Western entrepreneurs, owners and SME managers negotiate differently from giant MNCs in China. Recent headlines about scandals and corruption arrests are significant – but you have to draw the right conclusions about your situation.

1. Comparing China
Negotiating Tactics:
MNCs vs. SME
ChinaSolved
Fall 2013
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2. Differences in Negotiating
Tactics – SME vs. MNC
• Western entrepreneurs, owners and
SME managers negotiate differently
from giant MNCs in China.
• Recent headlines about scandals and
corruption arrests are significant –
but you have to draw the right
conclusions about your situation.
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3. SMEs Need a Risk Reduction Strategy
• Small and Medium sized enterprises
should negotiate to reduce risk.
• Fortune 500 co.'s play a longer game
with little risk of catastrophic failure.
• You have more at stake with fewer
expendable assets.
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4. Advantages of Being Small
• You are a less attractive target.
–You have fewer assets worth going
after.
• You fly below the radar.
–MNCs and famous brands attract more
attention.
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5. Disadvantages of Being Small
• The risks of catastrophic failure are greater.
– Smaller problems can threaten your existence.
• Managerial bandwidth is limited.
– Even if you survive, top managers having to
deal with protracted China problems can be
damaging.
• Fewer resources than listed giants.
– No legal teams or high-powered consultants for you.
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6. Key Differences
Five key differences in the
way SMEs and MNCs
negotiate in China:
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7. 1) Bottom Line vs. Global Strategy
• SMEs usually need the China business to be
self-sustaining or contribute revenue relatively
quickly.
– Unexpected delays or reversals can threaten the
existence of your operation.
• MNC’s are generally looking at China as a
strategic investment.
– It is typically a capital investment with a multi-year
schedule.
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8. 2) Passion vs. Pragmatism
• Entrepreneurs and owners are motivated by
inspiration or opportunity.
– Ideas, partnerships and gambles tend to be
personal (at least to some degree).
– You may play long-shots that ultimately pay off –
or stay in a losing investment for too long.
• MNC decisions are driven by legal teams and
financial analysts.
– They may pull out too early or support
unprofitable projects for too long.
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9. 3) Fragile vs. Immortal
• Entrepreneurs and SMEs are constantly
confronting existential challenges.
– Relatively small setbacks can destroy a high-
potential business.
– Beware of penny-wise, pound-foolish decisions.
• MNCs are rarely endangered by what happens
in China.
– It makes sense for them to sacrifice assets – and
people – for longer term business interests.
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10. 4) Niche Player vs.
Market Dominance
• SMEs and entrepreneurs will usually focus on
niche markets in a limited number of cities.
– Beware of changing your business plan on the fly
based on unique opportunities or “too good to be
true” guanxi schemes.
• Global business models often revolve around
market control.
– Recent price-fixing and anti-monopoly scandals
were rooted in attempts to control market share.
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11. 5) Price taker vs. Price maker
• SMEs and entrepreneurs have to work within
market limits.
– They often live or die based on prices and costs that
are beyond their control.
– Labor, land, shipping cost levels and other macro
forces can destroy business plans.
• MNCs often work to establish and enforce price
levels.
– The Chinese government tends to feel that this is their
job.
– A major source of conflict.
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12. Same Goals, Different Problems.
• Western decision-makers have to identify
their true goals and analyze unique risks.
• SMEs face a set of problems similar to their
Chinese counterparts.
– Price, bureaucracy and market acceptance.
• MNCs confront policy and government risk.
– Right now they are running afoul of corruption
and anti-monopoly measures.
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13. Thank You
All Rights Reserved. Copyright @2013.
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14. ChinaSolved: The China Training
and Coaching Specialists
At ChinaSolved we work with decision-makers,
purchasers and sales teams to reduce risk and
boost margins in China business deals. We show
companies how to maximize the return on their
China investments – while protecting intellectual
property rights and capital investments.
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15. About Andrew Hupert
• 10+ years in China,
– 3 in Taiwan & HK
• Principal at ChinaSolved
• Specialist in US-China Negotiation
– Corporate training, consulting, and
project management
• Publisher of ChinaSolved.com and
ChineseNegotiation.com
• Author – Guanxi for the Busy
American and The Fragile Bridge
Full list of publications and
slideshows available on
www.AndrewHupert.com
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16. Guanxi for the Busy American
• A professional’s guide to
building relationships in
China.
• Written for the Western
negotiator who needs
to transact and execute.
• Available on Kindle,
iBook and all major e-
formats.
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17. The Fragile Bridge
• Conflict Management in
Chinese Business .
• Building relationships is
easy – maintaining
them is hard. Learn to
do it right.
• Available on Kindle,
iBook and all major e-
formats.
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18. Contact
www.ChinaSolved.com
www.ChineseNegotiation.com
Linkedin: ChinaSolved
YouTube Channel:
www.youtube.com/Chinasolved