PROJECT ON BUSINESS NEGOTIATION IN CHINA

SUBMITTED TO: PROF. ANITA MANDREKAR INTERNATIONAL MARKETING

SUBMITTED BY: AMIT MISHRA MS-1 ROLL NO. 02

This humiliation and exploitation is not forgotten nor the idea that China should be the central and greatest country. it demanded many goods from China. By now lots of countries also wanted a share of China's market. China's History with Foreign Relations "Zhong Guo" is the Chinese word for China. The Chinese people have had a very rough transition period from thinking of themselves as the civilized central country for the last 3000 years with nothing but barbarians all around them. The "foreign aggressors" mainly France and Britain found some flimsy pretext to go to war and thus the second Opium war. it is important to actually know China's history and the people's take on it. Chinese civilization was further strengthened by the development of a Confucian state ideology and a common written language that bridged the gaps among the country's many local languages and dialects. 1949. It is common knowledge that foreign governments took advantage of China's instability from the 1800s through the 1930s.500 years. For many years Britain's chief export to China was opium. to being humiliated by these foreign powers until October 1. Many Chinese history book’s rage flavors the history and thus many Chinese people's view of the world and foreigners. It means middle or central country. the conquerors sooner or later adopted the ways of the "higher" Chinese civilization and staffed the bureaucracy with Chinese. Whenever China was conquered by nomadic tribes. Successive dynasties developed a system of bureaucratic control that gave the agrarian-based Chinese an advantage over neighboring nomadic and hill cultures. as it was by the Mongols in the 13th century. When Britain first came to China. There is also a great deal of anger and blame for the past military and economic imperialism. There is still living reminder of these times and frustrations. which ended in The Qing government being forced to sign some concessions to allow trade and open some ports. Britain brought in war ships. while China had no need to buy any thing from Britain. In order to understand this resentment and be ready for it.HISTORY OF CHINA China is the oldest continuous major world civilization. Trade expanded greatly. Although the Chinese history book I . When the Chinese government tried to stop the drug trade. Britain not liking the out flow of gold from its country started selling opium as a drug supplier to China. This became called the first Opium War. and the concession ports became too small. with records dating back about 3. the start of the People's Republic of China.

capitalist imperialism did the same thing with money as troops did with territory. It means that the business life is a permanent negotiation with others people who are defending their own interests NEGOTIATING TECHNIQUES When they deal with negotiations. They were repulsed by the Chinese defending forces. Insurances." The French and British then sent more troops and marched them all the way to Beijing. With fellow imperialist permission. The control this money provided in the form of special leases and treatments of different areas became so strong that in a process referred to as sphere's of influence China was carved into pieces each belonging to a different foreign power at complete disregard for China's national sovereignty. The emperor had already fled and his brother negotiated a settlement "shamelessly acceding to all the rapacious demands of these foreign pirates. in order to secure in exchange their cooperation in the suppression of the peoples revolution. The negotiation is mainly described as a conversation between polite persons. Banks. insisted on forcing their way into Dagu. BUSINESS NEGOTIATION Business is negotiation." The Qing government soon became a tool for foreign powers for the suppression of the "heroic common people". What is more. to fix the staff salaries and so on. you have to negotiate with regulators.read said China lost because of incompetence of the Qing commanders. . The two parties explore their common interests and try to reach the win-win option. Besides the outright censures of sovereign parts of China. Japan took Taiwan. business schools emphasize on the quality of the relationship between the two parties. accompanied by armed forces instead of talking the route prescribed by the Qing government. to sell. Then came the international incident. Japan next took Korea on the excuse provided by a coup. Britain took Burma. to conclude contracts with suppliers. perhaps superior weaponry and a Navy were also a disadvantageous to China and soon a new treaty was to be sighed. You will negotiate to buy. and France took Vietnam. Russia took large portions of northern China. Foreigners built and owned huge portions of railroads industry and business all over China. "The British and French ministers.

either you. Arrangements may be made without consulting you and you may be overwhelmed with hospitality. Before your arrival. This is particularly important if you are sourcing from or selling to China. However. Once you have decided to visit China. Guanxi creates an interdependency between the two parties because favors received must be reciprocated at some future time.BUSINESS NEGOTIATION IN CHINA   Whenever possible. The right connections can ensure you an attentive audience for your proposal and subsequent interactions. If you are representing a well known international company. obtain an introduction. Connections and relationships. It is not necessary to translate everything you send to China. for those who have the connections will often try to profit from them. your counterpart. or local representatives should schedule meetings for you at least one to tow weeks in advance of your arrival. In China. You should hire a local representative or consultant to monitor deals and relationships in your absence and to maintain a constant presence for your company in China. you can send a letter to the senior most person in a Chinese company in which you state your purpose for contacting him or her. quanxi. You should feel comfortable in politely declining any service that you do not want. make your desires regarding accommodations and the like known to your business contact. are very important. a host's responsibility includes fulfilling needs and ensuring the comfort. be sure to carefully check references and to obtain a list of his or her former and current clients. will give you the right connections. Foreign visitors can be surprised to discover that their Chinese business contact will make an effort to keep them entertained at all times. Guanxi also incorporates an element of graft. because translation costs could become expensive. are wealthy and can therefore afford to pay for all services. Make sure there is sufficient interest on the other end before you translate much of your marketing literature and the like. known as quanxi. care     . The Chinese tend to believe that all foreigners. When sending an initial letter it is a good idea to have the letter translated into Chinese. This can be particularly important if you represent a small firm with limited budget. When hiring a local representative. particularly Westerners. With the increased interest in China. there are numerous people and individuals in China to be able to work the magic in addition to having high level contacts.

Further. It is important to be patient. Chinese have a high regard for rank and seniority. Li. especially if you are the biggest or the oldest. If you wish to spend some time alone. will be built on to more serious topics. For example. and Hua would be his given name. Ranking your company can help to impress the Chinese. To become informal too quickly would upset the . It is advisable to hire a translator. therefore. many Chinese adopt given names. Although the Chinese are not always on time. are used wherever appropriate. Official and occupation related titles. Shao and Liu. they may not smile at a first greeting or as often as people do in some other Asian countries. Business cards. This fosters respect for each side and ensures that contacts will proceed harmoniously. They should be given and received with both hands. indicate so very politely. Huang Hua would be called Mr. The Chinese tend to maintain a level of formality in the early stages of a relationship. However. The five most common surnames are Chang (Chan in Cantonese). Mayor.and protection of their guests. Then. PROCESS OF BUSINESS MEETING IN CHINA         Chinese usually greet one another with a slight bow or nod of the head. Chinese pride themselves on holding their feelings inside. Ambassador. punctuality is viewed as a positive asset in others. Although many of the surnames may be pronounced the same. Wang. some Chinese will switch the order of their names when they are dealing with foreigners. which is occasionally followed by the second name or the western equivalent of a first name. many of which are Western names. called name cards (ming pianr) by the Chinese. Arriving early indicates respect for the host. are presented when everyone first meets. Huang. Married women rarely take their husband's family name. The Chinese will be impressed by and are usually more attentive to senior representatives of foreign firms. and appropriate topics include the weather and your recent travels. In business and with foreigners. the Chinese characters can be different.. Meetings often begin with small talk over tea. There are about one hundred widely used family names. such as Dr. It is important to establish a smooth business relationship and friendship. the family name precedes the given name. a handshake is common upon greeting and departure. Trust and cooperation are key. In China.

if negotiations stall. Verify what has been said to you. The Chinese will utilize their technical experts to focus on the technical phase until they are satisfied with basic issues or quality and usefulness. NEGOTIATIONS IN CHINA       Due to the vastness of China. Avoid discussing political and human rights issues. It should be noted that the Chinese often hesitate to provide information out of concern that someone will use it against them. and deals are often concluded over a meal. Entertaining is a critical part of Chinese business culture. or you encounter disagreements. You should be careful of these empty yes as it may not always draw positive conclusions. Be flexible and creative in your approach. They are more accustomed to doing business with foreigners and are more efficient. Most negotiations are divided into two phases: technical and business issues. If you think the answer . However. Make sure to include at least one technical expert in your negotiation team. Similarly. but do not lose sight of your business interests. balance the Chinese require to develop a meaningful business and personal relationship. Chinese pay a great deal of attention to details. Chinese usually conduct business over lunch and dinner. They will hint indirectly in the conversation. These topics can be very sensitive and may place your Chinese counterpart in an awkward position because Chinese people are not allowed to publicly criticize the government. In many instances. Use mutual contacts to assist if you are concerned about establishing trust and credibility with your Chinese counterpart. Cantonese business people can often be more adamant about having things their own way and so foreigners should be firm about their position in a negotiation. It is important that all parties maintain "face". Chinese do not like to say no or to be the bearers of negative news. even small changes to existing agreements cannot be made without the approval of senior officials. Government officials who are responsible for negotiating deals often do not have the authority to commit financial resources. different Chinese have varying business styles. The Cantonese tend to be more westernized due to the influences of Hong Kong and constant contact with Western traders for hundreds of years. However. You may present a small sample of your company's product or an item with a corporate logo. you will hear a yes response to almost everything. Gift are not required or expected at initial meetings. anything more elaborate or expensive will be inappropriate.

given their unique history and background. businesses and government offices are usually open Monday through Friday and every other Saturday from 8 am to noon and from 1:00 to 2:00 pm to 5:00 or 6:00 pm. many Chinese business practice are now beginning to align with more conventional methods. Business visitors would be wise to avoid this two to three week holiday period. BUSINESS HOURS   Most of China's business world slows down considerably during the spring festival in late January and early February. Banks are open Monday to Saturday from 8:00 am to 5:00 pm. If problems develop. Understanding Chinese business culture and etiquette The Chinese business practice is vastly different from the Western method that most of us may be used to. . you should be firm about your limits and your willingness to work with your counterparts to find a mutually agreeable solution. China's joining of WTO and the Olympics in 2008. China will always have their own unique business culture and etiquette. Be prepared for tough negotiations. it is good advice if you can learn some basic Chinese business culture before making the trip. What happened was that the Chinese party recieving the American purchaser was late in reaching his hotel. BUSINESS CULTURE AND ETIQUETTE China's business culture and etiquette is very much different from Western business practice. Of course. In most cities in China. Shops are open everyday. with the Chinese economy opening up. The American was furious as he had a tight schedule and that they were late and threatened to withdraw his purchase. "I was recently involved in a business meeting that went sour and threatened to scuttle a good deal. If you intend to travel to China for business purposes. verify your feeling by asking questions that can be answered positively. China has a five and a half day workweek consisting of 44 hours. to an issue is really no. Maintain a quiet and dignified manner. Adhere to your principles and objectives. However.

You see. even after a long time. Sometimes. aloof. essentially a business relationship is struck based on another business associate recommendation. You may source from the internet. you can approach a investment committee or a business advisory directly. Business Relationship in China Chinese business relationship inevitably becomes a social relationship after a while. However. there were numerous hotels along the lake but the Chinese were too shy to enquire which lakeside hotel earlier because they were afraid the American would 'lose face' for having given a vague address. advertisements and approach the Chinese companies directly through a call or email. Please contact us directly if you have such a need and we'll be glad to advise accordingly. trade fairs. Chinese business relationship becomes a social one. catalogues and brochures. Alternatively. They will be able to advise you on your best location based on your industry. The best prices and deals often comes from a strong recommendation. hobbies. To avoid similar cultural disasters. the other party is also making up his mind about your deal based on how much he sees your personal relationship with him. it is common today for cold calls and direct contacts. a lot of time is spent discussing matters outside of business. but then a lot of time. including family. aspirations. Unfortunately. The initial approach Chinese business contacts are mostly referrals. The more you share your personal life." A simple cultural difference threatened to scuttle a perfectly good working relationship.The Chinese party was late because they were given a vague address of a lake-side hotel. what happened was that the American gave his hotel as Lakeside hotel. if you are seeking to invest in a factory in China. the closer you are in your business relationship. Instead. . given the availability of the internet and the competitive nature of Chinese businesses. Unlike Western business relationship which remains professional and perhaps. raw material and manpower needs. political views. they spent the morning hopping from one lakeside hotel to another looking for this American gentleman. here are some tips on how you can conduct a more successful business in China.

 Lunch/Dinner in China There is no business talk in China without at least one trip to a restaurant. especially if it is not of too high a monetary value. There is an elaborate seating arrangement for a Chinese business meal. a trip is made to the restaurant even before any business discussion take place! Inevitably. Do note that if you are indeed giving gifts. Today. However. especially of Western origin was especially appreciated. ensure that you are stretching out with both hands with the card. It is good to seek advice before embarking on your first meeting with Chinese business contacts to avoid making the wrong move. There are fixed seating positions for the host and the guest and then they are seated again according to seniority. will continue to play an important part in your business relationship. make sure the senior people get a better gift or at least gifts perceived to have a higher value than their junior staff. sitting positions in a meeting room or a dining table is accorded accordingly to rank. You must give the appropriate respect according to rank and seniority. Director So and So or Manager So and So. especially Chinese art products. make sure you start with the most senior person before moving down the line. it is always appropriate to address the other party by his designationie Chairman So and So. Instead of addressing the other party as Mr or Mrs so and so. Sometimes. the restaurant will always be a grand one and you are likely to be hosted in a private room. This is a very important aspect of a formal dinner and it is . When giving out a namecard or recieving one.Similarly.  Gifts and Presents Unlike earlier days when China was very poor.  Giving Face or Gei MianZi Giving face (aka giving due respect) is a very important concept in China. importance and seniority. gifts. Seniority is important in China Seniority is very important to the Chinese especially if you are dealing with a State owned or government body. make sure you buy better gifts for the senior managers instead of buying similar gifts across the board. if you are buying gifts for an initial contact. Similarly. It is polite not to refuse. China produces and imports almost anything imaginable and gifts are no longer a novelty.When giving out namecards or brochures. expect to recieve gifts from the Chinese. Remember to face the card you are giving out in a manner such that the recieving party gets it facing him correctly. gifts are always appreciated and especially in the smaller cities or towns. For example.

having a alcohol concentration as high as 60%! No matter how good a drinker you may think of yourself. you are expected to pick up all bills for the night. In addition. if you are just new to this partnership. once you are familiar with them. or a Night Club. ever challenge a Chinese into a drinking contest. It is impolite to fight for the bill or worst. Most of the time. it seems that the Northern Chinese are very particular to this formal seating arrangement while the Southern Chinese has loosen the formalities somewhat. Better yet. Similarly. there will be alcohol. Chinese wine is the favourite. However. everyone is too drunk to indulge in further entertainment after a dinner. However. This will let you off the hook with little or minimal drinks. as long as a meal is being hosted. To maintain your sanity. you may be invited to a Karaoke.important that you follow the rules accordingly. all bills will be picked up by them for the night. . followed by red wine and beer. It does not matter if it is lunch or dinner. Do note that if they are the host for the night.  Drinking with the Chinese The Chinese are big drinkers especially in Northern and Western China. hands down! It is often seen as rude not to drink with the Chinese in a formal dinner. or a Suana. including all entertainment. if you are the host for the night. some karoake. split the bills. never. either claim to be a non alcoholic or plead medical grounds as an excuse. you are unlikely to be invited to further after dinner entertainment. They will win. and drinking contests. bring a partner who can drink on your behalf!  After Dinner Entertainment in China Formal business dinner normally drags for quite sometime as there will be much social talk. Chinese wine is more like fuel than liquor.

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