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8 key elements to negotiation in Chinese culture

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Written by Stefan Kostarelis

In my last post, I noted the increasing amount of Chinese investment in Australia, and how direct flights to SA and competitive prices with other Australian cities may lead to a boon for local real estate.

So given that dealing with the Chinese is a trend that will continue, it is in your best interest to equip yourself with knowledge regarding the Chinese approach to negotiation.

But before we begin, a quick caveat.

With a diverse population of over a billion people, it’s hard to give specific tips that will apply to all Chinese.

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What follows is general advice, primarily based on research by The Harvard Business Review and The China Business Review.

First off, some basics. These are things that everyone should know going into a negotiation with a Chinese person.

Upon meeting, you should make formal introductions (using full names), shake hands and exchange business cards.

Your card should be clean and neat and it should be given with two hands. You must also receive the other person’s business card with two hands and then place it on the table in front of you.

Other basics include your dress, which should be on the conservative side and speech, which should be fairly short, and to-the-point.

Knowing these things will certainly get your foot in the door.

However, if you would like to increase your chances of closing a deal you will need to go a little deeper in your understanding of Chinese culture.

The Harvard Business Review has identified eight key elements that underpin the Chinese negotiation style, and they are as follows.

#1 Guanxi (Personal Connections)

If you can form relationships with other members of the Chinese community and find a connection to the person you are negotiating with, it will greatly increase your chances of a successful deal.

#2 Zhongjian Ren (The “Middle Man”)

This is a concept related to guanxi.

The zhongjian ren is a mutual acquaintance who can arrange a meeting with the person you are dealing with.

This will increase trust between yourself and the Chinese person.

#3 Shehui Dengi (Social Status)

Chinese values are based on Confucianism, which includes a deep respect of social status. For example, if you are dealing with a wealthy businessman you should maintain a formal and respectful tone at all times. That means no chit-chat and no jokes. Also, don’t be surprised if the whole meeting is conducted through an interpreter.

#4 Renji Hexie (Interpersonal Harmony)

For the Chinese, negotiations are about the process. This means the negotiation may take a long time, in some cases weeks or even months. You have to stay the course and essentially become friends before the deal will happen, so pushing for quick results is a mistake.

#5 Zhengti Guannian (Holistic Thinking)

Due to differences in language, the Chinese are more likely to think of the whole rather than break things up into parts. This may result in seemingly chaotic negotiations that involve lots of non-linear questions and extra meetings.

#6 Zhejian (Thrift)

China has a long history of economic instability and this can lead to a lot of bargaining over price. In addition, the Chinese will often resort to silence as a bargaining tactic to defend price positions. In this situation, it is recommended that you ask the Chinese person to justify the price and force them to reopen the dialogue.

#7 Mianzi (Face)

Face is the combination of dignity and reputation. One of the quickest ways to lose face in Chinese culture is to get angry. When negotiating with the Chinese you should remain cool at all times – no matter how you feel inside.

#8 Chiku Nailao (Endurance)

Finally, there is endurance. The Chinese are known for their work ethic, so they will come to any negotiation extremely well prepared. In addition, you will need to saddle up for a meeting that may go longer than what you are used to.

In summary, there are some important things to remember. Having personal connections and using “middle men” is a great way to start a negotiation. Once in negotiations be prepared to go the distance and never lose your cool. Approach all negotiations with a formal demeanor and be prepared to patiently deal with a lot questions and haggling over price.