Like at the bazaar?

"At first, everything went very correctly and formally. The longer the negotiations

and the deeper it went into the details, the more you felt like you were at a bazaar. There were literally hours of haggling over details". This was the experience of the negotiator of a German automotive supplier.

Chinese negotiators have immense stamina to clarify detailed issues that are important to them. They expect the same from their negotiating partner. The negotiation phases in which concessions are granted take a long time. Remain as tough as your counterpart, but at the same time maintain a positive atmosphere. Concessions should always be discussed in terms of compensation and win-to-win. Do not forget reciprocity ("if..., then...") as a basis and combine a demand from the other side with a demand from your side.

Work in Progress: The Contract

It is quite common in China to modify once agreed stipulations in the next round of negotiations. There is not always a kind of "contract constancy" or an obligation to stick to concluded agreements. Therefore, all negotiation outcomes should be recorded in detail in writing, regardless of whether the agreement has been reached in part or in full. Oral commitments do not usually have a long life.

It is advisable to clarify the authority of the other side at the beginning of the negotiations. Is she authorised to conclude a deal or is it initially just to gather information and sound out the terrain so that in the next round of negotiations another staff member can conclude the agreement in a binding manner? Since China is a socialist country, trade is usually conducted through state-owned enterprises or government institutions. With a few exceptions, such as rental agreements, the drafting of contracts is relatively free. Certain regulations are stipulated, but experience shows that these can be fulfilled with "pro forma content". For domestic business, one should bear in mind that a corresponding contract law has only existed for a few years and the issuance of licences, which are required for many businesses, can already take longer.

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. If one wants to consult a lawyer, the question is whether to choose a Chinese lawyer or a foreign one who works for an international company in China. Whatever one decides, pitfalls remain: On the one hand, a Chinese lawyer loses his admission to the Chinese bar if he joins an international law firm in China.

On the other hand, a lawyer admitted abroad is not entitled to give an opinion on Chinese law. The best choice is a lawyer from an international law firm who knows the mentality of the Chinese and is not dependent on the government. Often, internationally active law firms employ Chinese who have studied abroad. They are familiar with Western and Chinese ways of thinking. Many things that are considered a matter of course in Germany require a written agreement in China. As mentioned, the Chinese treat contracts like laws: The wording is vague, leaving room for different interpretations. According to the Chinese, this way of concluding a contract includes the "human side"; the "paragraphing" of Western managers is often met with incomprehension.

In terms of Chinese legal sensibilities, choosing the right lawyer also pays off, as does imagination in marketing and negotiation. Example: Where we are talking about brand piracy, the Chinese tend to focus on the attractiveness of the product and any imitations are understood as a distinction for the original. 

This situation can be mastered, as the example of Coca Cola shows: before production began, the corporation launched a far-reaching campaign in the media. 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 actions pay off: despite concrete brand piracy in China, Coca Cola is very successfully positioned on the market there.