Module 4 - Background Third Party Intervention and Global Negotiation THIRD PARTY INTERVENTION   It probably goes without saying that litigation is likely the more expensive and the most time consuming. Lawyers have a knack for tying up a case in a tangle of legal knots for years. The outcome is often uncertain and the resulting benefits can be nebulous at best.  Arbitration, as it turns out, may not be that much more productive than litigation, as this dispute resolution process can also be costly and time consuming for the participants. However, the effect and influence of arbitrators can vary quite significantly between countries and cultures. In some countries, arbitrators may be inclined to impose a settlement on the parties in dispute, and in other countries they may be inclined to facilitate a more amicable agreement. Arbitration may be a more proactive venue than litigation. One thing is clear about a dispute in a joint venture partnership though: there is little hope that the relationship between the partners will likely survive either process.  Often, many companies will resort to either litigation or arbitration first. This may be a mistake.  This brings us to mediation. Mediation is the least-used process to resolve disputes. So, what are the similarities and the differences? First, a mediator is chosen by both parties, and will bring their own applicable expertise to the dispute process, as well as an understanding of the basis of the dispute. More importantly, mediators are both neutral and objective. The mediator will use the resources of both parties to help both parties resolve their conflict. In other words, a mediator, more than anyone else, can help mend a contractual dispute and save a relationship. Let’s look at an example. In Italy, a company called Nuovo Pignone, which manufactured heavy equipment, was being sued by an insurance company to recoup a claim they paid out to one of NP’s customers. The customer had lost business when some of the equipment it had purchased from NP failed in a contract job. NP suggested they use a mediator. Both the insurance company and the customer who had sustained the loss agreed. A retired Italian judge was called in to mediate. The judge focused on settlement as his objective in the dispute.  By taking this approach, the parties were able to more realistically gauge each other’s strengths and weaknesses. The customer was persuaded to put pressure on the insurance company as he was still a valued customer of both parties despite his dispute with NP. As a result, the insurance company was persuaded to settle for a reasonable and acceptable amount of money. In the end, all parties were satisfied through the mediator’s efforts and the business relationship between the parties was successfully maintained.  A mediator can more readily help the parties shape or restructure their agreements and is thereby more likely to also preserve a profitable ongoing relationship than would have be.

1. Module 4 - Background
Third Party Intervention and Global Negotiation
THIRD PARTY INTERVENTION
It probably goes without saying that litigation is likely the more
expensive and the most time consuming. Lawyers have a knack
for tying up a case in a tangle of legal knots for years. The
outcome is often uncertain and the resulting benefits can be
nebulous at best.
Arbitration, as it turns out, may not be that much more
productive than litigation, as this dispute resolution process can
also be costly and time consuming for the participants.
However, the effect and influence of arbitrators can vary quite
significantly between countries and cultures. In some countries,
arbitrators may be inclined to impose a settlement on the parties
in dispute, and in other countries they may be inclined to
facilitate a more amicable agreement. Arbitration may be a more
proactive venue than litigation. One thing is clear about a
dispute in a joint venture partnership though: there is little hope
that the relationship between the partners will likely survive
either process.
Often, many companies will resort to either litigation or
arbitration first. This may be a mistake.
This brings us to mediation. Mediation is the least-used process
to resolve disputes. So, what are the similarities and the
differences? First, a mediator is chosen by both parties, and will
bring their own applicable expertise to the dispute process, as
well as an understanding of the basis of the dispute. More
importantly, mediators are both neutral and objective. The

2. mediator will use the resources of both parties to help both
parties resolve their conflict. In other words, a mediator, more
than anyone else, can help mend a contractual dispute and save
a relationship. Let’s look at an example.
In Italy, a company called Nuovo Pignone, which manufactured
heavy equipment, was being sued by an insurance company to
recoup a claim they paid out to one of NP’s customers. The
customer had lost business when some of the equipment it had
purchased from NP failed in a contract job. NP suggested they
use a mediator. Both the insurance company and the customer
who had sustained the loss agreed. A retired Italian judge was
called in to mediate. The judge focused on settlement as his
objective in the dispute.
By taking this approach, the parties were able to more
realistically gauge each other’s strengths and weaknesses. The
customer was persuaded to put pressure on the insurance
company as he was still a valued customer of both parties
despite his dispute with NP. As a result, the insurance company
was persuaded to settle for a reasonable and acceptable amount
of money. In the end, all parties were satisfied through the
mediator’s efforts and the business relationship between the
parties was successfully maintained.
A mediator can more readily help the parties shape or
restructure their agreements and is thereby more likely to also
preserve a profitable ongoing relationship than would have been
achieved through either litigation or arbitration. When faced
with a dispute, consider the available mediation services before
resorting to litigation.
Source:
Negotiation.com
, Retrieved November 27, 2012.

3. GLOBAL NEGOTIATION
Overcome problems before they occur with your foreign partner
so that both parties succeed in their business objectives.
Any solid relationship should begin with a period of
introduction or courtship. It's the same when we enter into the
initial stages of a global negotiation venture with a prospective
foreign nation business partner. We need to know something
about their culture, and the company's background, structure,
and goals. Likewise, they will want to know the same about us.
If we do not have the expertise to investigate a prospective
partner, it might be wise to hire an experienced consultant or
professional third party to investigate and initiate
introductions.
The time and money spent before the negotiation courtship even
begins is well spent. We need to prepare the groundwork to
lessen the possibility of unnecessary expenses being incurred
later on.
Here are
6 tips
to effectively enhance pre-negotiation time and help you think
ahead about what will transpire during the negotiation and what
might happen after the contract is signed.
1) The negotiation never really ends
Never stop conversing, even after the contract is signed. There
are very few seers who can accurately predict the future while
gazing into their crystal ball. Nothing remains static --
everything is constantly in a state of change. Prices rise and
fall, and governments with different ideologies come and go on
an almost weekly basis, like a game of global dominoes. Let's
not even try to guess what the weather is going to do tomorrow.

4. If we're naive enough to think we can toss the contract into the
filing cabinet, put our feet up and allow ourselves a nice little
snooze, think again. Put the coffee back on and stay vigilant. Be
prepared to renegotiate on a whole host of potential problems.
Most of them will be small, annoying problems that will spring
up here and there along the way throughout the life of the
partnership. Don't ignore them. Deal with them immediately, or
risk the dire consequences of putting the negotiated relationship
on rocky footing.
Because there is so much instability and uncertainty out there, it
would be prudent to make certain that one of the key clauses in
the contract specifically ensures that both parties revisit it
periodically. By controlling the process in the early stages, we
can prevent our arrangement from spinning wildly out of control
later on. Keep the dialogue rolling and prevent needless
problems from festering due to lack of attention.
2) What do we do when we still can't agree?
As in many relationships, sometimes the only thing that people
can agree on is the fact that they disagree. It's like being
snookered or getting caught behind the eight ball. Neither
position is particularly desirable, and if not addressed early on,
both sides can end up feeling dissatisfied. We may not
necessarily be thinking objectively, and if both parties become
ensnared in the mesh of their own self-serving interests, their
problem-solving is not likely to be very productive.
To guide us through what may otherwise be an unseen minefield
of potential disasters, we might be well-advised to use the
expertise of third parties to mediate our disputes. There are
several possibilities to choose from. Our own senior
management could negotiate the minor disputes at an
operational level, or we could use the professional services of

5. legal advisers, specialized consultants, or a neutral third-party
mediator to help resolve the issue.
A detailed dispute mechanism must be visibly in place if we
want our operations to run smoothly. If the operation shuts
down because we didn't bother to put an effective dispute
resolution in the contract, and the CEO roars, '
Heads will roll for this
!', you can guess whose neck is going to be on the block.
3) Keep talking
Before we sign on the dotted line, we need to give thought to
what a successful and durable relationship really entails. It
means that the lines of communication have to be kept open.
This does not mean just picking up the phone or sending an
occasional email. A relationship means that we have to sit down
in the same room and talk face-to-face, perhaps 'breaking bread'
together. Communication at many different levels is the only
way to keep the relationship both productive and vibrant. By
agreeing to meet regularly to keep the lines of communication
open, we can prevent many hurdles from tripping us up in the
future.
4) Do it the right way
Anyone who has participated in a joint relationship based on
negotiation will tell you that we always need to go back to
basics. Whether our agreement is in the domestic market or the
international marketplace, we need to go beyond the simple
scope of our limitations and understand the real motivating
factors that support our positions. Remember, the main question
we must try to answer is not '
What
do they want?' but '
Why

6. do they want it?'.
Now, you're probably asking why. The reason is simple but not
necessarily obvious. We might be able to reach an agreement
based on our relative positions, only to find out later that the
other party's real goals and, as a consequence, our own, are
actually in direct conflict with each other.
5) Who are they - really?
Each company has its own unique structure and way of doing
things. It's common for many small companies to be family
owned, but many medium- and large-sized companies also exist.
Each company has its own individual subculture, and depending
on the business philosophy of the owners, this can present a
wide range of possible business outlooks and differing
organizational perspectives. One company can be very informal,
while another might be very structured or even bureaucratic and
formal in how it conducts business or interacts with its
personnel.
It would be very helpful to understand your prospective
partner's approach to business and how they function internally.
Similarly, it's equally sensible to let them know how your own
company works. For example, a larger corporation may have to
make a decision by going through several layers of management
and departments, while their medium-sized overseas partner
might simply have to refer the matter to the company president,
who has the ability to make a decision on the spot. We can
alleviate a lot of frustration and potential misunderstanding by
knowing how our partner operates.
6) Understand how the deal will be put in place
Every partnership will require numerous and demanding
decisions to be made on both sides of the international equation

7. on an ongoing basis, despite all the exhaustive efforts that
initially went into drawing up the contract. Remember that the
contract is only a part of the process, and our interaction goes
far beyond the contractual bonds. A contract cannot foresee all
eventualities and possibilities; so, if an issue that is not covered
in the contract arises as the parties work out the minor technical
clauses, both parties should agree on how they will deal with
this. It all boils down to building a solid base to keep the
communication lines open.
Summary
The explosion in international business ventures dramatically
illustrates the challenges we face as a result of our many
differences. It is imperative that we learn how to do things the
right way, as our international partners are just as eager as we
are to make our respective businesses grow. Language,
however, is not the only barrier we need to overcome. We must
also learn the many other facets that lie behind the complex
social and cultural fibres of our prospective international
business partners. Preparation is vital in laying a solid business
foundation. We would not want a contractor to skimp on a house
they are building for us, nor must we do so when constructing
an international business agreement. Always be thinking further
down the line.
Source: Jeswald W. Salacuse, 'The Global Negotiator', Palgrave
MacMillan (2003). Retrieved from Trident library.
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Module 4 - Case

8. Third Party Intervention and Global Negotiation
Assignment Overview
GLOBAL NEGOTIATION
A Rare Success in China - The Celanese Joint Venture
The present case study focuses on the topic of international
negotiations, but please note that mediation plays a role in the
creation of the joint venture in question. One of the most
closely studied Chinese joint ventures is that involving
Celanese Corporation of the United States, a producer of value-
added industrial chemicals, and China National Tobacco
Corporation (CNTC). The venture produces tow, the fluffy
synthetic fiber in cigarette filters.
In 1982, when CNTC decided to increase its production of filter
cigarettes, it was on the lookout for international suppliers.
Since all tow providers refused to sell their technology to
China, CNTC approached Celanese, a highly regarded tow
producer, with a view to setting up a joint venture. Celanese
declined the offer after two years of arm's-length, long-distance
discussions through its Chinese agent, London Export Company
(LEC), which was well regarded in China. Celanese believed
that the joint venture would destabilize the international market
and adversely affect its cash flow.
In early 1984, LEC reviewed the negotiations and found there
might be greater mutual benefit than had at first appeared. A
senior LEC executive asked Celanese for permission to continue
mediating the joint-venture proposal and, by mid-year, he had
persuaded both parties of the potential joint-venture benefits.
As a result, CNTC promptly made Celanese the preferred
supplier of tow, even before the joint-venture plant was

9. finished; classified the output of the new plant as import
substitution, so that foreign exchange would be conserved and
CNTC would not need to buy tow abroad; and would share top
management decisions fifty-fifty.
First Steps
Next came face-to-face negotiations, discussions, and
communications between the parties. Differences in formal
communication almost stalled these discussions before they got
off the ground, with suspicion arising over the language used
and the legal requirements put forward. Some of the main issues
were:
The Chinese insisted on a holistic approach, asking the U.S.
team to agree to a macro-concept for the new venture, with
details to be agreed to later. Meanwhile, the U.S. party insisted
that they would only regard the overall venture as generally
agreed to after agreement on each component of the new venture
had been reached.
The Chinese insisted on the prior development of friendship and
harmony, while the U.S. negotiators were blunt in their demands
for openness and frankness about differences.
The Chinese opposed the U.S. Company’s proposal that lawyers
be brought into the discussions.
LEC, which was respected by both parties and brought expertise
about China helped resolve the problems and develop an
atmosphere of trust, so that basic agreement was eventually
reached.
Stage Two
The second stage, comprehensive planning, cost $1 million,
took two years to complete, and involved the translation of the
basic agreement into a new plant and business organization.

10. It had been agreed in early talks that Chinese regulations on
technology transfers, feasibility studies, and joint ventures were
not well suited to the new enterprise, so much time was spent
anticipating problems related to the design and construction of
the plant, its general management, human resources policies and
practices, purchasing, finance, and accounting. As a result,
specific plans were drawn up by U.S. and Chinese teams, with
some 50 experts involved at any one time.
Cultural problems were not lacking, and included the difficulty
the Chinese encountered when their Celanese colleagues argued
with them or expressed differences of opinion. As one senior
Chinese manager said: “I had to learn that someone could argue
with me and still be my friend.” Cross-culturally sophisticated
LEC personnel mediated for both sides on a number of
troublesome issues.
Stage Three
The third stage involved construction of the plant, in the city of
Nantong, Jiangsu province. New cultural difficulties arose
daily, as Chinese practices collided with Western performance
imperatives. Celanese employees noted:
Crews of Chinese subcontractors would disappear for days at a
time, leaving work unfinished.
In work units supervised by foreigners, the Chinese observed
workloads; but in those supervised by Chinese, the workloads
were usually reduced and additional employees hired.
Many employees appeared indifferent to the satisfactory
completion of the project.
The Celanese habit of flagging errors or shortcomings was taken
by many Chinese as a personal affront—compounded by the
indignity of seemingly being “talked down to.”

11. The Nantong factory was completed in 1989, when the joint
venture went into operation, with a mixture of Chinese and U.S.
managers and staff. Most of the Chinese managers appointed to
the new enterprise saw themselves as loyal to CNTC, and their
allegiance to the new venture was initially fragile. The Chinese
managers discussed problems with their seniors at CNTC, rather
than with their U.S. venture colleagues. Neither side could
identify with the new entity at first. Also, managers held
meetings in their native tongue, which upset those on the other
side.
But overall, a long-term perspective was taken regarding the
factory, where training was provided to enable employees to
carry out prescribed operations.
At the same time, Celanese managers, believing that the
performance of local suppliers had to be upgraded, spent much
of their time helping suppliers improve deliveries. William
Newman (1992, 72) points out: “Chinese plants ... are
accustomed to loose standards. Erratic delivery times are
common with last-minute flurries of action to meet
emergencies.” (though things have changed in past decades)
By 1992, the Nantong plant was meeting corporate goals and
becoming profitable, and so it was expanded; and in 1994, the
production of acetate flake (the raw material for tow) was
added. Then two additional manufacturing sites for acetate tow,
each a separate joint venture with CNTC, were built and started
up in 1995—one in Zhuhai, Guangdong province, and one in
Kunming, Yunnan province.
Efforts Bear Results
Looking back, Celanese says its joint-venture agreements
reflect the learning and the changes that occurred in the wake of
the original Nantong joint venture. In 2002, the flake facility in

12. Nantong was expanded to provide flake to Zhuhai and Kunming.
A senior Celanese manager said that the performance of the
Celanese joint ventures in China had exceeded original
investment expectations.
There are few joint ventures in China that have been as
successful and learned so much from their own experiences. At
the same time, the Chinese laws and regulations affecting joint
ventures have seen tremendous changes since 1989, making it
easier to do business in China.
In May 2001, after ten years of increasingly successful
operations, the two partners announced they had “formed joint
work teams to complete a feasibility study on an expansion of
their joint venture to produce diacetate tow cigarette filters in
China” (
Chemical Market Reporter
, May 21, 2001).
This coincided with the Celanese plan to phase out its Rock
Hill, South Carolina, plant by the end of the first quarter of
2002. It is to be assumed that Celanese and CNTC will be more
professional this time around in planning their joint venture,
particularly since China is a growing contributor to the bottom
line.
Celanese is now firmly established as a profitable corporate
citizen in China, but cross-cultural learning and problems
remain part of joint-venture life. A senior Celanese manager
commented:
“My wife and I lived in Nantong from June 1997 until March
2000. We found the Chinese people, regardless of their personal
circumstances or status, to be extremely friendly and
supportive. One very unexpected aspect of life in China is the
way we felt completely safe and secure, more so than in any

13. place we have lived, including in the United States.
Close friendships are developed between expatriates and people
in every walk of life, including government officials. The only
observation I would make here is that it probably takes longer
and more effort to cultivate friendships at higher levels, and
this usually requires a peer relationship.
As I expected, I saw that there was a big variation in how well
expatriates respected and adjusted to the culture. Those who
tried to have things work the way they did back home became
frustrated, and the Chinese quietly resented their attitudes.
Likewise, some Chinese had no desire or ability to learn and
adopt modern business and management ideas, and they became
frustrated and were resented by the expatriates.”
In such cases, the performance of the venture was affected, so
the Chinese and Celanese directors ended up looking for ways
to resolve the issues, which usually meant moving someone out
of the joint venture. Over time, this has made the directors
much more careful in the management selection process.”
Commentary
This case illustrates how vital it is that a very long-term view
be taken when planning one’s objectives, to ensure that every
debatable issue—often resting on widely divergent cultural
values and practices—is thrashed out among the parties
concerned. We believe that the Celanese approach could not
have been bettered. Both parties handled problems as they
arose, choosing not to adopt stereotypical formats. Meanwhile,
LEC’s role as long-term mediator easily qualifies as the No. 1
point to note and mull over in this case.
Source: Dr. Bob March's book The Chinese Negotiator.

14. Assignment Instructions
Turn in a 3-page paper (page count does not include cover or
reference list) addressing the following questions:
1.
In 1982, why did CNTC approach Celanese and start the
negotiation? What was the reaction of Celanese at that time?
2.
Discuss the importance of mediation attempts on the part of
LEC with respect to contributing to the success of this joint
venture?
3.
What were the key culture-shocks during the negotiation?
4.
Can you list more based on your experience with eastern (or
other foreign) cultures?
5.
In your opinion, how should we deal with cultural conflicts in
international negotiation?
Assignment Expectations
1.
Answer questions with clarity.

15. 2.
Show depth and breadth to enhance the quality of your paper.
3.
Search in our library to find some papers/articles to support
your argument and show them in the reference list.
Turn in your at least two page answers by the module due date.
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Module 4 - Case
Third Party Intervention and Global Negotiation
Assignment Overview
GLOBAL NEGOTIATION
A Rare Success in China - The Celanese Joint Venture
The present case study focuses on the topic of international
negotiations, but please note that mediation plays a role in the
creation of the joint venture in question. One of the most
closely studied Chinese joint ventures is that involving
Celanese Corporation of the United States, a producer of value-
added industrial chemicals, and China National Tobacco
Corporation (CNTC). The venture produces tow, the fluffy
synthetic fiber in cigarette filters.

16. In 1982, when CNTC decided to increase its production of filter
cigarettes, it was on the lookout for international suppliers.
Since all tow providers refused to sell their technology to
China, CNTC approached Celanese, a highly regarded tow
producer, with a view to setting up a joint venture. Celanese
declined the offer after two years of arm's-length, long-distance
discussions through its Chinese agent, London Export Company
(LEC), which was well regarded in China. Celanese believed
that the joint venture would destabilize the international market
and adversely affect its cash flow.
In early 1984, LEC reviewed the negotiations and found there
might be greater mutual benefit than had at first appeared. A
senior LEC executive asked Celanese for permission to continue
mediating the joint-venture proposal and, by mid-year, he had
persuaded both parties of the potential joint-venture benefits.
As a result, CNTC promptly made Celanese the preferred
supplier of tow, even before the joint-venture plant was
finished; classified the output of the new plant as import
substitution, so that foreign exchange would be conserved and
CNTC would not need to buy tow abroad; and would share top
management decisions fifty-fifty.
First Steps
Next came face-to-face negotiations, discussions, and
communications between the parties. Differences in formal
communication almost stalled these discussions before they got
off the ground, with suspicion arising over the language used
and the legal requirements put forward. Some of the main issues
were:
The Chinese insisted on a holistic approach, asking the U.S.
team to agree to a macro-concept for the new venture, with
details to be agreed to later. Meanwhile, the U.S. party insisted

17. that they would only regard the overall venture as generally
agreed to after agreement on each component of the new venture
had been reached.
The Chinese insisted on the prior development of friendship and
harmony, while the U.S. negotiators were blunt in their demands
for openness and frankness about differences.
The Chinese opposed the U.S. Company’s proposal that lawyers
be brought into the discussions.
LEC, which was respected by both parties and brought expertise
about China helped resolve the problems and develop an
atmosphere of trust, so that basic agreement was eventually
reached.
Stage Two
The second stage, comprehensive planning, cost $1 million,
took two years to complete, and involved the translation of the
basic agreement into a new plant and business organization.
It had been agreed in early talks that Chinese regulations on
technology transfers, feasibility studies, and joint ventures were
not well suited to the new enterprise, so much time was spent
anticipating problems related to the design and construction of
the plant, its general management, human resources policies and
practices, purchasing, finance, and accounting. As a result,
specific plans were drawn up by U.S. and Chinese teams, with
some 50 experts involved at any one time.
Cultural problems were not lacking, and included the difficulty
the Chinese encountered when their Celanese colleagues argued
with them or expressed differences of opinion. As one senior
Chinese manager said: “I had to learn that someone could argue
with me and still be my friend.” Cross-culturally sophisticated
LEC personnel mediated for both sides on a number of
troublesome issues.

18. Stage Three
The third stage involved construction of the plant, in the city of
Nantong, Jiangsu province. New cultural difficulties arose
daily, as Chinese practices collided with Western performance
imperatives. Celanese employees noted:
Crews of Chinese subcontractors would disappear for days at a
time, leaving work unfinished.
In work units supervised by foreigners, the Chinese observed
workloads; but in those supervised by Chinese, the workloads
were usually reduced and additional employees hired.
Many employees appeared indifferent to the satisfactory
completion of the project.
The Celanese habit of flagging errors or shortcomings was taken
by many Chinese as a personal affront—compounded by the
indignity of seemingly being “talked down to.”
The Nantong factory was completed in 1989, when the joint
venture went into operation, with a mixture of Chinese and U.S.
managers and staff. Most of the Chinese managers appointed to
the new enterprise saw themselves as loyal to CNTC, and their
allegiance to the new venture was initially fragile. The Chinese
managers discussed problems with their seniors at CNTC, rather
than with their U.S. venture colleagues. Neither side could
identify with the new entity at first. Also, managers held
meetings in their native tongue, which upset those on the other
side.
But overall, a long-term perspective was taken regarding the
factory, where training was provided to enable employees to
carry out prescribed operations.
At the same time, Celanese managers, believing that the
performance of local suppliers had to be upgraded, spent much

19. of their time helping suppliers improve deliveries. William
Newman (1992, 72) points out: “Chinese plants ... are
accustomed to loose standards. Erratic delivery times are
common with last-minute flurries of action to meet
emergencies.” (though things have changed in past decades)
By 1992, the Nantong plant was meeting corporate goals and
becoming profitable, and so it was expanded; and in 1994, the
production of acetate flake (the raw material for tow) was
added. Then two additional manufacturing sites for acetate tow,
each a separate joint venture with CNTC, were built and started
up in 1995—one in Zhuhai, Guangdong province, and one in
Kunming, Yunnan province.
Efforts Bear Results
Looking back, Celanese says its joint-venture agreements
reflect the learning and the changes that occurred in the wake of
the original Nantong joint venture. In 2002, the flake facility in
Nantong was expanded to provide flake to Zhuhai and Kunming.
A senior Celanese manager said that the performance of the
Celanese joint ventures in China had exceeded original
investment expectations.
There are few joint ventures in China that have been as
successful and learned so much from their own experiences. At
the same time, the Chinese laws and regulations affecting joint
ventures have seen tremendous changes since 1989, making it
easier to do business in China.
In May 2001, after ten years of increasingly successful
operations, the two partners announced they had “formed joint
work teams to complete a feasibility study on an expansion of
their joint venture to produce diacetate tow cigarette filters in
China” (
Chemical Market Reporter

20. , May 21, 2001).
This coincided with the Celanese plan to phase out its Rock
Hill, South Carolina, plant by the end of the first quarter of
2002. It is to be assumed that Celanese and CNTC will be more
professional this time around in planning their joint venture,
particularly since China is a growing contributor to the bottom
line.
Celanese is now firmly established as a profitable corporate
citizen in China, but cross-cultural learning and problems
remain part of joint-venture life. A senior Celanese manager
commented:
“My wife and I lived in Nantong from June 1997 until March
2000. We found the Chinese people, regardless of their personal
circumstances or status, to be extremely friendly and
supportive. One very unexpected aspect of life in China is the
way we felt completely safe and secure, more so than in any
place we have lived, including in the United States.
Close friendships are developed between expatriates and people
in every walk of life, including government officials. The only
observation I would make here is that it probably takes longer
and more effort to cultivate friendships at higher levels, and
this usually requires a peer relationship.
As I expected, I saw that there was a big variation in how well
expatriates respected and adjusted to the culture. Those who
tried to have things work the way they did back home became
frustrated, and the Chinese quietly resented their attitudes.
Likewise, some Chinese had no desire or ability to learn and
adopt modern business and management ideas, and they became
frustrated and were resented by the expatriates.”
In such cases, the performance of the venture was affected, so

21. the Chinese and Celanese directors ended up looking for ways
to resolve the issues, which usually meant moving someone out
of the joint venture. Over time, this has made the directors
much more careful in the management selection process.”
Commentary
This case illustrates how vital it is that a very long-term view
be taken when planning one’s objectives, to ensure that every
debatable issue—often resting on widely divergent cultural
values and practices—is thrashed out among the parties
concerned. We believe that the Celanese approach could not
have been bettered. Both parties handled problems as they
arose, choosing not to adopt stereotypical formats. Meanwhile,
LEC’s role as long-term mediator easily qualifies as the No. 1
point to note and mull over in this case.
Source: Dr. Bob March's book The Chinese Negotiator.
Assignment Instructions
Turn in a 3-page paper (page count does not include cover or
reference list) addressing the following questions:
1.
In 1982, why did CNTC approach Celanese and start the
negotiation? What was the reaction of Celanese at that time?
2.
Discuss the importance of mediation attempts on the part of
LEC with respect to contributing to the success of this joint
venture?

22. 3.
What were the key culture-shocks during the negotiation?
4.
Can you list more based on your experience with eastern (or
other foreign) cultures?
5.
In your opinion, how should we deal with cultural conflicts in
international negotiation?
Assignment Expectations
1.
Answer questions with clarity.
2.
Show depth and breadth to enhance the quality of your paper.
3.
Search in our library to find some papers/articles to support
your argument and show them in the reference list.
Turn in your at least two page answers by the module due date.
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23. Module 4 - SLP
Third Party Intervention and Global Negotiation
Assignment Instructions
THIRD PARTY INTERVENTION
Think about a real-life situation where you reached a deadlock
in negotiations. Describe this process and illustrate how the
third-parties intervener could have helped you negotiate. Be as
specific and detailed as possible.
Feel free to consult background reading, browse our library to
find more articles, and check relevant websites to support your
argument.
SLP Assignment Expectations
1.
Answer questions with clarity.
2.
Show depth and breadth to enhance the quality of your paper.
3.
Search in our library to find some papers/articles to support
your argument and show them in the reference list.
Turn in your 2-page paper by the module due date.
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