensure their negotiators feel they have gained major concessions.
It is very important to know the commonest basic components of your counterparty's culture. It's a sign of respect and a way to build trust and credibility as well as advantage that can help you to choose the right strategies and tactics during the negotiations.
4. How to say NO in china?
Maintaining balance and harmony is an important aspect of Chinese thought. Chinese do not want to "lose face," and they also do not want to make you "lose face." Therefore, they will rarely disagree with you in public. Negative replies are considered impolite in China. Chinese people won't say "no" to a proposal. They have a thousand ways to say "no", but they won't use the word "no".
They will say "perhaps", "I'm not sure", "I'll think about it", or "We'll see" instead. If you hear that your proposal "is under study" or has arrived at "an inconvenient time," it probably means "no". This deliberately ambiguous communication is designed to let the Westerner know that the real answer is "no" but the relationship is worthy of preservation.
5. Does YES always mean YES in China?
No. Sociologists call Mandarin Chinese a "high context" language to indicate that there is more to the message than just the words being spoken or written. You have to pay attention to the situation, environmental factors and history to understand the real meaning. For example, when you are speaking at a meeting with Chinese people, a Chinese businessman might say "yes" which probably means "I've heard you", it does not mean "I understood, comprehended and this is what I will do".
Nodding is the same. Sometimes a Chinese nods his/her head just to suggest that he/she is listening to the speaker, but not to mean he/she agrees with the speaker.
When asked a direct question by a Westerner, a Chinese might answer "yes" to save the Westerner's face, but the true meaning is "no" and he/she might act as if he/she has said "no."
6. What's the meaning of "No big problem" or "The problem is not serious"?
It usually means "There are still problems". Always investigate the situation fully to obtain facts.
7. Is Guanxi important in negotiations?
Trust and personal connections are at the core of business in China. The Chinese believe strongly in building relationships first and then engaging in business. It is built on long-term partnership.
But you should know guangxi is a rental, not a purchase. It is a series of favors, and you have to give to get. Sometimes you do not always control how you will pay back a guanxi debt. It can't transfer. When your guanxi person goes, so does the relationship.
8. How to impress Chinese counterparties in negotiations?
You can learn to speak a few Chinese phrases, especially some "chengyu" (proverbs). They usually have four characters and have a whole story behind them to support the meaning that you want to express. Make sure you use a chengyu at the appropriate time and you will grab everybody's attention and gain substantial respect.
9. What composition should I have for my team when negotiating with the Chinese?
At first you need to know how many persons from Chinese counterparties will participate in your negotiation. You'd better have the same amount of team members. The team should include:
Operations Manager with the authority to cut a deal, sign a contract or write a letter of understanding.
Financial Analyst, who sends a trained business case analyst with strong business counsel skills, not an accountant who is capable of quick, high level assessments, but can follow through with detail later.
Engineer, with experience in the operations you are seeking to establish who also ideally has some business management trainings and can understand business case assessments.
Lawyer, as an adviser as contract terms can be confusing at best to the rest of the team.
Procurement Specialist, trained in international part and product sourcing if this is an essential component of the endeavor.
Marketing Specialist, trained in international marketing and with some business research background.
Professional Negotiator, who is essential if the team has little or no experience, and optional if you have a strong experienced team.
Local Interpreter, who can help you communicate well and give you guide of Chinese business culture.
Other skill sets as needed for the specific project.
10. What should I prepare for a price negotiation?
The Chinese are extremely price sensitive. In international trade, prices are quoted very reasonably as the price in the market is relatively transparent. Price would be affected by such factors as raw material and energy price, tax rebate rate, labor price, currency appreciation, and etc. You should do your homework well before having a price negotiation.
(1) Do some research of tax rebate rate, raw material price, and currency exchange rate.
(2) Do some research of the market. Search the target products on Made-in-China.com, and figure out the price of the market.
(3) Export companies in China normally quote a reasonable
price and price is relatively transparent. You can't expect to cut the price down by something like 50% or more.
11. Are contracts sometimes flexible in Chinese business culture?
Yes, sometimes the stronger your relationship with the other party, the more likely the contract will be followed as written. It is important to not solely rely on the contract to protect you. Establishing a strong relationship and having proactive involvement in product QC is the key to getting the product you desire.
12. Body language in China
Greeting- head nodding, smile, hand shaking. The Chinese seldom kiss on the cheek when they meet. Hug is for really close friends or relatives.
Come here- hand extended toward person, open palm, palm down, with all fingers crooked in a beckoning motion.
Good idea/ You've done a great job- thumb up, the other four fingers hold a fist.
Respect- using both hands (when one would be enough) in offering something to a visitor or another person. You can even hold your teacup with two hands while someone else ills it with tea to show extra appreciation. When somebody pours tea for you, tap the table to show "thank you."
Thank you for your help- cupping one fist with the other hand before the chest.
Shame on you- fore finger of one hand extended, tip touches one's own face several times quickly; similar to scratching, but with the fore finger straight.
I'm full- patting stomachs. The Chinese never lay their hands on their necks when they are full, which is a suicide action to Chinese.
Are you insane?- touch temple. Americans often use it to express somebody's cleverness. But it means there is something wrong with one's mind or one is stupid to Chinese.
The Chinese think it rude to point at somebody with one finger. When you introduce someone, point at him/her with all of your five fingers of one hand, which also means "please".
Girls will hold hands or walk arm-in-arm in China. It doesn't mean they are lesbians.
Many people in China consider it rude to show the inside of their mouth. That's why so many Chinese girls cover their mouth in a cute way while they laugh.
13. How to negotiate with the Chinese?
The Chinese are famous for their negotiation skills. Here are some tips on how to succeed in business in China.
(1) Build Guanxi.
(2) Be sincere and patient.
(3) Know the Chinese business culture.
(4) Find the implications from the Chinese communication.
(5) Do research of China market.
(6) Make sure you are communicating with the right person.
