Business relationships

Negotiation skills when doing business in China

- January 20, 2011 2 MIN READ

Changes to prior agreements

Regardless of whether the agreement you’ve made with your supplier is based on pricing, minimum order quantities, sample fee costs or other arrangements, until you have the goods in your possession, anything can potentially change, and typically it will.

Only regard things as fully locked away when you either have a supply contract (drawn up by a solicitor) in place and signed by both parties, or your goods are actually in your warehouse.

If neither of these events has occurred there are still things that may pop out of the woodwork and need to be renegotiated – that’s often the nature of doing business in China.

One key point to remember is that Chinese people tend to be very patient when negotiating anything. Don’t expect things to go fast or at the pace you want them to.

The ‘Yes factor’

In general, Chinese people don’t like to say ‘No’. There are two reasons for this.

Either they’ll be trying to ‘save face’, meaning they won’t want to look silly or incompetent, or they’ll be exhibiting typical entrepreneurial behaviour, seizing any opportunity that comes their way.

So while you may think you’re dealing with someone that knows their stuff or is connected to the right factory or industry, they may in fact be a middle person taking advantage of a good opportunity.

It’s often only experience or luck that helps you read between the lines of communication to really understand what‘s genuine and what’s achievable.

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What you’re told may not be what happens

As a result of the ‘yes factor’ and the ever-changing nature of negotiations, it’s not uncommon to be told one thing and ultimately find that something else eventuates.

The negotiation skills you use during this time will be paramount to maintaining your relationship with the supplier and keeping as much influence over the situation as possible.

Avoid taking a very firm approach or becoming demanding; if you do you’ll overstep cultural boundaries, prevent the supplier from saving face and potentially make them want to avoid working with you.

Bear in mind too that Chinese businesses are very interconnected. If you’re perceived as difficult or unfriendly to deal with, you may find that no suppliers are prepared to do business with you.

If you keep the mindset that the whole process remains a negotiation until the goods have landed, you’ll be far better able to preserve and nurture a mutually beneficially relationship with the supplier, and your long term success will be far more likely.

It’s very counter-intuitive to Western thinking isn’t it? Have you had similar experiences when doing business in China?