Master the ABC of Chinese Business Negotiations
The role of back-and-forth negotiations in global business has become more vital than ever, courtesy of the size of the economy in China and the ever-growing influence she has on international consumers.
This article provides valuable tips that can help you effectively navigate the intricate negotiation process in the People’s Republic of China, plus a preparation scorecard you can run through before your next meeting.
What is the ABC of Chinese business negotiations?
The ABC here is the basics: the handful of habits that decide whether a deal in China moves forward or quietly stalls. Master the ABC and most of the rest is detail. The U.S. International Trade Administration puts the same idea more formally, noting that Chinese business culture emphasizes personal trust in business relationships, a concept known as guanxi, and that building it is a long-term process requiring significant time, persistence, and patience. Every tip below is a practical expression of that one principle.
Manage expectations of all the involved parties
The Chinese people have learned a very important business principle, how to maintain synchrony and balance. Business people from the Asian tiger never want to get disappointed. Similarly, they never want to get into situations that would let down potential benefactors. For this reason, they always give emphasis to cooperation and good relations, rather than publicly differ with you.
For example, they might say “yes”, which means I heard you as opposed to “yes” I agree with you.
When dealing with the Chinese, do not let their way of life fool you into complacency. Any compliments accorded to you must be duly kept in perspective. Strive to understand the hidden meaning of words and phrases that your counterparts use. A good professional employment organization can provide valuable input on this matter.
Indifference can play a pivotal role at the negotiation table
When wooing a prospective love partner, it is always important to control your emotions. The same principle applies when engaging in business negotiations with the Chinese. Being extremely anxious can be a red flag, and shrewd business people from the People’s Republic of China are always on the lookout for suspicious signals.
Have exceptional negotiating tactics
In North America, Europe, and Africa, men and women who engage in business view deals as transactions that ought to be negotiated within the shortest possible time. They think of negotiations as sprints. In China, however, the opposite is often true. Counterparts there prefer to engage in marathons, and negotiations routinely run over extended periods of time.
In the United States, for instance, business negotiations routinely take place over the telephone, through teleconferencing or over video. That is far less persuasive in the People’s Republic of China, where the emphasis stays on face-to-face interactions. The International Trade Administration is blunt about the cost of ignoring this: China’s culture of guanxi places a significant premium on face-to-face connections, and companies that try to do business from afar are typically less successful than those that invest the time into meeting with partners and customers on the ground in China.
Control your emotions
It is not advisable to set deadlines in your mind. Do not threaten to leave the negotiating table, and neither should you openly display feelings of anger or frustration. If you do, the Chinese would doubt the genuineness of your wish to cooperate.
Understand that bargaining with the Chinese is not a one-man game
Once you get to the People’s Republic of China, you will discover that business negotiations are a team sport. In most cases, you will encounter a dozen people across the bargaining table. The whole group would, without doubt, have an ultimate decision-maker. Learn how to identify the ringleader, and the person or people who can exert influence on him or her as well.
An introduction helps more than a cold approach. Being introduced through an intermediary encourages business discussions, because these contacts generally prefer to do business with people they have a personal connection with, and the more credible your intermediary, the better your odds.
Be patient
Many people are not aware that patience is one of the virtues that Chinese people have and adore. To successfully negotiate a business deal, you must learn to be patient. The cold-shower strategy of decision making is undoubtedly the most effective tactic.
Before reacting or making the final decision, pause first. Think about the whole deal, listen some more, read about it and even sleep on it. Remember that it is not a sprint; you are taking part in a marathon.
Remember that the Chinese consider money in form of Yuan
Unlike people who have done business or grown up in the United States, the cost perspective of people living in the Asian nation is anchored differently. Whenever they see, hear or read about a 100 Yuan bill, the reference point is domestic prices in Yuan, not a converted dollar figure. That is a principally different perspective of a material object that is similar. Quote in Yuan, sanity-check the exchange rate on the day, and never assume a number that sounds reasonable to you reads the same way across the table.
Do not be egoistic
As a rule of thumb, Chinese people focus on what prospective business partners do, rather than what they say. They have little regard for people who are disrespectful and flashy. It is therefore important to be modest. The small signals carry weight too. Business cards are still part of Chinese business culture, and the card should be held in both hands when offering it to the other person; offering it with one hand is considered ill mannered, and you should receive a card with two hands and study it before continuing. Expect WeChat to stand in for a card with younger contacts, and check the China Country Commercial Guide before you travel.
Gifts are welcomed and can reinforce trust, but the choice matters. Avoid a clock or a watch, both seen as bad luck, and avoid anything so expensive that your counterpart cannot reciprocate without embarrassment.
Negotiation preparation scorecard
Run this scorecard before your next round of negotiations in China. Score each row 0, 1 or 2. A total of 14 or above means you are ready to sit down; anything under 10 means you are negotiating on hope.
| Preparation item | 0 points | 1 point | 2 points |
|---|---|---|---|
| Relationship | No prior contact | One meeting held | Repeat contact over months |
| Introduction | Cold approach | Loose referral | Credible intermediary vouching for you |
| Face-to-face plan | Calls and email only | One trip planned | On-the-ground presence scheduled |
| Decision map | Unknown who decides | Decision-maker named | Decision-maker and influencers mapped |
| Timeline | Hard internal deadline | Flexible target | Months of runway, no deadline pressure |
| Pricing | Dollar figures only | Converted at signing | Quoted and sanity-checked in Yuan |
| Etiquette | No briefing | Read a summary | Cards, gifts and greetings rehearsed |
| BATNA | None | Weak alternative | Strong alternative you would happily take |
The scoring bands are a practical rule of thumb from this scorecard, not a measured benchmark. Use the row scores to decide what to fix first, not to predict the outcome of a specific deal.
Frequently Asked Questions
How long do business negotiations in China usually take?
Plan in months, not days. Building the personal trust that deals rest on is a long-term process requiring significant time, persistence, and patience, so treat the negotiation as a marathon and keep a schedule that can absorb several rounds.
Does ‘yes’ mean agreement in a Chinese negotiation?
Not always. A ‘yes’ often means ‘I heard you’ rather than ‘I agree with you’, because the preference is for cooperation and good relations rather than publicly differing with you. Confirm agreement in writing and restate the specific commitment.
Can I negotiate with Chinese partners remotely?
You can start remotely, but do not expect to finish that way. Companies that try to do business from afar are typically less successful than those that invest the time into meeting with partners and customers on the ground in China.
What is a BATNA and why does it matter here?
A BATNA is your best alternative to a negotiated agreement. Having a strong outside option away from the table is the most reliable answer to hardball bargaining, and it is what lets you stay patient without getting squeezed.
Conclusion
In summary, it is very important to take your time and learn about China. In most cases, it requires several months or even years to successfully negotiate a long-lasting business deal. Do not expect to strike a deal within a few days.
It is imperative for any business that intends to move its operations to the People’s Republic of China to hire a reputable global PEO to help, given that the process can sometimes be complicated.
The gold rush mentality works on some continents. There is no doubt about that. However, if you wish to set up a business in China, keep away from that mentality. Ensure that the business deal that you are getting into would be beneficial to the organization in the short term and long term as well.
Thirdly, establish contacts at the highest levels possible. Reaching out to people who occupy high positions in government and society can help you find efficient and effective negotiators.
Finally, keep developing your best alternative to a negotiated agreement (BATNA). Having a strong and sheltered outside alternative away from the negotiating table is the best and most reliable solution to hardball bargaining tactics.
