Like at the bazaar?
"At first, everything proceeded very correctly and formally. The longer the negotiations went on,
and the deeper it went into the details, the more it felt like being at a bazaar. People literally haggled over details for hours on end." That was the experience of the chief negotiator for a German automotive supplier.
Chinese negotiators have immense stamina when it comes to clarifying details that are important to them. They expect the same from their negotiating partners. The phases of negotiation in which concessions are made take a long time. Remain as tenacious as your counterpart, but at the same time maintain a positive atmosphere. Concessions should always be discussed in terms of balance and win-win situations. Don't forget reciprocity ("if..., then...") as a basis and link a demand from the other side with a demand of your own.
Work in Progress: The Contract
In China, it is quite common to modify agreements once they have been made in the next round of negotiations. There is not always a sense of "contractual consistency" or an obligation to adhere to agreements that have been concluded. For this reason, all negotiation results should be recorded in detail in writing, regardless of whether the agreement has been reached in part or in full. Verbal commitments usually do not last long.
At the start of negotiations, it is advisable to clarify the powers of the other party. Are they authorized to conclude a deal, or should they first gather information and test the waters so that another employee can conclude a binding agreement in the next round of negotiations? Since China is a socialist country, trade is usually conducted by state-owned enterprises or government agencies. With a few exceptions, such as rental agreements, the drafting of contracts is relatively free. Certain regulations are specified, but experience has shown that these can be fulfilled with "pro forma content." For domestic transactions, it should be borne in mind that a corresponding contract law has only been in existence for a few years and that the issuance of licenses, which are required for many transactions, can take a long time.
Complex legal situation
In China, lawyers play an important role for foreign business partners. Lawyers serve not only as legal advisors, but often also as interpreters. When considering hiring a lawyer, the question arises as to whether to choose a Chinese lawyer or a foreign lawyer working for an international firm in China. Whichever option you choose, there are still pitfalls: on the one hand, a Chinese lawyer loses their license to practice law in China if they join an international law firm in China.
On the other hand, a lawyer licensed abroad is not authorized to provide expert opinions on Chinese law. The best choice is a lawyer from an international law firm who understands the Chinese mentality and is not dependent on the government. International law firms often employ Chinese lawyers who have studied abroad. They are familiar with both Western and Chinese ways of thinking. Much of what is considered standard negotiating practice in Germany must be set down in writing in China. As mentioned, the Chinese treat contracts like laws: they are worded vaguely so that there is room for different interpretations. According to the Chinese view, this type of contract conclusion encompasses the "human side," and the "legalistic approach" of Western managers is often met with incomprehension.
When it comes to the Chinese sense of justice, choosing the right lawyer pays off just as much as imagination in marketing and negotiation. Example: When we talk about brand piracy, the Chinese tend to focus more on the attractiveness of the product, and any imitations are seen as a mark of distinction for the original.
This situation can be overcome, as the example of Coca Cola shows: before production began, the company launched a wide-ranging media campaign. It explained to citizens what a registered trademark is, what the Coca Cola brand stands for, that its purpose is to ensure quality, and that imitations are illegal and inferior. Such campaigns pay off: despite concrete trademark piracy in China, Coca Cola is very successfully positioned on the market there.
