Guanxi Master

Playing the Game – Understanding How It’s Done

This is the second of a two-part series exploring the Chinese use of Western philosophy as a basis for negotiation with the outside world. The first article detailed how Chinese utilize postmodernism to undermine the West’s position. The second part discusses practical applications for negotiation.

With an awesome reputation for getting a deal, the Chinese are globally acknowledged masters of negotiation. As our first article explained, much of their talent lies in identifying the other party’s values and priorities, and then using those same priorities to control the agenda. At a philosophic and political level, this means China effectively takes the language and values of Western postmodernism, and uses them to its advantage. At an individual level, a Chinese negotiator will identify something that the foreigner wants, and then use it, as it were, “against him.”

Negotiation is all about give and take. The Chinese brilliance, however, lies in linking seemingly unrelated issues so that it can get what it wants, but only give that which it is willing to give up. When asked to surrender a point they are unwilling to concede, they show great creativity in finding an alternative that their opponent wants just as badly. This is where their penchant for using their opponent’s own position comes in.

As we noted last week, this is the reason the West’s postmodernism makes it particularly susceptible. It is the same strategy that we have seen in Beijing’s dealings with Obama in the recent RMB appreciation tension. It is the approach used by Chinese businessmen in countless boardrooms across the world. We will explain the Chinese negotiation technique through each of these three scenarios, and it can be seen in four simple steps:

1) Identify the opponent’s expectations – and evaluate whether or not to submit. The first step is the Chinese to recognize what is actually being demanded. For example, the West expects Chinese values to be welcoming and all-encompassing, a concept which is completely unacceptable to the Chinese system. The US wanted Beijing to revalue its currency to help remedy trade deficit and local unemployment, while China was concerned about sustaining its own export market. You expect the manufacturer to provide a high-quality product quickly and at a good price, but he wants to make as much money as possible. In each of these situations, the Chinese are not willing to submit to the other parties’ expectations, so they go on to the next step.

2) Find the opponent’s personal priorities – even in unrelated areas. Philosophically, China can see the West’s cultural demand for pluralism and postmodernism. Beijing discovered that Obama had a high priority for support over the Iran issue. At a local level, the businessman will recognize that your priority is, say, for a fast turn-around. By watching and listening, Chinese recognize what their opponent “needs” and absolutely “must have.” This then becomes the opponent’s weakness.

3) Make the opponent’s personal priority “unachievable” – even if quite reasonable. This is where the Chinese negotiator excels, pushing negotiations to the end of the time frame, and then threatening the opponent’s real priority. The Chinese side will frequently deny perfectly reasonable concessions in order to use them as bargaining chips. Even things they would be inclined to agree with can be withheld in order to gain later concessions. Supporting the US in UN sanctions against Iran would cost China nothing, as well be in China’s commercial interests by ensuring regional stability. Nonetheless, when the US started demanding currency revaluation, China subtly threatened boycotting the US action, threatening one of Obama’s greatest priorities. In your discussions, the supplier will suggest that the quick delivery you seek is “impossible” due to factory constraints, supply chain considerations, insufficient staffing, or any other real or imagined problems.

4) Offer the opponent a way to achieve their personal priority – but at a price. The Chinese then make it possible for their opponent to get what he must have, but at the cost of its original expectations of the Chinese side. By using the terms of postmodernism, China gratifies the West’s expectation of conformity, while demanding acceptance and submission to its system of absolute values (a concept true postmodernism actually denies). Obama was able to get China’s UN support, but in return, he had to back down over currency revaluation demands. The local supplier will find a way to get you your product when you want it – but you will have to lower your quality requirements, include more local “partners”, or just pay more than you wanted to.

This is, of course, negotiation as it occurs every day, all around the world. It just turns out that the Chinese are particularly brilliant at it. Culturally, Westerners bargain much less than Chinese. These tactics, however, are practiced by everyone from Beijing cadres to Hangzhou street recycling collectors, and as a race, few can compare to the Chinese at identifying an opponent’s weak spot and exploiting it for profit.

When negotiating in China, the key is to recognize your opponent’s strategy. You must keep your cards close to your chest, to keep your opponent from identifying what you want. Don’t allow them to explore your priorities… and try the entire time to find out theirs. Don’t be afraid to draw seemingly irrelevant issues into the bargain. Be aware of how your opponent is using your values against you. Keep your eyes on your initial goal. And if you practise hard, remain disciplined, and play the game exceptionally well, you might one day negotiate with the best of them.