About Andrew Hupert

Andrew is consultant based in Shanghai who has been working with the Greater China market since 1991. His specializes in helping new China entrants with sales management, marketing and negotiation. Contact him here.

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Negotiating in China: Ignorance is Power

By andrew | March 23, 2007

If your China business model involves B2B selling, there is a good chance that you will spend a lot of time negotiating with people who don’t know – or care – about how your product or service works. You are an expert in something that your counter-party is unfamiliar with. In the US, that would give you an advantage in the negotiation process. You would be able to play a large role in framing and scoping the project, and would get instant credibility as an authoritative expert.

In China, this is often not the case. Don’t be surprised if the negotiator isn’t fazed by his relative lack of expertise. It’s not unusual for him to point out shortcomings, deficiencies and problems in your proposal that don’t make any sense. (I remember drafting a very involved analysis of a company a client was interested in buying, only to have a Taiwanese senior manager who spoke only basic English send it back to me marked-up with wildly inappropriate ‘corrections’ and rewrites. It was unreadable.)

Purchasing and HR managers in China are notorious for this. Their senior managers task them with finding a supplier or hiring a consultant. If your counter-party doesn’t understand the assignment he won’t ask for a clarification or explanation, as that would result in a loss of face. Instead he’ll scan the internet or a magazine for a trendy buzzword or recent industry headline and base his interview with you around that. If your proposal is over his head (it will be) or you try to explain things to the decision maker, you will lose the deal.

They usually resort to focusing on the only metric that they understand – COST. Don’t be surprised if they try to bargain on points that will result in making your product or service completely ineffective. The result is classic lose-lose negotiation. (How much of a discount can you give me if the truck only has 3 wheels?) You receive less than you think you should and deliver a product or service that is lower-quality than you would like it to be.

Don’t wait for economic rationality to catch up with them. This is a boom-town market, and economic rationality could be long off in the distance. You are better investing the time to find a suitable counter-party, rather than try to educate a low-level staffer who is indifferent or has his own agenda. Try to avoid being someone’s first international supplier or client – and don’t waste a lot of time if the initial offer or specification is too far off base. China is huge and growing – there are always new clients or sellers. You will grow old and hungry trying to raise the skill level of your counter-party. It is a much better bet to find someone who already knows what they are doing.

Topics: China Business, Business Entry, Due diligence |

One Response to “Negotiating in China: Ignorance is Power”

  1. andrew Says:
    March 25th, 2007 at 7:16 pm

    Comment test. Are we having a discussion yet?

    -Andrew

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