Smart Shanghai Team

More and more Chinese negotiators are sitting down with westerners who are investigating China for the first time — since their own home markets are having so much trouble.  Unfortunately, when westerners do research about negotiating in China they are usually reading about ‘old-school’ Chinese negotiators who are now in the 50’s or 60’s.  They don’t know much about the New China made up of people under 35 years old — who may not be too familiar with 5 year plans and collective decision making.

 So much of what gets written about negotiating with Chinese managers and bureaucrats usually refers to the last crop of managers that either made the transition to free market competition or were reporting to people who did.  That’s where the buzzwords really come into play:  guanxi, preserving face, banquets & toasting, red envelops etc.  This style of negotiation – socialist bureaucracy meets 21st Century commerce – still goes on, but it is starting to give way to more modern approaches.

In newer or re-organized Chinese companies and China-based MNCs, however, you’ll encounter a younger type of Chinese counter-party who works in an operating environment similar to yours.  For him, deal-making is a structured process that must be governed by rules, logic and profit.  He has probably received formal training in negotiation, team management, and sales or procurement – depending on which side of the table he sits.  He answers to superiors and committees about specific price and delivery issues.  This guy isn’t asking for pay-offs or drinking parties – he wants the paperwork filled out properly and a rock-bottom price.

That’s not to say that New Chinese negotiating is any easier or more pleasant than Old Chinese negotiating.  You still won’t meet the boss and you may not be sure who really decides anything.  Payment schedules and quality issues still take a lot more time and energy than you think they should, and there’s absolutely no guarantee that language or cultural issues still won’t sink the deal.    But the process of negotiating in China has changed a great deal in the last 5 years, and you should be using that to your advantage.

1) Know what age group makes the decision.  Young Chinese use polite key-words like “this company is still very traditional” or “Mr. Chen is quite conservative” to indicate that the decision-making structure is going to be opaque and indirect.  If your contact refers to his company as very “international” or “modern”, you MAY be looking at an RFP or other structured system.  It’s ok to ask your new contact about the best procedures for submitting a bid or dealing with proposals. 

2) You have more choices now.  If you want to negotiate directly with the boss, you may be able to do that – but only if you select an organization that works that way.  40-something traditional managers haven’t changed their style much, and they’re not going to.  But now there is plenty of competition from newer or more international organizations.  Shop around for your counter-party, and you’ll be much happier in the long run.

3) Beware of mixed messages.  Lots of traditional Chinese companies and state-owned enterprises have brought in consultants and trainers and slapped a modern whitewash over their convoluted, cob-webby operating systems.  If you’re sitting in a giant board room waiting for the tea leaves to sink with a couple of bright, eager young grads who seem happy to see you but don’t  know much, then you are probably talking New China but walking Old China.  On the other hand, don’t be quick to write off giant state-owned giants – many of them have taken modernization and efficiency to heart, and you may be surprised at how quickly things move.