negotiating in china: challenges and practical approaches
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Negotiating in China: Challenges and Practical Approaches. Dr. Pitman B. Potter UBC Institute of Asian Research UBC Law Faculty. I. Introduction. Acknowledgements. Themes: Preparation, Balance, Prudence - PowerPoint PPT PresentationTRANSCRIPT
Negotiating in China: Challenges and Practical Approaches
Dr. Pitman B. PotterUBC Institute of Asian
ResearchUBC Law Faculty
I. Introduction
Acknowledgements. Themes: Preparation, Balance,
Prudence China negotiations similar and yet
distinct. Issues of preparation, balance, prudence are generally applicable elsewhere, but local context in China raises particular challenges.
II. Local Contexts
Culture and the importance of Relational Networks Culture (incl. language) is key to
understanding local markets and market behaviour.
Culture of communities vs. cultures of individualism.
Networks are cultural vehicles for communication, risk management.
Diversity of culture. Social: Elite; middle-class, consumers,
gov’t, family, etc. Regional: North / South; inter-
provincial, etc. Occupational: professionals,
bureaucrats, intellectuals, etc. Families (Xi Jinping, Bo Xilai, etc.).
Manifestation of culture: Expression, perception. Use of language (idea of contract as
“hetong” or “qiyue”). Interpretation of behaviour (response
to banquet etiquette, informality, etc.).
Manipulation of culture. Elite negotiator referring to
“laobaixing” cultural norms. Selective Adaptation of
international rules/standards. Acceptance of rules vs.
assimilation of norms.
III. Preparation
Conventional preparation. Identify goals (immediate, medium
& long-term). Identify goals and expectations of
counterparts (research and networking).
Plan processes of trade-offs, what-if’s, fall backs, etc.
China-Specific Preparation. Institutional and personal mapping
(linked to identifying goals and expectations of counterparts).
Examples Links between SOE’s // Central
Enterprises and gov’t departments. Provincial relationships (locally and with
the Centre).
I & P Mapping Examples cont. Rivalries among enterprises and
gov’t departments. Role of the Party, leading small
groups, etc. Personal histories (family, schooling,
projects, etc.)
Problems of non-transparency and obstacles to access to information. Role of informal sources. On-the-ground due diligence.
Examples Contrast English and Chinese
language sources (media, internet).
Due Diligence Examples cont. Contrast formal and informal sources
(published reports, ‘chats’). Problems with ‘conventional wisdom.’ Volume and quality of information. Network building.
Networks as mechanisms for acquisition
and management of information. Formal institutions vs. personal/family networks. Focus on obligations vs. rights.
Examples Agreements // Contract
Different interpretations re significance. Rights (individual) vs obligations (collective). Contract as final or ongoing/flexible expression of
terms and conditions. Implications for negotiations (linked to prudence).
Negotiations Who is participating, who is not? Where is the power/authority? What are the reasons for positions
taken? What are the relationships of
negotiators with third parties?
IV. Prudence Don’t sacrifice business judgment.
Banquet challenges. Market entry costs, loss-leaders, etc.
Respond to reality of relational contracts Prepare for change. Keep terms in reserve.
Assume you are being observed.
At the negotiating table and elsewhere. Plan activities/ demeanor/ behavior in
advance. Translators and helpers (bring your own).
Be disciplined. Spoken word (table talk, negotiating
demeanor, etc.). Behavior (careful about informality). Distinguish (??) between social and business
relationships/activities.
V. Balance Be aware of complexity within Chinese
cultures. Note role of occupation, family, regional differences.
Be aware of changing attitudes re individualistic and collectivist approaches.
Challenge assumptions about business culture.
Anticipate cultural (networking, community) perspectives of counterparts in negotiation and other business relations. But be ready for contradictions.
Be aware of cultural effects on market behaviour (collective relations may take precedence of individual efficiency).
Be alive to institutional implications of information and risk management (reliance of formal mechanisms vs informal information networks).
VI.Summary Be aware that marketization is bringing
change to Asian cultural perspectives, but this will not necessarily mirror European/North American market culture. Contract practices: document vs relationship.
Appreciation of culture should complement not displace attention to self- interest. Understanding of cultural perspectives helps us understand how “interests” are perceived and pursued.
Be aware of context. Be prepared. Be prudent. Be balanced.