Conflict Management in China Part 1

Conflict Management in China
Presented by ChineseNegotiation.com
& ChinaSolved.com

www.ChinaSolved.comwww.ChineseNegotiation.com
3 Approaches to Conflict in China
Conflict Avoidance
Conflict Management
Conflict Mitigation

Table of Contents
Post Negotiation Stress Syndrome
7 Words You Can’t Say in a Chinese Negotiation (without thinking carefully)
Conflict Avoidance vs. Conflict Resolution
Dealing with Negotiation Disputes
Best Practices

Part I: Post Negotiation Stress Syndrome in China

Post Negotiation Stress Syndrome
What is the most difficult aspect of successfully completing a business deal?
Western answer: Finding appropriate counter-parties.
Chinese answer: Post-agreement implementation.
The most important negotiations in China take place AFTER a contract has been signed.

What’s the biggest business challenge?
We ran a pair of surveys on Linkedin recently.
One survey appeared on a set of Linkedin business groups with NO specific geographic orientation and asked, “What is the most difficult aspect of doing business?”
A second survey targeted China-oriented groups
We broke down the deal process into 5 phases:

What is the most difficult part?
1) Finding appropriate counter-parties
2) Clarifying deal terms
3) Finalizing the deal – signing the contract
4) Executing the agreement / doing the actual business
5) Post-deal compliance & Quality Control

What is the most difficult aspect of doing business?

What about China?
A similar survey was run among China-business oriented groups that asked the same question – with the addition of 2 words.
What is the most difficult aspect of doing business in China?

What is the most difficult aspect of doing business?
Globally:Pre-Signing

China:Post-Signing

3 possible explanations:
Cheats & Liars; Buffoons & Idiots
Inappropriate counter-parties
Bad communication – and bad negotiating goals.

Cheats & Liars / Buffoons & Idiots ?
Whenever a cross-border negotiation goes awry both parties tend to hit the ‘cultural panic button’.
Westerners accuse the Chinese side of dishonesty.
Chinese tend to blame the Western side of being dim-witted & inexperienced.

Cheats & Liars / Buffoons & Idiots ?
If there were truth to this argument then few Westerners would stick around for a second attempt -- and international trade in China would collapse.
Research indicated that even among experienced, successful Western business people in China - post-signing renegotiation was the rule and not the exception.

In China the opportunities are vast, the culture different
Due diligence procedures are cumbersome.
References are hard to get – and harder to check.

The result:
Western deal-makers often hear what they want to hear in order to report good news to the home office quickly.
Chinese counter-parties tend to preserve harmony by glossing over problems and making promises they can’t keep.

Bad Communication
Cross-culture negotiation in China can have the ‘poisoned chalice’ problem.
Phrases like ‘contract’, ‘long term’ and ‘high quality’ sound universal and clear-cut but have very different meanings in China and the West.

Bad Communication
Westerners tend to make unrealistic assumptions about compliance, time-tables and quality.
Westerners put far more faith in contracts than Chinese counter-parties.
Chinese tend to value relationships far more than Western counter-parties.

Remedies for Chinese Post-Negotiation Stress Syndrome:
Manage time differently
Vet counter-parties carefully
Discuss difficult details early
Even the most careful & experienced deal-makers should plan for a second ‘post-deal’ negotiation

1. Manage time differently
Negotiators who fly into China with a firm timetable and a deadline for a signed contract are most likely to end up with a worthless piece of paper.
The best negotiators know that the answer to ‘how long will spend in China?’ is:‘as long as it takes to get an agreement that is good for everyone.’

2. Vet your counter-parties
Honest & reputable are vital prerequisites in potential partners – but only as a first step.
Competence and APPROPRIATE experience are what make good partners.
Avoid being anyone’s first international deal in China.

3. Discuss difficult details early
Inexperienced negotiators are so sensitive about ‘building guanxi’ and ‘making others lose face’ that they fail to nail down an enforceable agreement.
Ask for references and perform thorough due diligence.
Keep smiling – but keep drilling down for details until you get 100% transparency & complete answers.

Final Caveat
Even the most careful & experienced plan for a second ‘post-deal’ negotiation at the execution phase.
Make sure you budget the time, expense and managerial bandwidth for the inevitable second round.
Lawyers and consultants must prepare their clients IN ADVANCE.

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Conflict Management in China Part 1

by Best Practices China, ltd on Sep 13, 2010

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Conflict Management in China Part 1 — Presentation Transcript