Negotiating With China- II
The fundamental cultural influences [mentioned in the first part of the article, “Negotiating with China-I”, Article No:120, June 14, 2007] have left their imprint on the Chinese negotiating style. Scholars like John Graham and Mark Lam (The Chinese Negotiation, Harvard Business Review, October 2003) have identified and defined a set of eight elements that one would have to contend with when dealing with the Chinese.
Guanxi (Personal Connections): This refers to a person’s social capital within his friends, associates, and relatives. Good Guanxi depends upon a strict system of reciprocity (Hui bao). This does not mean immediate, Western-style reciprocity—there is no immediacy. Favours are always remembered and returned, though not right away. This long-term reciprocity is a cornerstone of enduring personal relationships. Failure to reciprocate is considered immoral.
Zhongjian Ren (The Intermediary): Since the Chinese have an intrinsic distrust of foreigners and strangers, transmitting or building trust via Guanxi becomes important. A trusted associate of yours must pass you along to his trusted associates. In India, too, this concept of an intermediary is well known and has been incorporated heavily into the Mahayana Buddhist faith.
Shehui Dengji (Social Status): The Chinese respect for hierarchy, as discussed above, engenders in them a formality and status consciousness that must never be lost sight of. Sending a junior to meet or negotiate with a senior will not work. To cite Graham and Lam: “At some point, negotiations may require a meeting of equals to stimulate more cooperation. However, top-level Chinese executives will not be prepared to bargain and will not be persuaded. It’s simply not their role. Rather, they will evaluate the relationship during their counterparts' show of sincerity or cheng-yi. And high-level meetings can work wonders.”
Renji Hexie (Interpersonal Harmony): While respect and responsibility are the glue that binds hierarchical relationships, friendship and positive feelings, or renjie hexie, hold relationships between equals together. Unlike in the West, where sizing up the opposite party takes only minutes, in China, as in many parts of Asia, this process may take hours, sometimes days, even weeks. It may include home visits, invitations to functions, and long dinners during which everything but business is discussed. Till rapport is established and comfort levels assessed and reached, no business can be done, and no agreements can be signed.
Zhengti Guannian (Holistic Thinking): As stated earlier, the Chinese tend to think holistically. Americans think sequentially, only one point or task at a time. Indians, while not as holistically inclined as the Chinese, are competent at parallel thinking and task performance. This means that during a negotiation, the Chinese would tend to skip across various points and issues, trying to evolve a holistic overview. In contrast, Americans tend to follow a list point by sequential point. Chinese negotiators practice a holistic approach, seeking long descriptions of background and context and often asking a thousand seemingly irrelevant questions to build the overall picture in their minds. The linear-thinking American wants to tick off points on his list or agenda as he goes along and, on arriving at the end of the list, feels that the negotiation is over. At that point, the Chinese counterpart, having put together his mental map, now wants to get down to the actual negotiation. When discussing mutual relationships with the Chinese, one cannot single out issues like the Line of Actual Control, the Tawang issue, or border trade. India has to be prepared to discuss all issues simultaneously, even if they appear to be in a haphazard manner.
Jiejian (Thrift): Not only are the Chinese very practical, but also very thrifty. Chinese negotiators will pad their offers, i.e., build in enormous cushions, and then make concessions with great reluctance after lengthy discussions. Like the Japanese, the Chinese are also adept at using silence as a negotiating tactic. Westerners often misinterpret prolonged silences as rejection and intercede with further concessions. Usually, a protracted silence means that the offer is being given serious thought and considered seriously; it does not mean it is being rejected outright. The Chinese thus use silence and patience as weapons against impatience and volubility.
Mianzi (Face): This issue is equally important in Japan and China. Embarrassment or loss of composure, even unintentionally, can be disastrous for any negotiation. Loss of face has even greater negative connotations than loss of dignity or prestige. Mianzi defines a person’s social worth; it can go up or down and is a reflection of his wealth, position, status, intelligence, connections, etc.
Chiku Nailao (Endurance, Relentlessness): The Chinese worldwide are renowned for their work ethic. Hard work rather than talent is valued as the key to success. This diligence is also reflected in the negotiating table. The Chinese side would have worked extremely hard to do their homework correctly. They shall be better prepared with their data and information than their counterparts. They shall also expect and be prepared for longer bargaining sessions. They are ready to test the stamina of their counterparts and shall attempt to wear them down.
Three tactics are recommended for handling this situation and demonstrating your Chiku Nailao: 1) Do not try to show yourself as being very clever; 2) outdo the Chinese in endurance by going to great lengths in your research and in educating your counterparts; and 3) patience is also imperative. The Chinese are skilled in using delay as a persuasive tactic. This works rather well when talking to democracies where political leaders are pressured to exhibit results of international diplomacy and negotiations to their electorates.
Finally, though one should have an advance list of the concessions one is prepared to make during the negotiations, these cards should not be laid on the negotiating table right at the start but rather played close to the chest and only reluctantly played after hard, patient, relentless bargaining. Each concession should be carefully reconsidered before being granted to examine its political, economic, social, and strategic implications in decades to come. We have seen so many concessions being “magnanimously” thrown away by India’s political leaders in the last half a century without extracting even a drop of mileage from them. On the contrary, many a seed of our strategic loss has been sown by these large-hearted but short-sighted vainglorious gestures.