I have some good news and some bad news.
Sticking to tradition, I’ll start with the bad news. You have lost at everything. Whether it is working, negotiating or doing business with the Chinese, you have lost at everything, by definition.
The good news is, I will help you win this war.
Why me?
Because it was I who took the risk of leaving everything behind with a less then mediocre command of Chinese and going to China with a one-way ticket and $300 in my pocket. I had nothing there: no friends, no place to live and no job. Moreover, everything I knew about the Chinese was limited to my university lectures. I had no other choice but to make arrangements with the Chinese in their language. And I did a good job.
I acquired all my knowledge, skills and capabilities in the field, rather than inside a comfortable office. And, by the way, I was speaking fluent Chinese within a month.
Why not them?
People who major in Chinese usually become translators, guides, teachers or FEA managers. None of them learn how to survive among the Chinese in combat mode. I do, however, respect all of the above mentioned occupations.
Numerous articles have been written on how to negotiate with the Chinese, but, weirdly enough, they all repeat one another and speak from a Westerner’s point of view. The Chinese are different. Completely. But not a single article gives us the actual picture. They mostly use general words and formulas, which do not work in practice. I learned this from firsthand experience, and more than once. For instance, not a single article will tell you a thing about the psychological age of the Chinese, or why, from a historical standpoint, their behavior seems so strange, inconsistent and unusual to us. Not a word. Not even a hint.
Negotiating with and thinking like the Chinese, reading their minds, doing business with them, choosing the right approach to working with them and making them play by my rules are the skills I acquired not at a university desk, but in real life. True, we learned a lot from our university lectures, but they never taught us how to apply this information in real life. So, I learned on my own. After graduation, I, like most of my schoolmates, had two main options: either finding a job as a translator or guide or purchasing agent, or going to China to continue studying. But I chose a third option. I simply went to China with no particular plan, to learn about the Chinese in their natural habitat.
It was only later that I enrolled in university in Beijing, having got to know the Chinese from the inside and having discovered them for what they really are. I studied for a year and I went to work with a good understanding of how to deal with the Chinese.
Many people who work with the Chinese often ask me, «Why do they act the way they do and what can we do about it?» I have often seen Western executives stall negotiations with their Chinese partners or agree to unfavorable terms (e.g. quality, deadlines, payments, etc.). When I hear such stories, I can’t help but wonder why it happens. Then again, some things that I find obvious are not as obvious to others.
I came up with this course after two incidents, which happened around the same time. These are the stories I would like to begin my course with, as they illustrate very well the essence of negotiating with the Dragon.
One of the stories happened to me and the other to a colleague of mine named Denis. We were doing business with two different Chinese companies, Leon and Electron respectively (all the names have been changed). We negotiated on different terms and ended up with different results: the price I was to pay was reduced from USD 7.15 to USD 6 and Denis’s was raised from USD 64 to USD 75.
The backstory goes like this. Leon charged me with USD 7.15 and refused point blank to go any lower. They said things like «we shall not discuss this any further», «we are incurring major losses», «we have raised the wage of our employees» and «production costs have grown», which are typical Chinese excuses when they want to close the deal. I believe many of you have come across such bargaining. And you probably agreed to the terms and the high prices.
Meanwhile, Electron charged Denis with USD 64 (he was buying a different product), sent an invoice and refused to lower the price making pretty much the same excuses.
Then the day arrived. We had both wanted a markdown on our respective products, but by the end of the day, we had two very different outcomes: I was to pay only USD 6 and Denis – USD 75.
Electron explained that the price increase came from the firm’s new management team that had «a new vision and policy» for the company.
Electron was able to pull this off, because:
1. Denis did not speak Chinese (negotiations were held in English);
2. Denis was unfamiliar with the Chinese mentality;
