Instituo Tecnológico y de Estudios Superiores de Monterrey

Roberto Isaac Hernández Delgadillo A00739149

Dr. Eileen Daspro
Negotiating Tactics
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Case Analysis: Wyoff and China-LuQuan:
Negotiating a Joint Venture

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Introduction
In this case we analyze a situation of of two companies, one Chinese and the other
American; both of them looking for a partner for a Joint Venture (JV). The context of the
situation is developed during the mid 1990s in the Chemical Industry.
The Wyoff a company established in 1910 as an agricultural chemical producer, based in
Pennsylvania shifted the company’s focus to a high profit margin industrial specialty chemical
markets in the 1970s (due to market saturation) in which products are sold for their performance
instead of quantity. The other Company was China Lu-Quan Chemical Ltd (CLQ), this
company was a state owned corporation founded in 1954 and was the largest chemical and
synthetic rubber manufacturers in China. CLQ had many manufacturing complexes around the
east coast of China, one them in the Shandong province, the Rizhao manufacturing plant, where
the local government owned 50% of the assets.
Both companies had different situational contexts, but had the same thing on the agenda,
and this was to partner up with a company in order to help the management achieve the long
term goals of their respective strategic plans. The interests of the Wyoff company was to get a
partner to help them penetrate the Chinese market, because they attempt on the 1990s did not
yield the results they expected (establishing town sales offices in Shanghai and Guangzhou). This
happened, mainly because of their lack of knowledge about the Chinese culture and way of
doing business, and also unfamiliarity with the chemical industry (which was heavily regulated at
that time).On the other hand CLQ was going through a phase of deregulation on the national
industry and opening in 2000 because of the entry of China to the WTO. But at their first

CASE ANALYSIS !1
attempt on doing business together the drive of CLQ was directed by the Chinese Government
(the Ministry of Chemical Engineering), and had the special command of developing the
manufacturing capacity of Caxtalene (10 kt/year) by the end of 2003. This also had the intent
to raise the level of technology used in the production of chemical products, which gave place to
a second intent on the negotiation on a JV, only this time Wyoff was more wise and used its
previous knowledge to to plan a better negotiation tactic.

Analysis
The first thing that we should identify in order to solve the problems of this particular
situation is the issue and the position on that matter. The issue of Wyoff at the first meeting
(Caxtalene) with the Chinese was to make a profitable deal that ended in the short term, for they
wanted a piece of that emerging market. On the other part the issue, CLQ’s perspective had an
opposite approach to the negotiation of JV; they wanted a long term deal, because they wanted
the technology capacity in order to fill the general needs of their customers. This at first look is a
problem because they don’t look for the same type of relationship, so naturally it fails.
Other contextual information about the first encounter between these two companies is
that their position interests and priorities are also in different places, one wants to have the
control of the operation and not to give the know-how for free, anthem other wants it for free an
d also wants the control of the operation; one looks on the short term, the other for long term;
one has as a priority the development of a JV that has the capability of meeting the industry
needs of that region of the country, and the other appears to be interested but is not willing to
concede (cooperate) with the other company.
Other Problem that we saw on these negotiations was that, Wyoff, did not acknowledge the
cultural differences in the first time. First they send a young team of negotiators, and went with
the expectations of getting the best result, because they had the knowledge of marketing,
management, R&D, and the technology to get one of the best products in the market. They had
also a weak BATNA, because they only had the options either to partner up with them or entry
the market alone (for which they had no capacity in terms of logistic).
The wrong approach has to do with the cross cultural negotiation that the american
company had, because if they knew that the business way in China has a system in which a
foreigner has to have Guanxi (personal connections), Zhongjian Ren (the intermediary), Shehui

CASE ANALYSIS !2
Dengji (social status), Renji Hexie (the interpersonal harmony), Zhengti Guannian (holistic
thinking), Jiejian (thrift), Mianzi (face or “social capital”), Chiku Nailao (endurance, relentlessness
or eating bitterness and enduring labor).
Not all the mistakes that we see in the negotiation are corrected in the second approach to
the JV in the 2000s but there are still many cultural differences that the american negotiators did
not get a grasp on. The Zhongjian Ren (Mr. Kwang) although it is of Chinese origin lacks the
complete understanding of that culture because it’s the third generation that grows in the US.
Other poorly chose attitude was the way the conducted the meetings, thinking of time as linear
and always pushing directly for sealing the deal, contrary to this the Chinese negotiating team
wanted to stables a friendship and attended very well its american counterpart (Renji Hexie and
Zhengti Guannian). At last we would like to mention the error the american negotiating team did
when they disrespected the Chinese when the visit was reciprocated, something that hurt the
Chinese was that they not seem as attentive with the relationship. That was what made the
Chinese lost Face in this type of society (Face Cultures) Brett (2014) says that “Self-worth one's
value to society in face culture—is socially conferred. Face depends on a person's relative position
in a stable social hierarchy, and on fulfillment of the person's role obligations in that society.” So
that we think was the impasse in the relationship became very significantly.

Possible Solutions
Now that we have identified the problem that arose from these negotiations, we can suggest
some possible actions that the company should take in order to get the deal moving forward:
• Take a different approach to the negotiator, you have to bring a good Zhongjian Ren
that helps to heal this last negotiation that has grown sour. This intermediator has to fully
understand the Chinese way of doing business. This way if Wyoff its determined enough to go
for the deal can avoid misinterpretation. Also they would have to improve on its BATNA in order
to get more concessions from the CLQ.
• The other possible solution is to go with out CLQ to the JV and maybe try to penetrate
the market alone, with all the risks that are involve in such an endeavor.

Conclusion
In this case we had the opportunity of analyzing a cross cultural negotiation with one of the
parties being of the Face Cultures, and the other a Dignity Culture. Both of these different

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cultures have their way to arriving at a better solution (in this case a good agreement). But we can
also see that the better solution does not coincides with the parties, because different priorities
and ways of see the world (philosophically speaking). And so in order to get an better negotiation
you must see where the coincidences are and try to work from there. Although for that you will
have to know the cultural background of the party you are negotiating with.After that reflection
we can say that the better solution was to put a different intermediary who understands the
complexity of the context in this type of negotiation. And try to strengthen the BATNA of the
company for the company would have better chances to get what it prioritizes more.
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References:
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Excerpt From: Jeanne M. Brett. “Negotiating Globally.” iBooks. https://itunes.apple.com/
WebObjects/MZStore.woa/wa/viewBook?id=8F80BF09130739AD402D0CE81B38AB34
Graham, J. Lam M. The Chinese Negotiation. HBR Spotlight. Pages: 82-91. October 2003.

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