Deal-Making in a Culturally Diverse World: Negotiating in the Chinese Market

"As the world is getting smaller, it becomes more and more important that we learn each other's dance moves, that we meet each other, we get to know each other, we are able to figure out a way to cross borders, to understand each other...".

This is a rather poetic and possibly idealistic quote from documentary maker and TED prize winner Jehane Noujaim. And yet there is power and truth to it. Our world is getting smaller, and certainly the business world has shrunk in the last couple of decades as barriers are removed and advances in technology make doing business with those across the globe far more accessible. Subsequently, we may be interacting and seeking to strike deals far more frequently with those who identify with a culture that differs from our own.

When this occurs, it is important that we acknowledge that although the basic negotiation framework can and should be applied across the world (our 8 step approach is taught in 38 countries and 24 languages), there are certain cultural nuances which need to be observed as they can impact the negotiation process. What may be ‘the norm’ and acceptable for a negotiation or business transaction here in Australia may be looked upon unfavourably elsewhere - and vice versa.

Drawing on Jehane's words, it is therefore of great benefit to seek to understand the other party in the negotiation and identify what their 'dance moves' are in order to cross any cultural negotiation borders.  How can we expect to negotiate a successful outcome, if we don't understand the prevailing business culture within which the other party negotiates?

With over 40 years of negotiation experience, and having taught our negotiation program around the world, we feel well-equipped to offer some insight into those cultural nuances which can come into play during cross-cultural negotiation. Over the coming weeks, we'll share these insights into negotiating in a culturally diverse world.

As a precursor to the following guidelines, we need to say that these are general observations from our experience in and with other cultures, but cultural diversity within every country - just as there exists in Australia - will mean that there will be exceptions to our observations.Today, we start with our colleagues in China.

Chinese Negotiation Culture

• In the initial stages of the negotiation process, the Chinese place great value on establishing a friendship before entering into business discussion. Initial meetings are viewed as a 'getting to know you' session, where very little 'shop talk' takes place. Some Westerners may perceive this as time-wasting, but this is a misconception and it would be considered inappropriately direct or forward to try and get straight down to business.

• An invitation to eat and drink is a very good sign, as it generally indicates that they like you. Being encouraged to continue drinking means that they really like you, as opposed to trying to get you drunk and possibly hungover in time for the upcoming negotiation. Furthermore, the 'breaking of bread' is a welcome forum to discuss business.

• The vast majority of the deal will be done with your counterparty with whom you spend the most time. The boss will only come to the meeting for signoff. So if the boss shows up at the meeting, it is a positive signal: it means you're about to shake hands.

• "We will consider this" is often their way of saying 'No', politely.

• In general, conflict is avoided, and, as a result, if one party does not like or agree with what the other has said they may not make this known. Instead, a statement may be met with silence or they may choose not to respond to correct the claim. This can be confusing as sometimes such a response may be perceived as an agreement when, in fact, it is not.

• It is not uncommon to reach agreement on the main issues and begin nutting through the finer details, only to rehash and renegotiate those main issues once again, at the next meeting. Although frustrating, this needs to be accepted as simply being part and parcel of the negotiation process in China and occurs when management weighs in and/or more thought has been applied retrospectively.

• It's no secret that corruption is rife amongst police and Government officials in China – President Xi Jinping has promised a war on corruption and tasked graft buster Zhao Leji to head the campaign. However, despite corruption being alive and well at the highest level, this does not generally occur at business level and thus should not be anticipated at the negotiation table.

The basic negotiation framework remains the same - regardless of country or language. However, having an awareness of cultural business and negotiation norms can prevent misunderstanding, frustration and confusion, and allow for a positive, smooth negotiation process for both parties.

開心談判! (Happy negotiating!)