Chinese Negotiating Style:

Commercial Approaches
and Cultural Principles
Written by Lucian W. Pye
Presentation by Lisa DeMello

Point of This Book

1. Minimize future misunderstandings
in Chinese commercial negotiations
2. Provide guidance for governmentto-government negotiations

Summary
1. Practice patience
2. Accept as normal, prolonged
periods of no movement
3. Practice control against
exaggerated expectations
4. Expect the Chinese will try to
influence by shaming

Summary (cont.)
5. Resist temptation to believe that
difficulties may be caused by ones
own mistakes
6. Try to understand Chinese cultural
traits, but dont believe that you, as
a foreigner, can practice them
better than the Chinese.

Sources of Difficulties

General Difficulties are:

Problems that come from new relationships, and
lack of experience on both sides
Capitalist vs. Socialist economy
Conflicting cultural characteristics

Difficulties (cont.)

Cultural Factors are:

Chinese culture shuns legal considerations, and
instead favor ethical and moral principles.
The Chinese do not separate business from
politics.

Ambience of Negotiations

The Home Court Advantage:

As hosts, the Chinese are in a position to control
both the agenda and pace of negotiations.
With this the Chinese gain the advantage of
surprise and uncertainty in agenda
arrangements.
These situations tend to create anxiety and
awkwardness in negotiation opponents.

Negotiations (cont.)

When Friendship Clashes with the

Desire For the Best:
The Chinese view that all successful
negotiations should include: mutual trust, respect
and friendship.
Chinese dwell of the subject of friendship and its
reciprocity is a prerequisite for doing business in
China.
The search for only the best conflicts with
friendship, and usually wins out.

Opening Moves

You Show Your Hand First:

In Chinese negotiating, they insist that the other
party reveal its interests while the Chinese mask
their interests and priorities.
The first step is a description by the American
company of its entire line of products and
services, and how they may be a value for the
other parties goals.

Opening Moves (cont.)

Ambiguity About Letters of Intent

The Chinese seek agreement on general
principles and often takes form of signing a letter
of intent.
The future importance of these letters are
affected by the Chinese attitudes toward publicity
about agreements with foreign companies.
Announcements of negotiating success may
influence investors and reassure top
management.

The Negotiation Session

Exploiting the Faults of the Other

Party
Most Chinese are raised and taught through
negative reinforcement or shaming.
It is a standard tactic to make use of any
liabilities, mistakes and misstatements of the
opposing side.
They feel that it strengthens their position by
superiority.

The Negotiation Session (cont.)

In Horse Trading There is Always a

Loser:
The Chinese are highly suspicious of being
outsmarted.
They are convinced that in any situation there
must be a winner and a loser.
Even when both are benefiting, one will benefit
more, so there is still a loser.

Emotions in Negotiations

Blending of Xenophobia and Xenophilia:

Xenophobia are deep feelings of distrust and
distaste for most things foreign.
Xenophilia is the alluring attraction of the
industrialized world, particularly foreign
technologies.
The right balance can be difficult to achieve.
The best solution is to be sensitive to the problem
and not be surprised by changes in attitude/mood.

Emotions (cont.)

Face and Guanxi:

The heavy use of shame is used as social

control:
The Chinese are sensitive about losing face
They establish friendships, and use these bonds
to make demands
The Chinese and Americans view sincerity
differently:
In China: sincerity = etiquette, polite
In America: sincerity = honesty

In Conclusion

1. The Chinese need time to digest all

information
2. They have a long-range view and are
less in a hurry to make decisions
3. The Chinese distrust fast talkers who
want to make quick deals

4.

Know Chinese cultural

differences, but be yourself

Recommendation
While this book is not always politically
correct, it does provide useful
guidance for conducting negotiations
in diverse cultures.
Just over 100 pages
Easy to read and follow in an outline
format

The End
Questions:
??????????????????????