Good sales negotiation - the rules of which feature below - can easily add 10% to sales revenues, which arguably goes straight to the bottom line as incremental profit. Good purchasing negotiation can easily save 10% of the cost of bought in products and services, which again arguably goes straight to the bottom line as extra profit. Good negotiation by managers in dealing with staff can easily reduce staff turnover by 5-10%, which reduces recruitment and training costs by at least the same %, as well as improving quality, consistency and competitive advantage, which for many companies is the difference between ultimate success and failure. Good negotiation by executives with regulatory and planning authorities enables opening new markets, developing new technologies, and the choice of where the business operates and is based, all of which individually can make the difference between a business succeeding or failing.
One of the most important skills you will need before you start your own business, regardless of what business might be, is to learn “How to” Negotiate. Now this subject could, like others in our ebook, fill an entire volume all of its own so we will keep this down to the ‘essentials’.
No matter what you do in your life, personal or business-wise, learning the Art of Negotiation will help you. Every time you buy a car, or a home, or even when you apply for a new job, you are going to be a
“Negotiating” situation. Just think about this, as an simple example. When you asked that new girlfriend out on that first date you were, “negotiating” right up until you got that first kiss, weren’t you? You didn’t know what she was thinking, she was ‘playing her cards close to her chest’ but you kept throwing out little signals, little questions (that is, if you were a gentleman) until you felt that it was time to move ‘closer in’ and ‘close the sale’ and get that first kiss with her.
Obviously you ladies do this in a ‘different’ way but the ‘process’ is very much the same, isn’t it? Well that’s “negotiation”. Okay – now for the more serious stuff.
When you go into a “commercial” negotiation you, being on ‘one side of the fence’, have in your mind (but preferably on paper as well) what you wish to achieve, be it a certain price, certain terms, timing, settlement date, quality issues and so on. We strongly recommend that you have these objectives’ written down, but kept totally confidential, so that ‘in the heat of battle’ you do not forget to cover all of those objectives. This will also help you focus, before your negotiation meeting, on what your main objectives really are.
These “objectives” are what is termed your “Hidden, or Secret, Agenda”.
Raise your BATNA, or no-deal option.
If you are relying on your Chinese counter-party for basic market and business information well into the negotiation then your currency is probably dropping in his eyes. Hire an assistant, or better yet spring for someone more high-powered, but do something to develop your own flow of reliable industry information. Experienced deal-makers who are based in China consider this advice simplistic, but many overseas negotiators never seem to figure out that they are getting all of their data from a counter-party who has a vested interest in keeping things as confused and opaque as possible.
Add a new player to the mix.
Find an alternate counter-party or spread your risk by taking on additional suppliers or marketing channels. Don’t give away exclusivity unless you are absolutely certain you can rely on your partner – and even then its one of the riskiest decisions a Western negotiator can make in China. Once your Chinese counter-party thinks the balance of power has shifted in his favor then the relationship goes into a nose-dive. Local Chinese are always looking for a bigger & better partner – so should you.
Capitulate.
Give in. Do it his way. Maybe the Chinese side has a point. Maybe you are better off just giving in. After all, there’s a good chance that the right partner really does know what he’s talking about and you don’t. For the non-China expert, this isn’t always a bad option. Particularly true if your business involves marketing within China.
Walk away slowly.
For all their talk of harmony and consensus, Chinese negotiators are basically power-players. They respect strong counter-parties and are opportunistic & cut-throat when dealing with weaklings. If you aren’t ready to walk away, then expect to get taken advantage of. But having a Plan B isn’t enough – you have to know how to deploy this tactic in China. The best way is to be polite – even friendly – and tell your Chinese counter-party, “Well, it looks like we won’t be able to do business this time. Hopefully we’ll meet again under different circumstances. Thanks for all you’ve taught me about doing business here.” Smile and walk away – slowly. In many cases your counter-party will come back with better terms. Even if he doesn’t, you are better off making the move – provided you have already set up an alternative option.
Run away.
If your relationship is truly gone to hell, then your best option may be to burn your bridges and get out of there immediately. Some people are simply more valuable as enemies than friends. If your counter-party is actively stealing from you or worse – engaged in illegal or reputation damaging activities – then you are much better off being the one to terminate the relationship. Running away is different from walking away slow, because in this scenario you have no interest in keeping even a pro-forma relationship going.
A final option that may seem counter-intuitive is well suited for some Americans – force a conflict and make them mad. Yes, this is a risky tactic, but when all else fails you may want to try to shift the balance of power back in your favor by provoking the Chinese side. I’m talking about forcing an open conflict in a situation that you feel has gone so far out of control that the status quo in simply untenable. If pushing you around has been working for them and they consider you a weakling, then you’ll never get this deal back on track. If they want a deal with you and you show a little spine, then they’ll find a way to accommodate. Your worst option is playing the role of damaged goods in a relationship a Chinese counter-party doesn’t value.
