If you’re new to negotiating in China or have been doing business in China and still find it difficult, here are some classic missteps to avoid.
Every China Businessman/China-entrepreneur spends some time haggling. Haggling is arguably a national sport in China whether it is with vendors, customers, suppliers, investors, or would-be employees. Most Chinese business owners are street smart, and seem to naturally perform well in negotiations. You probably have a trick or two —some magic phrases to say, perhaps— that can help you gain the upper-hand (or balance). But, often, the moment you get into trouble in a negotiation is when something careless just slips out. If you are new to negotiations in China, or feel it is an area where you can improve, check out these tips on precisely what not to say.
1. The word “between” 在…到…之间:
It often feels reasonable—and therefore like progress especially in the professional service industry where Chinese are not accustomed to paying for services (—to throw out a range. With a customer, that may mean saying “I can do this for between $10,000 and $15,000.” With a potential hire, you could be tempted to say, “You can start between April 1 and April 15.” But that word between tends to be tantamount to a concession, and any shrewd negotiator with whom you deal will swiftly zero-in on the cheaper price or the later deadline. In other words, you will find that by saying the word between you will automatically have conceded ground without extracting anything in return.
2. “I think we’re close” 我们几乎达成协议了
We’ve all experienced deal fatigue: The moment when you want so badly to complete a deal that you signal to the other side that you are ready to settle on the details and move forward. The problem with arriving at this crossroads, and announcing you’re there, is that you have just indicated that you value simply reaching an agreement over getting what you actually want. Negotiators in China are notoriously patient, and they may well use this moment as an opportunity to stall, and thus to negotiate further concessions. Unless you actually face extreme time pressure, you shouldn’t be the party to point out that the clock is loudly ticking in the background. Create a situation in which your counterpart is as eager to finalize the negotiation (or, better yet: more eager!) than you are.
3. “Why don’t you throw out a number?” 你认为多少公平?
There are differing schools of thought on this, and many people believe you should never be the first person in a negotiation to quote a price. Let the other side start the bidding, the thinking goes, and they will be forced to show their hands, which will provide you with an advantage. But some research has indicated that the result of a negotiation is often closer to what the first mover proposed than to the number the other party had in mind; the first number uttered in a negotiation (so long as it is not ridiculous) has the effect of “anchoring the conversation”. This is especially prevalent in China where the cost of material and labour may be much lower than that in foreign countries. Chinese negotiators may rely on your unfamiliarity with China’s prices to receive a starting price point higher than what they would have even started with. One’s role in the negotiation can matter, too. In the book Negotiation, Adam D. Galinsky of Northwestern’s Kellogg School of Management and Roderick I. Swaab of INSEAD in France write: “In our studies, we found that the final outcome of a negotiation is affected by whether the buyer or the seller makes the first offer. Specifically, when a seller makes the first offer, the final settlement price tends to be higher than when the buyer makes the first offer.”
4. “I’m the final decision maker” 决定只是我的
At the beginning of many negotiations, someone will typically ask, “Who are the key stakeholders on your side, and is everyone needed to make the decision in the room?” For most entrepreneurs, the answer, of course, is yes. Who besides you, is ever needed to make a decision? Isn’t one of the joys of being an entrepreneur that you get to call the shots? Yet in negotiations, particularly with larger organizations, this can be a trap. You almost always want to establish at the beginning of a negotiation that there is some higher authority with whom you must speak prior to saying yes. In a business owner’s case, that mysterious overlord could be a key investor, a partner, or the members of your advisory board. The point is, while you will almost certainly be making the decision yourself, you do not want the opposing negotiators to know that you are the final decision maker, just in case you get cornered as the conversation develops. Particularly in a high-stakes deal, you will almost certainly benefit from taking an extra 24 hours to think through the terms. In China, you can always expect the counterparty to be doing the same thing, the main decision maker will not be around for the initial negotiations. Adopting this same premise allows you to keep negotiations at a more equal level. For once, be (falsely) humble: pretend like you aren’t the person who makes all of the decisions.
5. “Fuck you.” 侮辱言语
The savviest negotiators take nothing personally; they are impervious to criticism and impossible to fluster. And because they seem unmoved by the whole situation and unimpressed with the stakes involved, they have a way of unnerving less-experienced counterparts. This can be an effective weapon when used against entrepreneurs, because entrepreneurs tend to take every aspect of their businesses very personally. Entrepreneurs often style themselves as frank, no-nonsense individuals, and they can at times have thin skin. But whenever you negotiate, remember that it pays to stay calm, to never show that an absurdly low counter-offer or an annoying stalling tactic has upset you. The Chinese often have the impression that foreigners, American citizens in particular, are brash and easy to anger. They will attempt to take advantage of this. Use your equanimity to unnerve the person who is negotiating with you. And if he or she becomes angry or peeved, don’t take the bait to strike back. Just take heart: You’ve grabbed the emotional advantage in the situation. Now go close that deal.