Sourcing & Business Tips Archives - Page 15 of 15

Understanding Negotiations In Asia Negotiating in Asia can be a daunting task. Many foreigners are not sure what they need to do or how to finish the deal. Most of the time, things can get outright frustrating and infuriating. To survive in negotiating with your Chinese or Asia suppliers, you need to understand a bit about negotiating in Asia. We have identified 5 types of Asian negotiating personalities. The 5 types of Asian negotiating personalities are 1) the Asian survival of the fittest, 2) the 50/50 or let’s split negotiator, 3) we are friends, so do this for me, 4) you need to help me, so do this for me, and 5) the tit-for-tat negotiator. Each of these uses different tactics to get what they want for the deal they want when negotiating. So it is very important when negotiating in China or Asia that you understand how the negotiation is taking place. Tip 1 - The Asian Survival of the Fittest Negotiation This Asian negotiation personality will usually put you through an endurance test during the negotiation process. It is the Olympics of all negotiations. The negotiation could take hours and hours or go on for days or even months. There can be many going back and forth about things that may not seem essential or have little relevance to the overall negotiation. I have been negotiating with Chinese suppliers sitting in front of me for hours and blowing smoke while talking to my staff and me. They often ignore me and talk to my manager in Chinese or a local dialect of Chinese. At that point, I usually try to tune it all out and let my Chinese manager take over. During the negotiations, I have to sit back, bite my ego, and allow things to ride out and the negotiations to happen in the rhythm and pace. I have learned there is no point rushing it as I would be the one loss on the deal, not my supplier. So I sit there looking interested and be happy to be there. This kind of negotiation can be brutal, especially if you do not understand any spoken languages. The supplier may sit in front of you and smoke while blowing smoke in your face, and then they talk about things that have nothing to do with the overall negotiations. If you are not a patient person - as I am not - it can be challenging, not to mention breathing in a ton of second-hand cigarette smoke going straight into my lungs, hair, and eyes. Many in Asia, particularly some parts of China, may have no concept that nonsmokers do not appreciate second-hand smoke. Though smoking laws have gotten stricter in many parts of Asia, including China, there are still many parts of China where people do not understand that smoking in someone else’s face is not appreciated. The tricky part of these negotiations is that they usually take a lot of time, and most of that time is spent is not about what you came to negotiate about but more about other things. Often, the blame game can start with both sides saying, “well, you did this,” and then you need to counter with “what about this?” which can go back and forth. It will finally be, after what can be several hours, days, or even months, that we will finally get to the point of the negotiation. After a very long time of talking, the actual negotiations of what we came to discuss can only take 15 to 30 minutes. The hard part about this is that I often feel like the other party probably knew at the beginning what they would or would not accept. They came into the meeting with an idea, but they dragged it all out to try to get a bit more. But, whatever the reason for the length of the negotiations, the best thing you can do is smile, act interested and allow it to ride out until the very end. Tip 2 - The Asia 50% - 50% Split Negotiator The other Asian negotiator type is the person who splits right down the middle no matter what they want. They will never give you what you want but always come back and say, “l will split the difference.” I’ll admit that I have also used this one a lot. This kind of negotiation happens a lot when you are negotiating for something on the streets in Asia. You may see something that is 100 RMB, and so you say to the person, I want this for 40 RBM, they come back and say, “No, cannot do it, ok I will give it to you for 90 RMB. Then you, “Oh “that is way too expensive; I can only go to 50 RMB.” You each start to inch your way down or up until you even start to walk away and tell them, “Ok, if you do not give it to me, I will not buy it.” Then suddenly, they say, “Ok, let’s sit the difference, you give me 50, and I give you 50, and we will meet in the middle.” So you both arrive somewhere in the middle for the amount you will each accept. In theory, each of you gives up a bit so that everyone can walk away happy. This kind of negotiation also happens not just on the streets but also in business here in Asia. Someone who always wants to split the difference no matter what you ask them or what price you ask. For this kind of negotiator, no matter what you try to negotiate at the end, they will come back to say, “ok, let’s see the difference 50/50.” There is nothing wrong with this, but understand this at the start, be ready for this, and know what price you can or cannot accept. A goal for any negotiation should be to feel good about the negotiation or a win-win for both parties. Tip 3 – We’re Friends Asian Negotiator This type of Asian negotiation relies on your relationship. They may feel you are friends or have a personal relationship, so you are under a kind of obligation to help them somehow because of this so-called relationship or friendship. To many, this kind of negotiation technique can almost seem like a kind of emotional blackmail since the element of friendship is being used as a way to get what they want. Other times it may simply be because you are friendly to them, so they may feel that there is a special bond so they can get whatever they want from you. This can be a problem for the so-called friendship and maybe even the business relationship. This is why you must understand the cultural and social norms of the country you are buying or negotiating with. Relationships in Asia are very important. If people like you, they may be willing to help you somehow, so friendship or friendliness in business can work both ways and be a good thing. Generally speaking, most people like to work with people they like and know. So this can be a touchy kind of negotiation. If you tell a supplier you are not friends; this can hurt your business relationship. And saying no to this kind of negotiation can always be tricky as you do not want to say no to a friend, nor do you want to insult them. So you may need to tread very carefully with this kind of Asian negotiation to get what you want and keep the long-term relationship intact. Tip 4 – The “Help Me Please” Asian Negotiator This Asian negotiation is like, “look, you need to pity me, so you need to help me.” Sometimes in Asia, people will tell you a sad story, or they may try to get your sympathy in part to set up for this kind of negotiation. They may have done this in the past, and it has worked, so they will keep doing it as they feel it helps them get what they want. I have found that the stories they are telling you often may have been embellished quite a bit. Not that the story is not true – or a small part of it true – but the story may have added things or stressed things that are not as bad as they are. The ” help me please ” Asian negotiation is not the same as our friends though they are similar. This one is more a “poor me” or “you are so rich, and I am so poor, so you need to help me.” There is a sense of obligation there, but it is more about one having more than another. Often, the Asian negotiator may play the poverty card on purpose when reality has a lot of money. To win this kind of negotiation, you need to understand who you are negotiating with. Then you need maybe even to play a bit of the “poor me” back at them or tell them, “oh, that is terrible, but did I tell you what happened to me? Or what happened to my Uncle or Aunt?” This way, you can try to put the “poor me” on an equal footing in the negotiation. Another great way to handle this kind of negotiation is to have a local person you can trust to help you with the negotiations. Most of my local employees know what is going on and will not fall into this trap. Tip 5 – The Tit-for-Tat Asian Negotiation Anyone who has watched many US-China trade negotiations will quickly understand how tit-for-tat negotiations work in Asia. Even with large-scale negotiations, this tactic is being used. The tit-for-tat Asian negotiator is the kind that will say, “Ok, you do this, then I will do that.” In this kind of negotiation, you plan a kind of one plus one or a minus one plus-minus one game. You will get as much or as little as you are willing to give or not give. Thie type of negotiation is based on equality, in that the other party is only willing to do, give, or take away as much as you are willing to. Depending on how much people are willing to give or not give, both parties can be the losers, or both parties can be winners. The tit-for-tat relations can also be one that also digs up the past if you have a relationship with that person. They may dig up the past time and time again to get a better deal for the future. Sometimes this kind of behavior can be justified, and other times, it is not justified as they are looking for a bargaining chip to help them get what they want from you or have the upper hand through the tit-for-tat spat. If you can understand this is happening, it can help you to be able to get a better deal in that you know and understand what game is being played. The idea is to try to find something they want that you can give up that will not cost you too much but still allow you to get what you want and allow them also to feel like they have won. In the tit-for-tat negotiations, it is best, especially if it is a relationship you want to keep, that both parties feel like they have both won. One of the reasons it is so important to understand these kinds of Asian negotiating personalities is that it will help you strategize where or what point you need to start your negotiations. This will then help you to be able to negotiate for what you want. It can be said that in Asia, relationships are extremely important. In their book entitled The Overseas Chinese of Southeast Asia: History, Culture, Business by Ian Rae and Morgen Witzel, the authors said: "It is sometimes said that one of the differences between Western and Eastern society is that in the West people put their trust in institutions, while in the East, people put their trust in individuals." Ian rae and Morgen Witzel In other words, when there are problems in the West, we will look to the courts, governments, legal systems, or the rule of law. We like to have contracts, and we believe in the power of a contract. But in the East, they like to have a relationship with people they know and people they know they can trust. This means there is a better chance that neither party will ever default, nor will there be a problem. One of the most important things in Asia negotiations is that you do not cause the other party to lose face, or all will be lost. All trust will be gone, and it will be challenging to get that trust back. Be careful to understand this when you are negotiating so that both parties can negotiate in such a way that both parties can come out feeling OK about the negotiations. The win-win attitude in Asia is important. If you do that, both parties will come out of the negotiations having won to some degree, and then the business relationship can continue without any problems. Since if a loss of face happens, you may win this time, but the next time they may refuse to do anything for you again. And if that is the case, then the relationship is more than likely lost. Simply, suppose the business relationship is essential to you. In that case, you want to be sure everyone comes out feeling good about the negotiations or there is a mutually beneficial win-win. If you are interested in finding out more about how we can help you create, develop, and manufacture home decor and home furniture products in Asia, we would love to hear from you. Feel free to contact Mondoro and Anita by clicking here. Related Questions What Are Cross-cultural Negotiations? Cross-cultural negotiations are the ability to negotiate with a different culture. It is about understanding the culture and interactions with the other party and having a successful business negotiation. Cross-cultural negotiations are a very important skill to have if you want to succeed in any form of international business. Like most skills, it is a skill that can be learned with practice and understanding. What Quality is the Most Helpful During a Negotiation? Many qualities are helpful with negotiating, but one that stands out is the ability to go into a negotiation and to have both parties come out feeling good about the terms of the negotiation. This means a win-win for both parties, and then the chances are that the relationship can stay intact, and everyone can move forward. So a good negotiator understands this and will negotiate with the knowledge that they need to give up something or come to terms with something to have a win-win for everyone involved.