Doing and undoing….to get to ones goal
Planet China: how and why one often finds oneself rediscussing points and conditions on which, apparently, an agreement had already been made. Third appointment with Alessandro Zaccarini.
Note. Doing business in the Middle Kingdom, effectively managing relations with reps, customers, suppliers and co-workers. ItaliaImballaggio proposes a series of information and analyses (drawn up by Alessandro Zaccarini, expert in Italo-Chinese relations) on the main negotiation tactics and the modes of the typical relations between entrepreneurs and “local” managers. Offering relative advice on how to best tackle negotiations.
In comparison to Europe, negotiations in China are long drawn out affairs. This is due to a specific cultural approach, which absolutely needs to be taken into account: in China one always tries to make or take decisions agreed upon by the greatest number of people possible, so as to be able to keep up a good harmony within a group. Indeed, avoiding taking unilateral decisions, one does not risk being singled out for having made what might later turn out to be a poor choice.
The demands and expectations
Here follow some of the most common situations which a supplier may end up finding himself in.
a) A supplier is invited several times to China for commercial meetings and each time the same points are discussed that were dealt with previously, usually with different partners. A technical department one knew nothing about suddenly shows interest in the project and wants to discuss the details.
b) Agreements already made, signed by contract with written commitments, are suddenly called into question or not respected and the supplier is forced to renegotiate them.
c) The supplier is sent to technical meetings where a high number of people take part (the entire technical staff of the customer) but then he is suddenly asked to provide a sort of lecture, a training session on the main characteristics of the product on sale. Little time is dedicated to the discussion of the project itself.
d) The supplier is urgently asked to deliver certain documentation or provide further information by a deadline close at hand, defined as “undelayable”, the lack of respect of which will have negative effects on the project. In the rush, without time to go into the details and wishing at all costs to respect the imposed deadline, the supplier provides inaccurate information or accepts unfavourable conditions.
The steps to be taken
Aboveall one should consider that, even if the Chinese are used to drawn out negotiations, they know full well that Europeans appreciate behaviour and procedures that consider the economic value of the “time factor”.
One is though ill advised to oppose oneself to the situations mentioned above, perhaps refusing to rediscuss subjects already dealt with or by showing irritation or unease due to unexpected or forced demands (like that of the delivery of an unpaid training session or the respect of an extremely tight deadline…).
We suggest you prepare in advance, foreseeing the fact that these situations may occur: the demand to rediscuss points which have been previously extensively clarified should not be rejected merely on the basis of the fact that an agreement has already been reached, or that the managers of the two companies have signed a previous written agreement on it.
An agreement is an agreement?
It should be remembered that the Chinese – the same as the Japanese and the Koreans – only consider a contract as binding as long as the conditions under which it was signed remain still valid. If, for example, a year after signing with a certain supplier, a different company presents a proposal considered more interesting, the Chinese company considers it a change in the pre-existing conditions; in the light of the new circumstances, the Chinese company feels itself authorized to at least consider the contract renegotiatable.
The usefulness of a written and signed agreement does not so much lie in the possibility of binding the customer, but in making sure that the agreements made with given persons inside the company are easily accessible, and hence if needed can be retrieved should there be, as often happens, a change of managers within the client company. The bond to respect certain decisions derives not so much from having signed an agreement, but from the ability to maintain smooth relationships to the point where it appears convenient for both parties to continue to respect the agreements made.
The insistence on discussing certain points in more detail and several times, or on forcing the supplier to carry out a training session under the pretext of discussing a project, should be interpreted as at least being a sign of interest. In a subsequent moment in the negotiations, having offered a series of technical training sessions to a certain number of departments could for example be used as a weapon to demonstrate that you have already made your share of sacrifices.
Many of the deadlines indicated can and have to be discussed the same as any other point of the project. Thus in the same way as the customer sets arbitrary deadlines to force the supplier to hurry in his decision and to accept unfavourable conditions, so the supplier can refer back to an hypothetical need for rediscussing the matter with his own bosses in Italy and to the need to respect internal regulations of his/her company that lay down a certain procedure for making certain decisions.
In the coming issue: being able to strike up personal relationships is good for business.
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