Intercultural negotiation

1. Intercultural negotiation

2. Steps in the negotiation process • 1. Relationship building • 2. Preparation and site selection • 3. Team selection • 4. Arrival and opening talks • 5. Discussions and information exchange • 6. Persuasion • 7. Agreement and concessions

3. Relationship building • Relationship building is relatively unimportant for U.S. businesspeople. • In China, no relationship often means no business. • Relationship implies trust and mutual benefits (favors back and forth) over a long period of time.

4. A need for trust • Absolute honesty is not a core value in Asia; Asian believe that truth can be only defined in a relative sense. • When absolute honesty is absent, trust becomes particularly important. • One can trust someone only when a relationship (established probing and monitoring) is established. • A relationship takes a long time to build.

5. Typical strategies for building a relationship, I • Starts early before you propose anything. • Locating an agent to serve as an intermediary if your firm has no one can build a direct relationship with the targeted firm. • To do business with governmental representatives, you may need a strong intermediary to even get an appointment. • Relationship is often person-specific. That is, if your contact person left your firm, the relationship eroded.

6. Typical strategies for building a relationship, II • Personal-specific: the contact person needs be present during the entire negotiation process. • Personal-specific: the relationship is often built through non-business, informal activities, such as sight-seeing, banquet, drinking, etc. • Giving face: being subtle; no disregard for one’s status.

7. Typical strategies for building a relationship, III • Emphasize how both sides can be mutually beneficial; that is, identify the common goals and emphasize them; that is, you may leave unsettled conflicts to a much later day. • Trust requires certain amounts of openness. Be prepared that Asian businesspeople may ask you the same question multiple times over the entire negotiation process to check whether your answers are consistent and whether you are deceiving.

8. Preparation, I • Know your negotiation opponents well: company history, their customers, sales, profits, production capacity, financial condition, information about the members of the other negotiation team, etc. • It is generally known that U.S. businesspeople may not be as completely prepared as the other side. • Asian counterparts may take the lack of preparation as a sign of no respect.

9. Preparation, II • Understand your opponents’ culture, etiquette rules, and behaviors well. • Determine the cultural protocol of the opponents’ culture. • U.S. businesspeople tend to make fewer adjustments to their opponents’ behaviors.

10. Preparation, III • Define negotiation objective. • Prioritize objectives/issues. • Anticipate the opponents’ objectives/issues. • Most of the people in the world are more concerned with feelings (face) and relationships. • Determine “at what point he/she will do the deal and still feel like he/she is coming away with something.”

11. Preparation, IV • Prepare a strategic plan for negotiation. • Ideal scenario: each party makes concessions on low-priority issues in exchange for concessions on high-priority issues; a win-win outcome; good for long-term relationship building. • U.S. businesspeople tend to adjust/change their negotiation strategy less than their counterparts.

12. Preparation, V • Figure out who is the person making the final decision on the other side. • This person may not be the negotiation team leader. • This person may not be an executive. • This person can be a local Communist Party member/officer.

13. Site selection • When a meeting is held on your turf, you have more power and feel more comfortable; but you have more responsibility for seeing to your opponents’ comforts. • A negotiation can be held at a neutral location; this is more often for governmental negotiations. • Site selection is less an issue for U.S. businesspeople. • Asians may expect you to go to them initially as they are more comfortable on their own turf.

14. Team selection • Factors: status/rank, relationship, language proficiency, age, gender. • Include someone on the team who has the relationship. • Include someone on the team who has the language expertise or hire your own interpreter (try not use the one hired by the other team). • The usual number of members: 2-3 for U.S. team; 4-7, or even higher, for Asian team. Balance?

15. Arrival and opening talk • Upon the arrival of the U.S. team, Chinese host(s)will want to try to build a relationship with your team. • Expect a lot of sightseeing, welcome banquets, and entertainments. • Gift giving. • It may take 2-3 days before you can really talk and negotiate. • Upon the arrival of the Chinese team, U.S. host(s) tend to held a cocktail party; however, most Chinese are not good at small talk and they also like to be formally introduced.

16. Opening talk, I • In China, the opening talk can be quite long. It often includes giving generalizations about the firm (and/or the governmental authority) itself, which is unrelated to the negotiation. • For Chinese, these generalizations were to provide a context for the negotiation at hand (note that almost everything is defined and measured in a relative sense in Asia).

17. Opening talk, II • In the U.S., opening talk begins rather quickly (sometimes spending time in small talk). • During opening talks, Asians expect that your top-level executives and the contact person to be present.

18. Discussion and information exchange, I • To “close the deal,” U.S. teams tend to focus on points of contention that remained unresolved. • Chinese value of harmony implies that Chinese prefer to focus on common grounds—the things that have already been agreed upon rather than on conflicts. • Chinese tend to believe that conflicts will eventually be resolved; there is no need to rush. • It is possible that a contract is signed and some unresolved issues are left for further discussions in the future.

19. Discussion and information exchange, II • During this phase, it is important to figure out the other side’s probable goals and their priorities. • One of the usual goals for Chinese is to establish a relationship with you regardless of whether the deal can be closed. • If success does not come this time, it may come the next as long as there is a relationship. • In negotiations with Chinese, it is sometimes advisable to move discussions to an informal and more personal location, such as a golf course.

20. Negotiation strategies • U.S. negotiators like to negotiate from a position of strength. They prefer a win-lose outcome. • Asian negotiators believe in a win-win negotiation strategy to further nurture the long-term relationship.

21. Persuasion • Encourage your counterparts to focus on what they can gain, not what they may have to give up. • Use inclusive language: “together we can …” • Supporting arguments not just with factual data, but also with personal connections and mutual interests.

22. Concessions and agreement, I • When making a concession, tie it with a counter-concession; e.g., “we will give you a 10% discount on printers IF you are willing to use our papers.” • Make sure that the concession that you make ranks high for your counterparts; e.g., their team leader ( a manager at a government-owned business) can brag about the 10% discount to the local Communist Party officer.

23. Concessions and agreement, II • It is well known that U.S. businesspeople tend to make too much concessions because (1) they rush, and (2) they tend to believe that a deal is better than no deal.

24. A deal • After reaching an agreement, it usually takes the Asian counterpart a long time to get the final approval. • The written agreement/contract is vague by U.S. standard. • The contract is often viewed as a guide for future negotiations. • For Asians, the documents are less important than is keeping the interdependence in a good relationship.

25. Usual negotiation mistakes (Cellich, 1997) • Making a negative initial impression. • Failing to listen; talking too much. • Assuming understanding by the other culture. • Showing discomfort with silence. • Interrupting the speaker. • Failing to read the nonverbal cues. • Making statements that are irritating or contradictory.