Negotiating In China: Jack’s 10 Rules For Success
Based on 25 years of experience negotiating deals in China, Jack describes his “10 Rules For Success” in this podcast, referencing relevant aspects of the current trade negotiations between China and the United States.
***Excerpt:
Jack’s 10 Rules
1. Manage your own and your boss’s expectations.
2. Have a negotiating strategy— your counterpart will.
3. Understand that negotiating in China is a team sport.
4. Assemble a capable Chinese team and enlist the support of third parties, most importantly the government.
5. Remember that in China, a yuan is a buck.
6. Leave your ego at home.
7. Patience is a virtue in China; learn to listen more and speak less.
8. Don’t set artificial deadlines; control your emotions.
9. Be fair, reasonable and diplomatic.
10. Nothing succeeds like indifference.
***
EPISODE TRANSCRIPT
Doug: Jack, with all the talk of the trade war negotiations, you must have a special insight into what some of these negotiators are going through negotiating with the Chinese party. Do you have any comments about that?
Jack: Tsinghua University, one of China’s leading universities, like many leading universities, run executive programs where they bring executives in from various companies and give them a crash course on doing business in China. I’ve been asked by Tsinghua to speak at programs for companies like BMW and Citibank. In a program for Citibank several years ago, they specifically wanted to know the keys to success for negotiating in China. In preparation for the class, I came up with my 10 rules, which I then went over with the class. It went over so well that I put the bullet points on a little plastic card. So, when I speak to university groups and executive groups today, I usually pass it out as a reminder of what they might think about if they are ever in a situation where they have to negotiate in the country.
Doug: Great. Well let’s go through those. The first one, it says: “Manage your own and your boss’s expectations.” What do you mean by that?
Jack: Anyone that comes to China for the first time, will be surprised at how well their meetings seem to go. But, what you need to keep in mind is that the Chinese don’t like to lose face, and they don’t like you to lose face. You’ve traveled all this way to their country to have a meeting, so they’re going to treat you very well, and they’re going to say a lot of very nice things. And, if you happen to come over with your boss, they’re going to treat him royally, and they’re going to have great big banquets and dinners and talk about mutual cooperation, mutual benefit and win-win situations.
A common reaction after a week of meetings is: “Wow, this is a lot easier than I thought. It seems like they really want to work with us. They’re saying all the right things.” Meanwhile, your boss says: “Geez Jack, you’ve got a really easy job negotiating this deal.” And then, when you actually get into the negotiations, it’s tough and you find that it’s different from what they said in the beginning. It’s not that they were not sincere, it’s just that they were putting the best face on things.
If you look at the trade war negotiations, every meeting between President Trump and President Xi is a love fest. President Trump always talks about how President Xi is a great friend, and President Xi always says the same thing. To the Chinese, the relationship with the United States is very important. So you have the same dynamic with the two countries in these trade war negotiations. I’m sure that the temperature in those negotiating rooms has been a lot different. And, President Trump’s probably wondering why his team is taking so long to get this deal done.
It’s the same thing with every CEO. The point I want to make here is that you need to be mindful of this. You need to talk to your boss and manage his or her expectations, and you need to manage your own expectations. Don’t get lulled into a sense of complacency thinking it is going to be a cakewalk.
Doug: And know that love fest and expect it.
Jack: Right.
Doug: Number Two: “Have a negotiation strategy. Your counterpart certainly will.”
Jack:The Chinese are known for developing strategies and they’re going to have a strategy. So you have to have a strategy going into the negotiations—you have to know where you want to end up and how you’re going to get there. In the current negotiations between China and United States, I would have to be pretty critical of the US negotiating team for the strategy that they have employed.
Anyone that looked at this when it first started, knew that the thorniest part of the negotiations was going to be in the area of intellectual property—how do you manage that process? How do you agree on something, and then ensure that the other side lives up to that agreement? So everyone knew that was going to be the tough issue.
And there are a lot of different ways you could have addressed it. The way that the US side unfortunately chose to address it was in a very legalistic, lawyerly way, which never really works in China. They thought: “Okay, let’s get these IP protections written into Chinese law.” That sounds great. And to a company doing business in the United States, a very litigious society, that’s a good solution. In China, that kind of approach never works. There are a lot of laws on the books in China, but the real trick is in enforcing those laws. I really question whether, of all the different ways the US side could have chosen to negotiate the deal to get those protections, I question whether that was the right one. Then on top of all that, this approach touches a sensitive nerve in China—a strong reaction to any type of foreign interference in their country. I would have to say that the US side didn’t have as great a strategy going into the negotiations as maybe they should have.
Doug: So the third rule is: “Understand that negotiating in China is a team sport.”
Jack: Yes, there are a couple of aspects to that. One is that the Chinese negotiate as a team, and just like they have a strategy, different members of the team play different roles. This includes when you go out to the banquet afterwards, they will have a designated drinker and that person’s job is to basically toast every foreigner at least two or three times. Everyone has a role. And of course, the other element to make sure you know who is making the final decision. I hope the US team would have recognized that probably the only one making the final decision is President Xi. So, whatever a negotiator agreed to in those negotiations, it wasn’t going to really happen unless President Xi agreed with it.
In order to negotiate against a side that looks at negotiations as a team sport, you need to also put together your team, including having people on your team who can provide a very valuable back channel to the other side. Discussions don’t only take place at the negotiating table, they also take place behind the scenes by somebody that maybe has an element of trust with the Chinese and can try to bridge any gaps that may exist.
The ambassador to China, Terry Branstad, hosted President Xi in his home state of Iowa back in the 1980’s when President Xi was a mid-level executive in a province that was interested in an agricultural cooperation with the United States. In a very real sense, President Xi and Terry Branstad are old friends. He’s the kind of person that could act as a very good back channel. I hope they’ve been using him. Even more effective would be someone in China who’s actually living there and is a Chinese who has a certain level of trust with the Chinese leadership. That would be the kind of person that would be valuable.
When we negotiated in China, we had people in the local government that we had built a relationship with. We had others in China that we had close relationships with, and in many cases, acted as back channels for us. We put together a whole team, not just the people at the negotiating table, but the people that were working behind the scenes.
Doug: So in this case, the Trump/Xi negotiations, the decision maker was clear, but in your experience, that’s not always the case. You have to sometimes work a little bit to figure out who that decision maker is.
Jack: That’s correct. It’s not always obvious. Generally, if someone is the General Manager, which in United States parlance is the CEO, you would think: “Okay, that person has the ability to make the final decision.” But, we all know that the Chairman, the Party Secretary are other positions where final decision making may rest in China. It may or may not be the General Manager, but it’s not always completely clear who actually is in that position. One of the most important things to do is to try to identify who that person is as soon as you can.
Doug: The fourth point is to: “Assemble a capable Chinese team and enlist the support of third parties, most importantly, the government.” Obviously, this doesn’t apply as much to the Trump/Xi negotiations when you’re negotiating government to government, but give us a little bit of your experience with that.
Jack: Well, again, this is using people that have a level of trust with the opposite side. Somebody that has had a relationship or has a relationship with the other side; somebody that’s worked with them; somebody that knows them well. In China, trust is a very, very big item. Trust is important in any country, but particularly so in China. If you can find someone who has worked with your counterpart for a long time and has a level of trust, then that person can be an effective back channel in terms of helping to bridge any of the gaps that may arise. Again, I mentioned that Ambassador Branstad would be the kind of person that could act very effectively in this role.
Doug: Number Five is: “Remember that in China a yuan is a buck.”
Jack: This rule refers back to the chapter in my book that deals with China’s different cost perspective— the fact that, when an American goes to China and sees a RMB 100 bill, what they really see is about 15 bucks, because they divide by 6.7, 6.8 or whatever the current exchange rate is. However, when a Chinese looks at that same RMB 100 bill, they see something that looks more like a $100—a fundamentally different cost perspective. I don’t know whether this rule applies in this case or not. We’re talking about billions of dollars of exports and imports.
But, in the context of a company, a lot of times many differences can arise because of this fundamentally different cost perspective. Oftentimes, the US side will think that the Chinese are just being short sighted because they’re not willing to pay for a license, or for technology, or maybe a piece of equipment that the US side is recommending and that is made outside of China and therefore more expensive. The Chinese, on the other hand, may want to use Chinese-made equipment because it is cheaper. Those kinds of discussions, which can cause real differences in the negotiations, are not because the Chinese are not thinking long-term, or that they’re not thinking about it the right way. It’s not that they’re being penny wise and pound foolish, it’s because they look at money differently.
The foreign general manager for one of the companies that we helped get set up in China insisted on putting the air conditioner for the plant on the roof, because that’s where they put it in the United States—that way it’s out of sight, out of mind, it’s up on the roof. But, the Chinese manager, the person in charge of day to day operations insisted that it be located on the ground because it was cheaper.
I’ll never forget that. It was a stark reminder that things we take for granted in a place like the United States, really look very differently from the viewpoint of a Chinese. I always caution people to keep that in mind. The Chinese look at money fundamentally differently, and when you have these differences on dollar or RMB issues, just keep in mind that there is a very different cost perspective at work.
Doug: Number Six is: “Leave your ego at home.” What do you mean by that?
Jack: The point I always make is that all 1.3 billion people in China are actually from Missouri, which is known as the “Show Me State.” Since China opened up and foreign companies began coming to China, it was very common for foreign executives to come to China and brag about all the things they did, or have done, in the United States or Europe. The Chinese refer a lot of times to people like that as big talkers—they talk a lot. Over the years, the Chinese have seen many foreigners come to the country, talk about what they’ve done in other countries, talk about their grand plan for China, and then the Chinese never see them again. Or the foreign company or foreign individual comes to China, and at the first sign of trouble, basically abandons their plans.
In my experience, the Chinese basically sit back and watch. They hear what you say, and then they watch what you do. Chinese are very understated. They don’t talk about themselves a lot, so when foreigners do it, they become skeptics. Americans are particularly guilty of this and looked at as being cowboys and a bit too arrogant. This is something we need to watch for in negotiations. You want to keep your ego understated.
Doug: Number Seven: “Patience is a virtue in China. Learn to listen more and speak less.”
Jack: I was being interviewed for a radio show and they were asking me how I make decisions in China. I said: “What I’ve learned is that just when I think I understand what’s going on, I don’t do anything. I sleep on it, come back the next day and listen some more to see whether or not my initial conclusion was the right one.” The host said, “Oh, the cold shower approach to decision making.” I said, “Yes. The cold shower approach.”
One incident I will never forget—we were having a partner issue with one of our companies—with one of our Chinese partners—- and it was a very serious problem. I took three of my most reliable, most trusted Chinese managers with me, and we sat down with the Chinese party and they spent an hour discussing it in Chinese, going back and forth about the issue. After about an hour, I said “Okay, let’s take a break.” And then went outside the room with my three colleagues and asked, “Okay, what’s this all about?” I got three completely different answers to my question. So, here are three Chinese, they’re speaking their native language, and yet all three of them come away with three different opinions.
Again, that reinforces the idea that what you’re hearing may not really be what the other side means, or what they’re really saying. You need to take your time, be patient. Don’t be in a rush, and just when you think you understand, you are better off just taking a deep breath and thinking about it some more.
Doug: Number Eight is: “Don’t set artificial deadlines. Control your emotions.”
Jack: On television or in the movies, you often see the negotiator pounding the table, getting up in a huff and leaving the room. Well, that doesn’t really go over so well in China. The Chinese value stability in a relationship. They don’t like overt displays of aggressiveness. Therefore, it’s best to keep your emotions under control. Your counterpart in China will respect you a lot more and they’ll be much more comfortable dealing with you.
Setting deadlines can sometimes work, but I find, more often than not, that it’s an artificial deadline that you’re worried about, and the Chinese know that. The typical example is a company that comes to China and wants to negotiate their deal in a week. They come over on Sunday night, so they’re jet lagged Monday morning when negotiations start. They really don’t get into it until Tuesday. On Wednesday, they get a call from their boss who asks, “How’s it going?” Well, they haven’t really done much yet, and everyone knows that they’re leaving on Friday at 5:00 to go back to the United States.
That’s an artificial deadline. My experience is that when you have a situation like that, none of the important issues will come up until 4:00 on Friday when it’s impossible to solve them in a satisfactory way. Because you want to go back and report good news to your boss, you may agree to things that you wouldn’t have agreed to if you had just been a little more patient, taken your time and not had an artificial deadline.
Doug: I don’t know. That sounds to me like an argument to create the artificial deadline to get those issues to the table, and then just plan on blowing through your artificial deadline. Maybe have one because it doesn’t sound like things will happen if you don’t have it.
Jack: Right.
Doug: Nine: “Be fair and reasonable and diplomatic.”
Jack: People say all the time that they want to create a win-win situation. That’s what the Chinese, and your Chinese counterpart is going to want. You see this in the negotiations between China and the United States. The US is now being criticized in the China press because of what’s happened with the breakdown in negotiations. The US is being accused of being arrogant, one-sided and unilateral imposing their will. These are the kind of themes that really drive up the emotions in China.
By all means, what you want to do is to always come across as fair, as reasonable and really thinking about the other side’s perspective. I think that would apply in almost any country, but it’s certainly very important in China.
Doug: And Number 10, I’ve heard this before: “Nothing succeeds like indifference.”
Jack: This is the one that I always get the question on. When we pass out these cards to a visiting class, you can see them looking at it. I guarantee you that a hand will go up, or a couple of hands will go up. “What do you mean by Number 10?” It’s true in business or in your love life— if you act too interested, oftentimes the other side resists……
Doug: Something must be wrong……
Jack: Something must be wrong, right. I find that in these negotiations, nothing succeeds like indifference. If your Chinese counterpart knows that you desperately want to get a deal done, or that you desperately have to get a deal done, or that you’re really anxious to come into the China market, whatever they were thinking going into the negotiations, they are going to up the ante.
But, if you go in with the attitude: “Look, I’m here. If I don’t get a deal done this week, that’s fine. I’ll go back to the United States. I’ll be back in another month. And by the way, I may go and see a couple of your key competitors and see what their attitude is.” If you convey the attitude that: “Yes, I’d like to get a deal. I’d like to get it done, but the sun’s not going to rise and fall based on whether I get this deal done or not.” Of all the ten rules, I think this one is probably one of the most important.
Doug: Well, I think Trump and Xi got that one, but maybe they could take a few pointers from your other lessons.
Jack: Trump’s a master at this. I mean, he says, “This is great. We put 25% tariffs on $500 billion and we’ve got $100 billion coming into the US treasury.” I mean, that’s the ultimate in being indifferent as to whether a deal gets done. We’ll see. We’ll see if that tactic works.
Based on 25 years of experience negotiating deals in China, Jack describes his “10 Rules For Success” in this podcast, referencing relevant aspects of the current trade negotiations between China and the United States.
***Excerpt:
Jack’s 10 Rules
1. Manage your own and your boss’s expectations.
2. Have a negotiating strategy— your counterpart will.
3. Understand that negotiating in China is a team sport.
4. Assemble a capable Chinese team and enlist the support of third parties, most importantly the government.
5. Remember that in China, a yuan is a buck.
6. Leave your ego at home.
7. Patience is a virtue in China; learn to listen more and speak less.
8. Don’t set artificial deadlines; control your emotions.
9. Be fair, reasonable and diplomatic.
10. Nothing succeeds like indifference.
***
EPISODE TRANSCRIPT
Doug: Jack, with all the talk of the trade war negotiations, you must have a special insight into what some of these negotiators are going through negotiating with the Chinese party. Do you have any comments about that?
Jack: Tsinghua University, one of China’s leading universities, like many leading universities, run executive programs where they bring executives in from various companies and give them a crash course on doing business in China. I’ve been asked by Tsinghua to speak at programs for companies like BMW and Citibank. In a program for Citibank several years ago, they specifically wanted to know the keys to success for negotiating in China. In preparation for the class, I came up with my 10 rules, which I then went over with the class. It went over so well that I put the bullet points on a little plastic card. So, when I speak to university groups and executive groups today, I usually pass it out as a reminder of what they might think about if they are ever in a situation where they have to negotiate in the country.
Doug: Great. Well let’s go through those. The first one, it says: “Manage your own and your boss’s expectations.” What do you mean by that?
Jack: Anyone that comes to China for the first time, will be surprised at how well their meetings seem to go. But, what you need to keep in mind is that the Chinese don’t like to lose face, and they don’t like you to lose face. You’ve traveled all this way to their country to have a meeting, so they’re going to treat you very well, and they’re going to say a lot of very nice things. And, if you happen to come over with your boss, they’re going to treat him royally, and they’re going to have great big banquets and dinners and talk about mutual cooperation, mutual benefit and win-win situations.
A common reaction after a week of meetings is: “Wow, this is a lot easier than I thought. It seems like they really want to work with us. They’re saying all the right things.” Meanwhile, your boss says: “Geez Jack, you’ve got a really easy job negotiating this deal.” And then, when you actually get into the negotiations, it’s tough and you find that it’s different from what they said in the beginning. It’s not that they were not sincere, it’s just that they were putting the best face on things.
If you look at the trade war negotiations, every meeting between President Trump and President Xi is a love fest. President Trump always talks about how President Xi is a great friend, and President Xi always says the same thing. To the Chinese, the relationship with the United States is very important. So you have the same dynamic with the two countries in these trade war negotiations. I’m sure that the temperature in those negotiating rooms has been a lot different. And, President Trump’s probably wondering why his team is taking so long to get this deal done.
It’s the same thing with every CEO. The point I want to make here is that you need to be mindful of this. You need to talk to your boss and manage his or her expectations, and you need to manage your own expectations. Don’t get lulled into a sense of complacency thinking it is going to be a cakewalk.
Doug: And know that love fest and expect it.
Jack: Right.
Doug: Number Two: “Have a negotiation strategy. Your counterpart certainly will.”
Jack:The Chinese are known for developing strategies and they’re going to have a strategy. So you have to have a strategy going into the negotiations—you have to know where you want to end up and how you’re going to get there. In the current negotiations between China and United States, I would have to be pretty critical of the US negotiating team for the strategy that they have employed.
Anyone that looked at this when it first started, knew that the thorniest part of the negotiations was going to be in the area of intellectual property—how do you manage that process? How do you agree on something, and then ensure that the other side lives up to that agreement? So everyone knew that was going to be the tough issue.
And there are a lot of different ways you could have addressed it. The way that the US side unfortunately chose to address it was in a very legalistic, lawyerly way, which never really works in China. They thought: “Okay, let’s get these IP protections written into Chinese law.” That sounds great. And to a company doing business in the United States, a very litigious society, that’s a good solution. In China, that kind of approach never works. There are a lot of laws on the books in China, but the real trick is in enforcing those laws. I really question whether, of all the different ways the US side could have chosen to negotiate the deal to get those protections, I question whether that was the right one. Then on top of all that, this approach touches a sensitive nerve in China—a strong reaction to any type of foreign interference in their country. I would have to say that the US side didn’t have as great a strategy going into the negotiations as maybe they should have.
Doug: So the third rule is: “Understand that negotiating in China is a team sport.”
Jack: Yes, there are a couple of aspects to that. One is that the Chinese negotiate as a team, and just like they have a strategy, different members of the team play different roles. This includes when you go out to the banquet afterwards, they will have a designated drinker and that person’s job is to basically toast every foreigner at least two or three times. Everyone has a role. And of course, the other element to make sure you know who is making the final decision. I hope the US team would have recognized that probably the only one making the final decision is President Xi. So, whatever a negotiator agreed to in those negotiations, it wasn’t going to really happen unless President Xi agreed with it.
In order to negotiate against a side that looks at negotiations as a team sport, you need to also put together your team, including having people on your team who can provide a very valuable back channel to the other side. Discussions don’t only take place at the negotiating table, they also take place behind the scenes by somebody that maybe has an element of trust with the Chinese and can try to bridge any gaps that may exist.
The ambassador to China, Terry Branstad, hosted President Xi in his home state of Iowa back in the 1980’s when President Xi was a mid-level executive in a province that was interested in an agricultural cooperation with the United States. In a very real sense, President Xi and Terry Branstad are old friends. He’s the kind of person that could act as a very good back channel. I hope they’ve been using him. Even more effective would be someone in China who’s actually living there and is a Chinese who has a certain level of trust with the Chinese leadership. That would be the kind of person that would be valuable.
When we negotiated in China, we had people in the local government that we had built a relationship with. We had others in China that we had close relationships with, and in many cases, acted as back channels for us. We put together a whole team, not just the people at the negotiating table, but the people that were working behind the scenes.
Doug: So in this case, the Trump/Xi negotiations, the decision maker was clear, but in your experience, that’s not always the case. You have to sometimes work a little bit to figure out who that decision maker is.
Jack: That’s correct. It’s not always obvious. Generally, if someone is the General Manager, which in United States parlance is the CEO, you would think: “Okay, that person has the ability to make the final decision.” But, we all know that the Chairman, the Party Secretary are other positions where final decision making may rest in China. It may or may not be the General Manager, but it’s not always completely clear who actually is in that position. One of the most important things to do is to try to identify who that person is as soon as you can.
Doug: The fourth point is to: “Assemble a capable Chinese team and enlist the support of third parties, most importantly, the government.” Obviously, this doesn’t apply as much to the Trump/Xi negotiations when you’re negotiating government to government, but give us a little bit of your experience with that.
Jack: Well, again, this is using people that have a level of trust with the opposite side. Somebody that has had a relationship or has a relationship with the other side; somebody that’s worked with them; somebody that knows them well. In China, trust is a very, very big item. Trust is important in any country, but particularly so in China. If you can find someone who has worked with your counterpart for a long time and has a level of trust, then that person can be an effective back channel in terms of helping to bridge any of the gaps that may arise. Again, I mentioned that Ambassador Branstad would be the kind of person that could act very effectively in this role.
Doug: Number Five is: “Remember that in China a yuan is a buck.”
Jack: This rule refers back to the chapter in my book that deals with China’s different cost perspective— the fact that, when an American goes to China and sees a RMB 100 bill, what they really see is about 15 bucks, because they divide by 6.7, 6.8 or whatever the current exchange rate is. However, when a Chinese looks at that same RMB 100 bill, they see something that looks more like a $100—a fundamentally different cost perspective. I don’t know whether this rule applies in this case or not. We’re talking about billions of dollars of exports and imports.
But, in the context of a company, a lot of times many differences can arise because of this fundamentally different cost perspective. Oftentimes, the US side will think that the Chinese are just being short sighted because they’re not willing to pay for a license, or for technology, or maybe a piece of equipment that the US side is recommending and that is made outside of China and therefore more expensive. The Chinese, on the other hand, may want to use Chinese-made equipment because it is cheaper. Those kinds of discussions, which can cause real differences in the negotiations, are not because the Chinese are not thinking long-term, or that they’re not thinking about it the right way. It’s not that they’re being penny wise and pound foolish, it’s because they look at money differently.
The foreign general manager for one of the companies that we helped get set up in China insisted on putting the air conditioner for the plant on the roof, because that’s where they put it in the United States—that way it’s out of sight, out of mind, it’s up on the roof. But, the Chinese manager, the person in charge of day to day operations insisted that it be located on the ground because it was cheaper.
I’ll never forget that. It was a stark reminder that things we take for granted in a place like the United States, really look very differently from the viewpoint of a Chinese. I always caution people to keep that in mind. The Chinese look at money fundamentally differently, and when you have these differences on dollar or RMB issues, just keep in mind that there is a very different cost perspective at work.
Doug: Number Six is: “Leave your ego at home.” What do you mean by that?
Jack: The point I always make is that all 1.3 billion people in China are actually from Missouri, which is known as the “Show Me State.” Since China opened up and foreign companies began coming to China, it was very common for foreign executives to come to China and brag about all the things they did, or have done, in the United States or Europe. The Chinese refer a lot of times to people like that as big talkers—they talk a lot. Over the years, the Chinese have seen many foreigners come to the country, talk about what they’ve done in other countries, talk about their grand plan for China, and then the Chinese never see them again. Or the foreign company or foreign individual comes to China, and at the first sign of trouble, basically abandons their plans.
In my experience, the Chinese basically sit back and watch. They hear what you say, and then they watch what you do. Chinese are very understated. They don’t talk about themselves a lot, so when foreigners do it, they become skeptics. Americans are particularly guilty of this and looked at as being cowboys and a bit too arrogant. This is something we need to watch for in negotiations. You want to keep your ego understated.
Doug: Number Seven: “Patience is a virtue in China. Learn to listen more and speak less.”
Jack: I was being interviewed for a radio show and they were asking me how I make decisions in China. I said: “What I’ve learned is that just when I think I understand what’s going on, I don’t do anything. I sleep on it, come back the next day and listen some more to see whether or not my initial conclusion was the right one.” The host said, “Oh, the cold shower approach to decision making.” I said, “Yes. The cold shower approach.”
One incident I will never forget—we were having a partner issue with one of our companies—with one of our Chinese partners—- and it was a very serious problem. I took three of my most reliable, most trusted Chinese managers with me, and we sat down with the Chinese party and they spent an hour discussing it in Chinese, going back and forth about the issue. After about an hour, I said “Okay, let’s take a break.” And then went outside the room with my three colleagues and asked, “Okay, what’s this all about?” I got three completely different answers to my question. So, here are three Chinese, they’re speaking their native language, and yet all three of them come away with three different opinions.
Again, that reinforces the idea that what you’re hearing may not really be what the other side means, or what they’re really saying. You need to take your time, be patient. Don’t be in a rush, and just when you think you understand, you are better off just taking a deep breath and thinking about it some more.
Doug: Number Eight is: “Don’t set artificial deadlines. Control your emotions.”
Jack: On television or in the movies, you often see the negotiator pounding the table, getting up in a huff and leaving the room. Well, that doesn’t really go over so well in China. The Chinese value stability in a relationship. They don’t like overt displays of aggressiveness. Therefore, it’s best to keep your emotions under control. Your counterpart in China will respect you a lot more and they’ll be much more comfortable dealing with you.
Setting deadlines can sometimes work, but I find, more often than not, that it’s an artificial deadline that you’re worried about, and the Chinese know that. The typical example is a company that comes to China and wants to negotiate their deal in a week. They come over on Sunday night, so they’re jet lagged Monday morning when negotiations start. They really don’t get into it until Tuesday. On Wednesday, they get a call from their boss who asks, “How’s it going?” Well, they haven’t really done much yet, and everyone knows that they’re leaving on Friday at 5:00 to go back to the United States.
That’s an artificial deadline. My experience is that when you have a situation like that, none of the important issues will come up until 4:00 on Friday when it’s impossible to solve them in a satisfactory way. Because you want to go back and report good news to your boss, you may agree to things that you wouldn’t have agreed to if you had just been a little more patient, taken your time and not had an artificial deadline.
Doug: I don’t know. That sounds to me like an argument to create the artificial deadline to get those issues to the table, and then just plan on blowing through your artificial deadline. Maybe have one because it doesn’t sound like things will happen if you don’t have it.
Jack: Right.
Doug: Nine: “Be fair and reasonable and diplomatic.”
Jack: People say all the time that they want to create a win-win situation. That’s what the Chinese, and your Chinese counterpart is going to want. You see this in the negotiations between China and the United States. The US is now being criticized in the China press because of what’s happened with the breakdown in negotiations. The US is being accused of being arrogant, one-sided and unilateral imposing their will. These are the kind of themes that really drive up the emotions in China.
By all means, what you want to do is to always come across as fair, as reasonable and really thinking about the other side’s perspective. I think that would apply in almost any country, but it’s certainly very important in China.
Doug: And Number 10, I’ve heard this before: “Nothing succeeds like indifference.”
Jack: This is the one that I always get the question on. When we pass out these cards to a visiting class, you can see them looking at it. I guarantee you that a hand will go up, or a couple of hands will go up. “What do you mean by Number 10?” It’s true in business or in your love life— if you act too interested, oftentimes the other side resists……
Doug: Something must be wrong……
Jack: Something must be wrong, right. I find that in these negotiations, nothing succeeds like indifference. If your Chinese counterpart knows that you desperately want to get a deal done, or that you desperately have to get a deal done, or that you’re really anxious to come into the China market, whatever they were thinking going into the negotiations, they are going to up the ante.
But, if you go in with the attitude: “Look, I’m here. If I don’t get a deal done this week, that’s fine. I’ll go back to the United States. I’ll be back in another month. And by the way, I may go and see a couple of your key competitors and see what their attitude is.” If you convey the attitude that: “Yes, I’d like to get a deal. I’d like to get it done, but the sun’s not going to rise and fall based on whether I get this deal done or not.” Of all the ten rules, I think this one is probably one of the most important.
Doug: Well, I think Trump and Xi got that one, but maybe they could take a few pointers from your other lessons.
Jack: Trump’s a master at this. I mean, he says, “This is great. We put 25% tariffs on $500 billion and we’ve got $100 billion coming into the US treasury.” I mean, that’s the ultimate in being indifferent as to whether a deal gets done. We’ll see. We’ll see if that tactic works.
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