Respect face
Face is an essential component of the Chinese national psyche. Having face means having a high status in the eyes of one's peers, and is a mark of personal dignity. The Chinese are acutely sensitive to gaining and maintaining face in all aspects of social and business life. Face is a prized commodity which can be given, lost, taken away or earned. Causing someone to lose face could ruin business prospects or even invite recrimination. The easiest way to cause someone to lose face is to insult an individual or criticise them in front of others. Westerners can unintentionally offend Chinese by making fun of them in a good-natured way. Another error can be to treat someone as a subordinate when their status in an organisation is high. Just as face can be lost, it can also be given by praising someone for good work before their colleagues. Giving face earns respect and loyalty, but praise should be used sparingly. Over-use suggests insincerity on the part of the giver.
Accept the pecking order
Mao Zedong's thoughts on discipline published in 1966 provide a valuable insight into structures which persist in Chinese organisations even to this day: "The individual is subordinate to the organisation. The minority is subordinate to the majority. The lower level is subordinate to the higher level." This quotation, which underlies the way China was governed for over 20 years, indicates why Chinese society and companies are very hierarchically organised, and why Chinese people seem to be more group oriented than individualistic and often do not like to take responsibility. Similarly, people are seldom willing to give an opinion before their peers as it might cause loss of face with a valued ally.
Know the tricks of the trade
Chinese negotiators are shrewd and use a wide variety of bargaining tactics. The following are just a few of the more common strategems:
- Controlling the meeting place and schedule
The Chinese know that foreigners who have travelled all the way to China will be reluctant to travel home empty-handed. Putting pressure on foreigners just before their scheduled return can often bring useful benefits to the Chinese side.
- Threatening to do business elsewhere
Foreign negotiators may be pressured into making concessions when the Chinese side threatens to approach rival firms if their demands are not met.
- Using friendship to extract concessions
Once both sides have met, the Chinese side may remind the foreigners that true friends would reach an agreement of maximum mutual benefit. Make sure that the benefit is genuinely mutual and not just one-way.
- Showing anger
Despite the Confucian aversion to displays of anger, the Chinese side may put on a display of calculated anger to put pressure on the foreign party, who may be afraid of losing the contract.
- Attrition
Chinese negotiators are patient and can stretch out discussions in order to wear their interlocutors down. Excessive hospitality the evening before discussions can be another variation on this theme.
Play the game yourself
Foreign negotiators dealing with Chinese may find some of the following tactics helpful:
- Be absolutely prepared
At least one member of the foreign team must have a thorough knowledge of every aspect of the business deal. Be prepared to give a lengthy and detailed presentation, taking care not to release sensitive technological information before you reach full agreement.
- Play off competitors
If the going gets tough, you may let the Chinese side know that they are not the only game in town. Competition between Chinese producers is increasing. There may be other sources in the country for what your counterpart has to offer.
- Be willing to cut your losses and go home
Let the Chinese side know that failure to agree is an acceptable alternative to making a bad deal.
- Cover every detail of a contract before you sign it
Talk over the entire contract with the Chinese side. Be sure that your interpretations are consistent and that everyone understands their duties and obligations.
- Be patient
Chinese generally believe that Westerners are always in a hurry, and they may try to get you to sign an agreement before you have adequate time to review the details.
