This presentations gives some tips about how to deal with Chinese counterparts when bargaining.

1. Negotiating with the Chinese:
A Socio-Cultural analysis
Anthony Mercan, Eugeni García, John Mosquera, Óscar Fabián & Pablo Santana

2. Index
Negotiating with the Chinese: A Socio-Cultural analysis
Purpose
Case
Literature
Negotiation
process
Chinese
business culture
Managerial
implications:
The 4 Ps
Conclusions:
Summary

3. Introduction
Negotiating with the Chinese: A Socio-Cultural analysis
“China is a special challenge: It is the world’s largest emerging market,
largest Communist bureaucracry & oldest culture”
Study Chinese negotiating style
1. Process view 2. How 中国 Style  Culture
JV: 北京 Ericsson Mobile Communications (BMC)
Swedish Ericsson BTB. Chinese PTIC
Pye  Problems: Newness, Capitalist & Culture
Tung  Style causes failure & is “culture-based”
This study sets
out to look at
the Chinese
negotiating
style from a
process view

4. The “Ping-Pong” model
Chinese
strata-
gems
PRC Condition
Confucia-
nism
Pre-
Negotiation
Formal
Negotiation
Post-
Negotiation
“Continuous back and forth bargaining feature in the Chinese negotiating style”
Dimensions of
the Chinese
business culture
Fang
Stages of the
negotiation
process
Ghauri + Graham & Lin

5. The “Ping-Pong” model
Stages of the Sino-Western business negotiation process
Pre-Negotiation Formal Negotiation Post-Negotiation
Starting early contacts with
Chinese government
authorities
Lobbying
Presentation
Informal discussion
Trust building
Chinese show interest in
“further discussions” and both
parties sign a “letter of intent”
Task-related exchange
of information
Persuassion
Concessions &
Agreement
Chinese usually prefer to
change situations rather than
the contract
Implementation:
Some problems can
arise (obligations)
New Rounds of
negotiation:
Effective solution
PTIC (China) Ericsson (Sweden)
Equity share
Initially: have a majority share. Finally they insisted
on having at least 50% holding
-
Contribution
Tangible resources like production premises and
equipment. Easy to estimate
Intangible resources like technology and
managerial training. More difficult to assess
Management
control
Share senior management positions exactly in
proportion to the parties’ equity share
Keep as many senior management positions in
the JV as possible
Technology
Obtain the most up-to-date
technology and training
Protect its technology and patents
Price
Demanded very low technology transfer prices,
royalty fees… “Trade” the Chinese market for
foreign technology
Considered the Chinese the “only take, never
give” type

6. The “Ping-Pong” model
Dimensions of Chinese Business Culture
Chinese
strata-
gems
PRC Condition
Confucia-
nism
Politics
Econ.
Plan
Legal
system
Tech.
Great
size
Back-
ward-
ness
Rapid
change
Bureau-
cracy
Moral
cultivation
Interpersonal
relationships
Family &
Group
Respect age
& hierarchy
Avoid conflict
for harmony
Concept of
face
Sun Tzu – The Art of War
36 Ji (Stratagems)

7. Managerial implications
4 Ps for negotiating effectively with the PRC
Be sensitive to the
guiding principles of
the gov.
Take into account gov.
priorities & policies
Most important thing
for success
Bureaucracy is slow
Trust & Closeness
Difficult & crucial
If they feel you give
face  Help & Friends
Margin to gain face
People above contract
Trust  Strategems
Guanxi  Reciprocity
of hospitality

8. Conclusion
Negotiating with the Chinese: A Socio-Cultural analysis
Chinese
strata-
gems
PRC Condition
Confucia-
nism
Pre-
Negotiation
Formal
Negotiation
Post-
Negotiation
Dimensions of
the Chinese
business
culture
Fang
Stages of the
negotiation
process
Ghauri + Graham
& Lin
4 Ps for negotiating
effectively with PRC
Priority
Patience
Price
People

9. Thank you for your attention
谢谢
Anthony Mercan, Eugeni García, John Mosquera, Óscar Fabián & Pablo Santana