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Chinasolved Negotiation Training- MNC vs. SME China Styles

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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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Chinasolved Negotiation Training- MNC vs. SME China Styles

  1. 1. Comparing China Negotiating Tactics: MNCs vs. SME ChinaSolved Fall 2013 Property of ChinaSolved. All Rights Reserved. Copyright @2013
  2. 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. Property of ChinaSolved. All Rights Reserved. Copyright @2013
  3. 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. Property of ChinaSolved. All Rights Reserved. Copyright @2013
  4. 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. Property of ChinaSolved. All Rights Reserved. Copyright @2013
  5. 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. Property of ChinaSolved. All Rights Reserved. Copyright @2013
  6. 6. Key Differences Five key differences in the way SMEs and MNCs negotiate in China: Property of ChinaSolved. All Rights Reserved. Copyright @2013
  7. 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. Property of ChinaSolved. All Rights Reserved. Copyright @2013
  8. 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. Property of ChinaSolved. All Rights Reserved. Copyright @2013
  9. 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. Property of ChinaSolved. All Rights Reserved. Copyright @2013
  10. 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. Property of ChinaSolved. All Rights Reserved. Copyright @2013
  11. 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. Property of ChinaSolved. All Rights Reserved. Copyright @2013
  12. 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. Property of ChinaSolved. All Rights Reserved. Copyright @2013
  13. 13. Thank You All Rights Reserved. Copyright @2013. Property of ChinaSolved
  14. 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. Property of ChinaSolved. All Rights Reserved. Copyright @2013
  15. 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 Property of ChinaSolved. All Rights Reserved. Copyright 2013
  16. 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. Property of ChinaSolved. All Rights Reserved. Copyright 2013
  17. 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. Property of ChinaSolved. All Rights Reserved. Copyright 2013
  18. 18. Contact www.ChinaSolved.com www.ChineseNegotiation.com Linkedin: ChinaSolved YouTube Channel: www.youtube.com/Chinasolved

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