Business Negotiation & Business Culture

Transcription

1 Business Negotiation & Business Culture Greater China Roadshow, Cambridge 21 February 2007 Chris Cotton, Regional Manager, China-Britain Business Council & David Owen, International Communications Manager, UKTI East of England

2 Don t Expect Business in China to be easy it isn t! Business in China to be impossible it isn t! Do Expect Hunger for business Interest in what you have to offer Demanding and canny negotiators

3 Challenges of the China Market Distance, time and cost Cultural perceptions: strangeness, business practices Concerns over getting paid / making a profit Lack of reliable data & market information Tendency to view China as a single market Inadequate representation / hiring & keeping good employees Corruption & bureaucracy Intellectual property rights Opaque & under developed legal, regulatory & tax framework Standards Political situation Don t suspend normal judgement just because it s China!

4 Where in China? Treat it as a Continent, not a Country Guangdong Province Sichuan Province Jiangsu Province Zhejiang Province Chongqing Shanghai Beijing 85 million people 83 million 74 million 47 million 31 million 17 million 14 million Focus on one area only, initially

5 Western Region Bohai Rim Yangtze Delta Pearl River Delta Main Centres of Economic Gravity

6 Some of the Influences... Foreign baggage - not just Westerners Legacy of the Cultural Revolution The Big Flip : from Capitalist running dogs to toeing the line as a paid-up member of the WTO Structural reforms: breaking the Iron Ricebowl City sophisticates vs rural traditionalists The desire to get rich quick.... aka corruption

7 Some of the Influences... Basic Confucian values relevant to business culture: 1. The concept of face 2. Importance of interpersonal relationships guanxi 3. Family and group orientation 4. Respect for age and hierarchy 5. Avoidance of conflict and the need for harmony Kong Fu Zi aka Confucius

8 Some of the Influences... Political: The Communist Party Suppression of dissent, eg. Falun Gong Dismantling state sector: >100m unemployed instability? Risk aversion Contradictions of a socialist market economic system : Communist bureaucracy vs market economy progress Social stability at the expense of a pluralistic society

9 Business Culture Formal Meetings B I B=Boss

10 Business Culture Formal Meetings S? B? I B=Boss, S=Staff

11 Business Culture Formal Meetings B? B? I B=Boss

12 Business Culture - Meetings

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14 Building Relationships Guanxi lit: connections, relationship Doing business through value-laden relationships If you don t have it, find someone who has Keep contacts warm: communicate!

15 Business Culture - Banquets B BB

16 Business Culture - Banquets 52% BB

17 Business Culture - Do Take some mementos / souvenirs / company gifts Some small, some slightly larger (tie / book / bottle) Have some room in your suitcase accept reasonable gifts Wrap in red or gold Take photos and send them back to your hosts - Don t Give clocks or knives Wrap in white Refuse reasonable gifts BB

18 Basic Recommendations: 1. Do your homework. Before anything else, carry out proper, in-depth research on the market for your product or service in China. 2. Gain an appreciation of the cultural niceties of doing business in China. 3. Visit the market. See firsthand the opportunities for your company in China. 4. Cultivate the best contacts you can in China and take time to develop and nurture this network. With the right product or service, small or medium sized companies have as much chance of success in China as big organisations. Relax, be yourself - Enjoy it!

19 Business Negotiation & Business Culture Does your Chinese contact have a personal as well as a business agenda? (eg: particular interest in an area of your discussion) What are the relationships at play between members of the Chinese negotiating team? What relationships are at play between your agent and the negotiating team?

20 Business Negotiation & Business Culture Do not underestimate the ruthlessness of Chinese negotiation, especially when coated with effusive friendliness Ensure you understand what the next steps are after the negotiation (as they may not be obvious) Don t expect everything to be signed off or agreed at once

21 Business Negotiation & Business Culture Learn to read between the lines the Chinese are masters at this Try to verify in subtle terms whether Chinese claims can be substantiated (is there exaggeration involved)? The Chinese are humble whilst being proud of success don t be afraid to state your strength and competitiveness

22 Business Negotiation & Business Culture Chinese negotiations don t always have clear marketing plans Be prepared for some direct personal questions these are often not considered rude Chinese documentation can sometimes come on manky paper but is still valid

23 Business Negotiation & Business Culture Negotiation styles can vary between generations, so be prepared for rapid shifts of style Getting things in writing is always desirable but sometimes difficult Be prepared for the little huddles older style negotiations relied on group agreement

24 Business Negotiation & Business Culture A meeting never lasts as long as the agenda states it continues in several other forms (meal, subsequent exchanges etc) Some of the Chinese team will turn up without knowing why exactly they are there (but will not be concerned about this) Get to know the boss (and his family, and his hobbies, and )

25 Business Negotiation & Business Culture The Chinese have a great sense of humour, and will laugh along with you but don t be Monty Python and make fun of yourself, your colleagues or your business

26 Business Negotiation & Business Culture The Chinese tend to hold the British in high regard, so use this In many respects Chinese character is close to British character (aversion, humility, politeness ) The Chinese admire strength and ambition, and genuinely strive to be better than their neighbour it is not a society for the weak-hearted

27 Business Negotiation & Business Culture The Chinese are extremely welcoming, and genuinely so Business and social meetings can see completely different types of behaviour Be prepared to have to go back to China for follow-up If something is wrong on the Chinese side, they will be reluctant to admit it

28 Business Negotiation & Business Culture Young (20-35) Chinese negotiators are completely different from their older counterparts Retirement is a nebulous concept in Chinese business, and elderly representatives may at times be present Management styles vary hugely from western-educated to old state-owned mentalities