By Andrew Hupert
Chinese negotiators tend to shift from guanxi-seeking partner to cut-throat competitor mode when confronted with an unpredictable counter-party.
Chinese negotiations usually follow one of two paths – towards long-term partnership or one-off competition. What’s the difference? You are. If a Chinese counter-party feels that he can do better as a long-term partner, that’s what he’ll go after. If he feels that you won’t honor the terms and obligations of a durable & profitable relationship, he’ll go for your throat.
Chinese institutions are known for their long memories, and well after members of the new administration have forgotten their twitter tirades and decided to “move on and get on with business,” American firms will still face increased scrutiny, hostility, and non-economic barriers.
With the US starting to look more and more like a potentially hostile, unreliable partner, where does that leave you – the individual negotiator?
If Chinese counter-parties stay true to form, when confronted with an unpredictable they will follow a familiar pattern:
- Switch their orientation from partner/guanxi relationships to competitive one-off transactions.
- Reduce the risk of losing face by minimizing status of counter-party. In effect, a preemptive insult.
- Force conflict to extricate themselves from existing obligations.
What does this mean to individual firms involved in China deals? I’ve got good news and bad news.
The good news? You may be able to take on the role of stable and reliable partner. Chinese counter-parties are in a bind. They need American markets and know-how more than ever, but for Chinese businesses the US political landscape is looking like crazy-town during a full moon. Until recently, the US had been easy (or at least relatively straight forward) to manage. We had laws & regulations, we all came across as predictably naive, and our approach to commerce was childishly transparent. In 2 weeks that changes — and even if Anbang big-wigs with access to powerful son-in-laws can negotiate attractive deals , the chances are your direct counter-party won’t have the same pull. That’s where you come in. You are the devil they know – and your connections and access to US markets make you more valuable than ever.
Individual American negotiators have a few options in front of them.
- China favors divide and conquer techniques, such as Baidu’s recent courting of Silicon Valley techies. While you may receive some interesting overtures, move cautiously and try to avoid being the first one in the water.
- Indirect routes to and from Chinese markets may be the face-saving option for everyone. China has shown new enthusiasm for the ASEAN region, and important FTAs are already in place. If you have operations in Singapore or Thailand, you may want to explore avenues for conducting more China business from those locations. (Singapore seems to be have lost some favor with Beijing in the last year or so, but the @leehsienloong twitter feed is pleasantly dull.)
- Be realistic about your China prospects. I don’t know if the Chinese still say “cross the river by feeling the stones” anymore, but maybe Americans should start using the expression. If you thought China negotiations were tough in 2016, well, then buckle up waipengyou. The challenges are certainly going to get much biglier in 2017.
Written by an American for Westerners negotiating in China, “The Fragile Bridge” dispenses with politically correct euphemisms and ivory tower pseudo-psychology. Knowing which 1,500 year-old philosopher uttered what esoteric phrase won’t help you safeguard your assets or keep your JV operating, but learning from the lessons of dozens of successful Westerners who have survived the China challenge just might.
Andrew Hupert runs ChinaSolved.com, an online platform that helps the international business community achieve greater success when doing business in China. He also writes ChineseNegotiation.com. He can be reached at email@example.com.