Business Culture-How to Negotiate Business in China-NYTimes blog

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How to Negotiate Business in China

Anne Field Freelance writer, Business Insider Recent posts0 Comments

December 14, 2010

For businesses of any size, the opportunities in China are huge. But for small companies with few resources, tapping that market potential can pose challenges almost as large as the potential profits. That’s especially true when it comes to learning how to negotiate successfully with potential suppliers or other partners, due to the steep cultural and language differences.

“It’s a different world when it comes to negotiating,” says Cary Silverstein, president and CEO of the Negotiating Edge, in Fox Point, Wisc.

Here’s what you should know:

Prepare for a long haul. For the Chinese, Silverstein says negotiations are all about building relationships. That means your potential partners will expect to spend time getting to know you before they’re willing to talk business.

First, you’ll probably need to meet in their offices while you introduce your company and form a bond of trust. “You can expect to spend 50 percent more time negotiating in China than here,” says Silverstein. Then, let them initiate when it’s time to start serious discussions.

Find your own interpreter. Unless you or your counterpart speak the same language, you’ll need to hire an interpreter. But don’t use someone supplied by the other side; you want a person who’s on your team, able and willing to help with the nuances of the language and culture. Silverstein points to a frequent problem: U.S. businesspeople unknowingly say things that can be construed as inappropriate to the Chinese. “Your interpreter would translate the essence of your statement in such a way that it wouldn’t be offensive,” he says. “Their person might translate exactly what you said.”

Your interpreter also can help decipher the nuances of the conversation. For example, it’s likely your Chinese counterparts will avoid saying “no” directly. The translator can explain whether “It’s difficult” means what it sounds like or is an indirect form of “Forget it.”

Want more international business advice? Check out these stories:
■Know Before You Go: 12 Tips for Doing Business Abroad
■How to Prepare for International Expansion
■Top 6 Tips for International Business Success

Form a plan and a team. Before beginning negotiations, you need to pinpoint exactly what you have to discuss and the minimum you can accept. While that’s true for any negotiation, it’s especially important for China, where you’ll face significant language and cultural differences. Your plan should include everything from who pays for shipping and who owns the goods to the method of payment. A key decision: at what point you lock in the currency value you’ll use, since it fluctuates. You might decide on the value of the dollar on the day of shipment, for example, or at the time of the negotiation.

Also, make sure you’ve assembled a team of people who can attend negotiations with you. That should include a local representative who can act on your behalf, making introductions and working with potential partners. You can find such a person through the State Department.

A banker is also key. Before you leave for China, in fact, it’s best to meet with your bank here and ask to be connected to its financial representative in China. Then you can arrange to meet that person as soon as possible once you arrive, and for him or her to take part in negotiations. “If a manufacturer says he wants all the money upfront, you don’t want to have to tell him you’ll get back to him later,” says Silverstein. “You want to take care of it right then and there.”

Expect a different view of what a contract is. “For the Chinese, the contract is the beginning, not the end, of the discussion,” says Silverstein. Meaning: Just because you’ve agreed to certain terms doesn’t mean that’s what really will happen.

It’s likely your supplier will continue to make many changes up until the time a product is delivered. For that reason, build into your own planning the distinct possibility, for example, that goods might not be shipped on the date you think you’ve agreed to.

In addition, once the contract is signed, make sure to stay in touch so you know what’s really happening with your order.

Pay attention to rank. One’s position in a hierarchy is viewed as crucial. Therefore, you may be addressed by your title rather than by name. You need to do the same in return.

What’s more, you’ll be expected to have people of the same rank as your Chinese counterparts participate in negotiations. If lower-level representatives of the other side take part in the discussion, assume they don’t have the final say. “You might think something has been decided, but those people are going to go back and get approval from someone else,” says Silverstein.




Know Before You Go: 12 Tips for Doing Business Abroad

Jane Applegate President & CEO, The Applegate Group Inc., The Great Ideas Network

December 6, 2010

If a Chinese person tells you that you look fat, don’t be offended -- it’s a compliment. This is just one of the important things to know if doing business overseas is on your list of New Year’s resolutions.

“It’s important to be aware that most Chinese people are very direct,” said Syndi Seid, an expert on international customs and founder of AdvancedEtiquette.com in San Francisco. “They will often ask you personal questions about your salary or family.”

Being prepared to deal with the complexities of other cultures before going global is critical to your success. The good news is that there are tremendous resources available to help you get started, and here’s why:

“Seventy percent of the world’s purchasing power and ninety percent of the population is located outside of the U.S,” said Karen Zens, deputy assistant secretary for international trade at the International Trade Administration.

Here are 12 things to consider before booking a flight:

1. Similar to the U.S., every country has different regions. Language, customs and cuisine vary, so become acquainted with the particular region you plan to visit. In addition to reading books and magazines about the country, try to meet as many people as you can from that country before you go. One great way to learn about life abroad is to host visitors from that country. Ask friends and business contacts to make introductions or contact your local chamber of commerce.

2. Read current books, magazines and online information about your target country. Follow news reports to up to date on social and political issues. Set Google Alerts to monitor what’s going on. You don’t want to be traveling overseas during unstable times.

3. Contact the U.S. Department of Commerce. The department has commercial experts based in 126 countries. Their job is to provide business owners information and make introductions. Best of all, most of their services are free.

4. Learn how to pronounce names correctly and memorize a few key phrases in the native language. Making an effort to learn the local language makes a positive impression. Hire an interpreter for business meetings. Brief them about your business and products before the meeting. Explain what you hope to accomplish so they can prepare for the meeting.

5. If you don’t have an international mobile phone, rent a local phone. (You can rent a mobile phone at most major airports). It’s much easier to set up meetings if you have a local number. Texting is usually cheaper than making calls abroad. Use Skype to keep in touch with friends and family back home.

6. Be willing to try the local cuisine. As long as you are not allergic or the food served violates a religious or dietary restriction, try it. Not eating may offend your host, according to Seid.

7. Be patient. The biggest mistake Americans make is not having the patience to build solid relationships. “No one likes to be treated, nor thought of as just a dollar sign,” said Seid. “Build at least two mentor-type relationships with new and trusted friends in the country who are willing to be on call whenever you need advice or direction.”

8. Don’t forget to carry your hotel residence card at all times. “Never leave the hotel without a card that can help a taxi driver know how to get you back home safely.”

“Always dress up because you can always dress down,” advises etiquette expert, Syndi Seid. Many business dinners abroad are formal, so men should pack a white shirt, tie and tuxedo. Women should bring a full length evening dress or dressy pants suit. Dress conservatively and professionally for business meetings: a suit or jacket and tie for men and business attire for women.

9. Be careful to address someone by their proper title. It’s best to use Mr. or Ms. “The global trend is to honor a person's gender, but not focus on a woman's marital status,” said Seid.

10. During a toast, look directly at the person making the toast and take a sip. If the toast is in your honor, don’t sip. Just smile and say “thank you.” Immediately following the toast to you, make a toast to your host and everyone else. Always wait for your host to start eating before digging in.

11. Keep both hands on top of the table at all times during a meeting or meal. “It means you are not hiding weapons under the table or holding hands with the host’s sweetheart,” said Seid.

Other quick notes: pack extra prescription medicine and keep it in the original containers. Bring along a small medical kit, including plastic bandages for cuts and scrapes, medicine for treating diarrhea and indigestion, cold remedies and cough drops.


Jane Applegate is president of The Applegate Group Inc., which provides strategic marketing and video production services to big and small companies. She’s the author of four books on entrepreneurship, including 201 Great Ideas for Your Small Business, published by John Wiley & Sons. For more information, visit: www.theapplegategroup.com.




How to Prepare for International Expansion

Anne Field Freelance writer, Business Insider



September 2, 2010

Thanks to President Obama’s recently announced National Export Initiative, now may be a good time to expand your business globally. The program aims to increase financing and other support to small businesses and, ultimately, double the amount of exports over the next five years.



Whether or not that goal can be attained, it underscores how crucial international expansion is for small businesses is these days. Branching out globally opens up new markets able to boost business when economic growth is slow at home. “You don’t put your eggs in one basket,” says Ayse Oge, President of Ultimate Trade, an international trade consulting and training firm in Encino, Cal. “It has a huge impact on the bottom line.”



But, expanding globally also is a major undertaking. You’re dealing with different cultures, tax structures, regulations, distribution systems—you name it. That’s why the key to success lies in your first steps: how you prepare, research and do your homework before signing your first deal. These resources can help:



U.S. Department of Commerce. This should be your first stop. There’s a virtual goldmine of information and advice available through this department, including:


■National Trade Data Bank. This massive database provides import and export information from 19 government agencies. Chances are, whatever you’re looking for is here—everything from market size and growth projections for a particular product in a specific country to upcoming trade shows, currency exchange rates, and tariffs. You can get access to it at your nearest Commerce Department or SBA office or from home, if you subscribe. Or you can go to the closest library that has access to the data base and get it for free
■Gold Key Matching Service. A customized service through which specialists in specific countries connect you to buyers, agents, and distributors, all of whom have been pre-screened. “They check the credit-worthiness and reputation of the buyer for you,” says Oge. “That’s important, because it’s hard to know just how reliable they are otherwise.” They’ll also organize a trip for you ahead of time, scheduling meetings for you with potential partners and helping you out while you’re there.
■Additional services. You can also meet with other specialists who can do everything from helping to find the most appropriate country for you to enter to making sure you have the right paperwork. They can help you find buyers and agents, too.
■U.S Export Assistance Centers. Located in 19 major metropolitan areas, these centers are operated by Commerce, together with the SBA and the Export-Import Bank of the United States, which provides guaranteed loans for exporters. At each center, you’ll find experts who can provide technical help.

Shipping companies. Through FedEx’s Global Manager option, you can get detailed demographic and statistical information about specific countries. UPS Tradability also provides information about compliance, regulatory, and tax matters in specific countries.



Local trade associations. It’s likely your area has its own regional or local trade association, which probably also can provide you with information. Oge, for example, holds breakfast meetings through the Valley International Trade Association in Los Angeles every two months focusing on such topics as compliance issues or information related to specific countries.



Visiting the country. No matter how thorough the research is, you still need to hop on an airplane at some point and spend some time in the country you’re targeting. That way, you can meet with potential buyers in person and get a better feel for your customers.


In-house preparation. You also have to start getting your internal operations ready to handle the new business-- making sure your employees have the necessary technical knowledge for selling in another country, for example. But don’t go overboard. That means getting started with one order in one country, so you can gear up your facilities and get rid of all the kinks before expanding any further. Says Oge: “Start small.”




Top 6 Tips for International Business Success

Laurel Delaney Founder and President, GlobeTrade

August 2, 2010

Before you even think about taking your business global, examine your domestic operation. Are you doing the best you can do? If the answer is a resounding "Yes!" then you're ready for my top six tips for international business success.



1. Hold up a mirror to your successful domestic business. More than likely, your success at home stems from the fact that you have done a good job getting and keeping your domestic ducks in a row. People know where to find you, like your product or service, buy it repeatedly, tell others about it and find you a joy to do business with.



Now it’s time to take that same business model and tap into one new foreign market that broadens your customer base. Start small, approaching a foreign market that’s easy to enter (one where the natives speak your language). After you succeed there, take on more foreign business, one market at a time. Eventually, you'll achieve the same level of success as your local business.



2. Stretch your people. Most of us realize that people make a business successful, not the other way around. Yet not all employees know how to expand a business internationally. Maybe even you — the founder, president or CEO — don’t know anything about this new avenue of growth. If that's the case, make this your new mantra: “We will work together to stretch, learn and grow global!” Begin by adapting the skills, interests and resources you've already been using to build your local business. Soon, you'll develop an organizational culture of shared values and assumptions that will guide behavior in taking your business global.



To accelerate the learning curve and keep expenses in check, consider resources that evolve over time and help you stay on the cutting edge: read a few good e-books on how to go global, listen to podcasts, participate in webinars, take courses and watch videos. Use these resources with the intent of mastering the best way to conduct business overseas. In the process, you'll discover that your existing team of talented individuals — those you employ as well as independent contractors — all have the ability to stretch, provided you lead in a way that makes them feel engaged, excited, valued and capable.



In the hiring process at our company, we always look for someone who has a can-do spirit, great salesmanship qualities, persistence, an interest in international matters, bi- or multilingual language capabilities, cultural empathy, good writing and speaking abilities, and a habit of paying attention to detail. Everyone on board must learn to coordinate his or her activities to ensure the smooth flow of the overall international operation.



3. Get yourself and your business on every imaginable online platform. How else will cross-border customers find you? If you are still thinking about whether your business should launch a blog or be on Twitter, forget the notion of taking your business global. You are too myopic! You need to position yourself on relevant networks and beef up your communication efforts. So for all you aspiring global enthusiasts, pony up the nominal fee to set up a regular website, start a blog, and get on Twitter, Facebook and LinkedIn. Use effective marketing to get noticed. The more online platforms you use, the better your chances of being discovered. When a customer bites, test out your price, see what reaction you get and then negotiate from there.



If you offer products on an e-commerce platform, can customers buy them at every destination point? Make sure you focus on customer support, fulfillment and being user friendly. Accessibility is paramount considering all the different time zones we operate in. Make it easy for customers to get help should they need it. Your site should be attractive and functional. Speed is also important when considering users in remote parts of the world with dial-up connections. Do what you can to help them buy from you without a hassle.



4. Pick a product or service to take overseas. You can’t be all things to all people. Decide on something and stick with it. Nothing is more frustrating than giving your customers too many options because then they won’t buy a thing. Narrow it down, keep it simple and choose a product or service that sells (Revisit No. 1. You should know your top-sellers by now!).



5. Show me the money! The most important thing to negotiate before closing on an international sale — lucky for you if you’ve gotten this far — is how payment will be made. Your banker can guide you with several strategies for getting paid in full and on time while minimizing risks.



The National Export Initiative offers special international funding for small businesses through the Export-Import Bank of the United States. Prompt your banker to contact them. Meanwhile, check out their seminars.



If there is any pearl of wisdom here, it’s this: Agree on the terms of payment in advance, and never, ever sell on open account to a brand new customer. No ifs, ands or buts. Just don't.



6. Going global matters. Stop rationalizing that you don’t know how to go global and that it doesn’t matter because it is not relevant to your business. It does matter and it is relevant. The whole world has become virtual, bringing everything to our door instantly. We talked about the importance of going global and being fearless about it in an earlier article, “6 Ways to Be Innovatively Global.” Don't let fear of the unknown hold you back. Avoiding uncertainty can kill any idea, but if your people have strong leadership from you, the power to make decisions and the necessary information and resources to embrace the unknown, you will see your business go from local to global in record time.






About the Author: Global business expert Laurel Delaney is the founder of GlobeTrade (a Global TradeSource, Ltd. company). She also is the creator of “Borderbuster,” an e-newsletter, and The Global Small Business Blog, all highly regarded for their global small business coverage.