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19 Dec 2010 05:40 PM #1
China Business Negotiation - Understanding the Basics
For small businesses of any type, the rising opportunities in China are enormous. However, for most with little to no resources, breaking into that market can be daunting task for the less experienced entrepreneur. Thats especially true when youre negotiating your way up the top with potential partners or suppliers, due to the cultural differences and language barriers. Its a different ball game when it comes to negotiating in your favor.
Heres what you have to know:
Hire a skilled interpreter
Unless you speak fluent Mandarin, youre going to have to pay for the services of an interpreter. You shouldnt hire someone who favors the other team; you want someone who is motivated, competent and willing to teach you all the social tones of Chinese culture and language. Therell be plenty of times when you say something that can be misconstrued as rude to the Chinese. The interpreter you hire must be able to properly translate the true tone of your voice in a way that wouldnt be impolite.
Know the ranking system
Your position in the company is seen as something that is critical. Therefore, youre going to be formally addressed by your title instead of on a first-name basis. Its customary to treat them in the same way.
Furthermore, youre expected to bring people who are the same rank as your Chinese equivalents when youre all having a sit down. If low-level personnel from the other side adds something to the conversation, never assume they have the final say. You might believe that something has been decided, but theyre going to talk to their bosses and get approval from them.
Plan it with a team
Before you embark on the wonderful journey of negotiation, you have to find out exactly what youre going to talk about and how low you can go. Even though this is true for any negotiation, its really important for the Chinese, where youll battle language barriers and social customs. You meeting should cover everything from whos going to pay for shipping costs and methods of payment. An important topic is to decide on what currency youll both be using, since itll fluctuate in the future.
Also, take note of the people on your team who can sit next to you at the negotiation table. This list should include a local native who can act on your behalf, introducing your company and working with your potential suppliers. You should be able to find the right person through the State Department.
Another person to have right next to you is a banker. Before you head out on your flight to China, its a smart move to talk to your bank here and have them schedule a meet with one of their financial advisors in China. Then you can talk to that person as soon as you land, and for him/her to add their input in the negotiations. If a manufacturer wants payment upfront, you dont waste time gathering all the paperwork. You take care of it right on the spot.
Be patient throughout the negotiating process
When it comes to the Chinese, negotiations rely heavily on building a deep relationship. That means its customary to get to know everybody on a personal level before you even begin to talk about business.
First, theyre going to scheduling a meeting in their offices so you can introduce your company and establish trust. Youre going to spend twice the amount of time negotiating in China than in the US. Then, when things are going along smoothly, let them decide when its a good time to get serious.
Contracts have different meanings
Heres the thing with the Chinese, they see the contract as just the start of the entire process, not just the end of it. Just because youve agreed to whatever terms doesnt mean its going to end that way.
In all likelihood the supplier will update your product design several times over. For that reason, include into your schedule the tiniest chance, for example, that your product wont be ready to ship on the date youve agreed to.
Moreover, once you sign the paperwork, make sure theres a direct line of communication so you know whats going on with product development.Want To Be An eBay Powerseller?This is the Service You Need.
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