Model of Business Negotiation in China

Business negotiation techniques differ all around the world, but no major arena is quite like China for western businesses. The more holistic approach to the deal that the Chinese business people use on a regular basis, is much more involved than the more technical approach that is preferred by most of the western business community. While negotiations in China still rely on the technical information, as the western business negotiations do, they also take into consideration Guanxi, renqing, and mianzi, which can slow the pace of the negotiations in comparison. By getting more involved and integrating the personal lives of the negotiators, there is a believe and development of a new layer of trust. The biggest variation in business negotiation in China as compared to North America or Europe, is that they view the signing of the contract as merely a component in negotiations, and not the conclusion. Realizing these differences and working to understand why and how the Chinese business people tend to negotiate, can help your business to be more success in the approach and process as a whole.

The increased complexity of negotiating in China can be navigated by taking an understanding for the reasons of each of these impeding factors for “efficient” negotiations, as the western business have become accustomed to. The political and legal framework that is present, and has been around for several decades, creates an environment of distrust and lays down the reason for getting to know someone on a personal level. Beyond the personal vetting and sense of reciprocity that Guanxi imposes on the relationship, the negotiations in China are unique because of the adaptations that had to be made during all of the political turmoil. The resulting model of business negotiation, is not specifically different, just that there are more steps to take to reach similar results. The Chinese businesses realize that they are in a unique position and want to ensure that their business is not negatively impacted by the deal. Negotiating within these rules will allow your firm to navigate the “preliminary” negotiations and get the contract signed, but then the real negotiations start.

Where negotiations in the west, and throughout most of the world, end with the signing of a contract, the Chinese business people see the signing of a contract as the beginning of further negotiations. While this may seem sneaky or manipulative to businesses that are not familiar with this environment, it is not done in malice and is done to improve the deal. Remembering this key piece of information, and planning to re-negotiate even after the deal is signed will give your organization the competitive advantage over your peers that do not keep this in mind.