Smart Shanghai Team

Buyers in China — particularly Purchasing Managers for large international businesses — are already encountering a special negotiating situation which I call, “whose problem is it”.  That’s when your counter-party tries to make his weakness your problem. 

You’ll hear it when someone owes you money or a supplier is trying to defend his price (or other bad news).  ”If you push any more I’ll go bankrupt and then you’ll have nothing”.   It’s a pretty common tactic when a small or shaky business partner is the counter-party.  The bad news is that it may not be an empty threat. The worse news is that this guy may be using the same line all over town, and the first one to call his bluff loses less than you do.   

Is there a defense or counter-tactic?  The only thing you can do once it happens is to assess the situation objectively and decide how much you need the other party in the short term.  If they are strategic or leaving them will cause a short-term bottleneck, then you’ll have to find a compromise and keep them around long enough for you to find a replacement.  If the only leverage they have over you is the recovery of money they owe, then this is a much riskier proposition.  You might be best off cutting your losses.

In order to prevent this kind of thing from happening, make sure you A) have a deep list of suppliers and B) try to gain transparency with key and strategic suppliers to assess their finances and production capacity.  Consider expanding the number of suppliers you work with to minimize the impact of one of them going out of business or shutting down production temporarily.  

Negotiating in tough times requires you to shift from Win-Win to Win-Lose and back again quickly.  This is a fact of life for everyone in business, but is particularly true for purchasing managers negotiating in China.