“The Listener Retains Only the Words He Is Expecting”: Negotiating in China

The title of this article comes from Marco Polo’s description, to Kublai Khan, of negotiating in China during his travels. Polo’s words echo across the centuries even to today, a time of unprecedented globalization and cultural exchange. Despite the near-instantaneous access to cultural information, many non-Chinese are bewildered by the complex and elaborate dance of negotiating with the Chinese. Here are some tips for more successful outcomes.

Relationships are crucial

According to the EU’s SME Centre (EUSME), the Chinese concept of guanxi encompasses a network of personal connections, such as with friends, classmates, and relatives, as well as with close business associates. The concept of guanxi may therefore be unfamiliar to people from other cultures where personal and business associations are kept separate. It’s important to grasp the importance of guanxi because these networks are very important social forces in China.

So how can you navigate this crucial relationship landscape? Start with what you have. Review your contacts for any connections in China, and try to get a personal introduction whenever possible. Next, be selective and foster relationships with people who will be able to help you reach your goals. Finally, maintain your relationships by giving before taking and by concentrating on the most fruitful parts of your network.

Managing “face”

The English expression “to save face” comes from the Chinese concept of mianzi, a vitally important aspect of Chinese culture that can seem vague and irrelevant to outsiders. According to EUSME, face defines a person’s place in those all-important social networks. Social position, respect, and personal honour are very important in China. Therefore, personal image and the effect of image on others are key to business success.

Breaking promises, acting aggressively, or manifesting frustration may all be common in European or American negotiations, but these can be severely detrimental in Chinese negotiations. These can all make you seem like a undesirable business partner and close off huge portions of business networks to you and your associates. To maintain face for yourself and your counterparty, remain trustworthy and keep promises to the best of your ability. Respect hierarchy; it could be disastrously disrespectful for a junior associate to challenge the arguments or facts given by a senior negotiator.  In reality, almost every conversation or business interaction you engage in involves a negotiation of face between the two parties. Knowing how this works is essential to working with your Chinese counterparts.

Consider alternate perspectives

While it’s important to consider the other side’s perspective in any negotiation with anyone, Chinese people can have particular perspectives that seem unintuitive to outsiders. One such different perspective involves the relative value of money between cultures. An article from Forbes.com explains that Americans may see a 100 yuan note and instictively apply the exchange rate to it, so that they “see” the $15 value. However, in China, even wealthy Chinese will see the 100 yuan note as the equivalent of a $100 bill. Thus, if your counterpart differs from you on money issues, it may not be a negotiating tactic, but a fundamentally different way of assessing value.

You can avoid sticky situations arising from differences in valuation by steering the negotiation away from the sticky point—perhaps dollar figures—and toward something more aligned with each side’s point of view. For example, if price becomes a sticking point in the negotiations, it may be better to address other concerns like timelines, quality control, payment schedules, or some other topic that can move the negotiation forward and save face for everyone.

Understand that ethics are relative

It can be easy for non-Chinese, especially those from European and American cultures, to perceive their ethical and moral codes as universal truths, and to act as if their counterparties feel the same way. Of course, this attitude can lead to huge misunderstandings, loss of face, and crumbling business networks. James Sebenius and Cheng Qian, writing for Harvard Business School, give the example that it can be difficult to conduct market research in China because respondents to surveys and focus groups can be under pressure to deceive the market researcher. Although more western moral codes would tend to value truth-telling in such a low-involvement activity as taking a survey, a Chinese person who deceives in order to protect the interests of a family member or business associate may see themselves as acting supremely honorably.

Chinese literature is full of heroic tales that describe deception when dealing with more powerful opponents. Chinese culture has embraced some of these literary ideals and the social pressures to handle hostile opponents with deception can overshadow what we may see as the “logical course of action.” Therefore, it’s important to keep in mind that your definition of dishonorable may not align with that of your counterparty. This makes it doubly difficult to save face sometimes, because you may unintentionally insult your counterparty by criticizing what he sees as a legitimate tactic.

Putting it together

Negotiating in the framework of an unfamiliar culture can be daunting and stressful. In addition to doing as much research as possible before you sit down at the negotiating table, there are some things you can consider to help you reach successful outcomes. Keep in mind that networks are crucially important in the Chinese business ecosystem. One key to maintaining your network is to be mindful of how you present yourself and interact with others to save face for everyone. It can be difficult to know what potential faux pas you may make, so try to get a feel for how the other side views the elements you will negotiate on, and what your opponent considers to be acceptable ethically. Do your homework and pay attention, and you’ll find your negotiations will go much more smoothly.

Brandt Arceneaux
MBA Candidate 2016