Deal Making

Historically, China has witnessed foreign deal making which was not in the interests of the Chinese people. The period in the 19th Century where foreign powers forced open the Chinese market and occupied Chinese territory is still referred to as the ‘Hundred Years of Shame’. No wonder then, that China can be suspicious of foreign intent. China’s recent re-emergence as an economic power is accompanied by a great sense of national pride, and a desire to be treated on equal terms. At the same time, international issues and how they are reported in the Chinese press can influence the mood of everyday interactions with foreigners in China. Foreign technology and know-how are highly respected, but the starting point for today’s deal making can occasionally carry some historical, political or cultural baggage.

Western business visitors are often deadline-driven and unwilling to slow down to the Chinese pace when discussing business. But in China the pace can be fast and slow simultaneously. Those involved in negotiations know how long they can drag on when the Chinese side is consulting internally or has other reasons for delay. But Chinese negotiators can move with lightning speed on other occasions and exhaust Western business visitors and local partners in consecutive midnight meetings when a deadline is looming. Chinese negotiators use time constraints more strategically than their Western counterparts, who should be aware that speedy conclusion of business can result in extremely tight equipment/service delivery dates.

Another different approach to doing business is that in a buying decision Westerners tend to look for clear alternatives, whilst Easterners may examine ways to combine both options.

For example, a Chinese panel may feel that a supplier who combines claims of best quality with a low price may either raise the price during the contract or fail to implement the contract. They will therefore often prefer to choose a supplier whose price is neither the cheapest nor the most expensive. In addition, a Chinese panel may avoid awarding each supplier more than one contract each, in order to minimise dependence on a single supplier. Such an approach may make a Westerner think that a Chinese negotiator is being illogical, evasive or devious, when he believes he is being quite straightforward.