Questions & Answers
Westerners Chinese Negotiation Failure
Q1: What are the main reasons why most foreign companies fail in negotiating a business deal in China? Q2: What are some implications that cause the foreign company to back out of a deal during the negotiating process?
Q1: I assume that this means "fail to reach an agreement". There are dozens of possible causes. Here are a few common reasons:
- Failure to develop friendly, trusting relationships with the Chinese
- Failure to understand what Chinese negotiators really want from an agreement
- The Chinese team has not developed a coherent set of demands because they have conflicts within their own team
- There is no one in the foreign team to guide them on understanding the Chinese and / or they do not believe that they need any special counsel on the Chinese
- The foreigners set themselves unrealistic timetables (e.g. three days in and out) to reach an agreement
- Unprepared for negotiating with the Chinese. Think negotiation will be more or less just like back home
- Foreign ego - think they will out-gun, out-negotiate the Chinese
- Lack of trust of the Chinese, and probably lack of human understanding, not trained in Chinese negotiating nuances
- Inadequate interpreting of what the Chinese concessions and position, and / or of the foreign position to the Chinese
- When the negotiation issues are highly political for the Chinese, then first, the foreign team needs to know that, for they are likely to stall discussions, and / or introduce new parties (especially government officials at village, county or provincial level), change their demands etc.
- The foreigners do have inadequate or zero professional counsel on the day to day behaviour (and its real meaning) of the Chinese side
- Not adjusting to their sojourn in China. Suffering culture shock, especially "hating the food"
My book, "The Chinese Negotiator" (Kodansha International, 2007) ISBN 978-4-7700-3028-3, contains much guidance on these questions, including twenty detailed successful and unsuccessful case studies. Bob March