Smart Shanghai Team » renegotiation http://www.smartshanghaiteam.com Negotiation Training in China Mon, 15 Dec 2008 00:14:59 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 China Purchasing Managers – Renegotiating Deal Terms in a Recession http://www.smartshanghaiteam.com/2008/12/03/china-purchasing-managers-renegotiating-deal-terms-in-a-recession/ http://www.smartshanghaiteam.com/2008/12/03/china-purchasing-managers-renegotiating-deal-terms-in-a-recession/#comments Wed, 03 Dec 2008 03:01:27 +0000 Andrew http://www.smartshanghaiteam.com/?p=46 China purchasing managers are negotiating successfully for better deal terms.  The lucky ones are going for more advantageous terms in future negotiations — but a few are learning to give bad news about deals that were negotiated in the past.   

Right now, the power balance is in your favor.  Smart purchasing managers, however, will take care not to alienate their network of suppliers.  In the future, there may be shortages and technological breakthroughs that will give the seller more power in the relationship.

Here are a few ideas for handling the deal-renegotiation call with a western or MNC supplier:

  1. Be as direct as you can.  They are expecting the call.  Don’t make it worse by dragging it out.  I know that if the counter-party is Chinese you may be a bit more polite and round-about.  When the counter-party is Western (or has Western bosses) then you are being kinder by being quicker.  Start out with, “I’m afraid I’ve got some bad news.  We have had new orders from the very top to cut costs and review all existing contracts…”.   You can take it from there.
  2. Show a little transparency.  Give your suppliers a little information about your situation – particularly when you expect to be big buyers again.  If you are in financial trouble, be as honest about the situation as you feel is appropriate.  Chinese buyers can very tight-lipped at times – and it often serves them well.  This is not one of those times.  Share a little info and learn more about the seller’s situation as well.  
     
  3. Don’t let it get ugly.  You remember when the situation was reversed and you were begging for reasonable prices and the other guy showed you no love.  Now is your chance for revenge, right?  Wrong.  Now is the time to secure your future relationship with key suppliers and strategic partners.  You want to come out of this global recession in a stronger position — not just see your suppliers fail.  

Go to www.ChineseNegotiation.com for their take of how Western sellers are handling the renegotiation call.

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Please help with a research project by taking a brief, simple & anonymous survey about US-Mainland negotiation. 

 

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My name is Andrew Hupert, and I’m a teacher and writer in Shanghai. I am now working on a project for my International Negotiation class at New York University’s Shanghai campus (in cooperation with East China Normal University). 

 

Thanks very much for your cooperation in my research. I would be happy to share raw data with any participants who wish to see it, and will publish my findings on ChinaSolved.com , ChineseNegotiation.com and DiligenceChina.com .

 

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