The Chinese economy is growing rapidly, and so it’s no surprise that that more and more investors are drawn to investing in China. However, with tensions increasing between China and the US, it’s possible that business negotiations will become trickier to navigate. With very different cultures to negotiate it’s easy to see how some negotiations may end badly.
The first step in any negotiation process is to ensure you’re fully prepared. When entering into negotiations, planning is of utmost importance and conducting essential research beforehand should never be ignored.
It’s also essential to assess the risks versus potential rewards of every possible outcome when entering into a new or very different market. Most importantly, it’s vital to understand that while China has adopted free-market principles, it remains a communist country and so the rules that govern a public company in China still differ from those in the UK or the US – for example, Chinese accounting standards are very different from the West’s, and regulatory differences abound.
Be wary of falling into any dirty negotiating traps when heading overseas, including China. It’s fairly common that your clients will aim to start meetings while your concentration is impeded due to jet leg and fatigue, or perhaps aim to ‘entertain’ you the evening before to the same effect. Research by airlines and medical schools indicates that jet lag seriously impairs judgement, so keep your wits on and aim to travel early, leaving plenty of time for recuperation before meeting the other side. It’s recommended to leave a quarter of a day’s resting time for each time zone travelled through.
Huthwaite’s research shows that the most successful negotiators don’t entertain dirty tricks in negotiation but instead strive to reach agreements that are satisfactory to both parties. When both sides are happy they are far more inclined to work towards a successful implementation.Another essential aspect of successful negotiation, and arguably one of the most important when it comes to negotiation in China, is recognising and understanding cultural differences. There are many nuances and processes in Chinese culture that must be respected, especially when it comes to business.
Hierarchy plays an integral part of business culture in China, and it’s important for Chinese leaders to be more distinguished and to hold the respect of their juniors. In the UK, or in the US, people wouldn’t think twice about asking a question or challenging a more senior member of their team publicly, but it’s uncommon in China. It’s important to observe this Chinese tradition while negotiating in China.
Often Western investors fall foul of rushing ahead and pushing too hard when doing business in China too. However, things move far more slowly than western businesses are necessarily used to – and it’s also not unusual for Chinese businesspeople to extend the decision-making process past the deadline. In Chinese culture, it’s typical to take time over proceedings and engage in multiple meetings in order to establish a strong relationship before closing a deal. However, be wary of unnecessary excuses and boundary pushing, put down to a ‘that’s how we do it over here’ excuse.
Patience is the key to success while doing business in China,. A savvy investor would look to get off to a head start by understanding and adopting a considered and strategic approach to negotiating in Chinese markets. By doing so, they provide themselves with a greater chance of securing quality deals even in the time of global tensions.