Posted at 10.31.2018
This can be an intercultural assignment for the topic 'Intercultural Sales Negotiation'. . I am students of the slight Latin American Business Studies. In the minor Latin American Business Studies that I am following, we acquired the assignment to study the Guanxi circumstance and to do some research in to the Chinese and US culture related to negotiation meetings. The last part of this project will be that I have to prepare a role of American get together in a negotiation ranking between Electrowide and Motosuzhou.
In this task you may expect the following things: you will see a short explanation of different ethnicities on earth. Next subject matter will be an intercultural research about the Chinese and US ethnicities and where these various cultures will influence negotiation attitudes and positions. After this you will see a prep about the Guanxi circumstance. This preparation includes: BATNA, ideals, fallbacks, needs/priorities, assumptions and strategies/practices. In this preparation there will be also quoted explicitly when and in what manner the study has afflicted the planning.
Intercultural research between American and Chinese people doing negotiation
The world has a great deal of people. The folks who are living in several parts of the world are not all the same. They belong to a certain culture. A culture includes the customs and practices of a certain nation from a certain country. This consists of the group of values, diet, diet, clothing, faith, music and dance. We can split the world in several main ethnicities like: UNITED STATES, Western Europe, Eastern Europe, Latin American, Middle East/ African and Asian culture.
During negotiation around the world you have to know the dissimilarities between all these different cultures. Doing some research prior to going into a negotiation is vital. That is important because there might show up some misunderstandings because of the dissimilarities in culture. If you work in a global commercial environment it pays to to have some knowledge of the impact of these cultural differences. This is one of the tips to international business success during negotiation.
Regarding to these distinctions of culture, we now going to zoom in in to the Chinese culture and the American culture doing negotiation with one another. We will look in what way the various cultures of American and Chinese people will affect negotiation behaviour and positions.
Chinese way of negotiation:
If we go through the way Chinese people negotiate, they are extremely different in comparison with other countries. They are incredibly different in terms how they approach a business negotiation. For Chinese language business people a negotiation is more like an exchange of information. A learning you process. They consider it as a formal talk. They are prepared to negotiate for years to get to know the other person and also to create quite a while partnership. The reason why willing to make a deal for a long period is to get approximately information out of you. If they have the ability to get enough information out of you, they can modify their quarrels on what you say. They are able to also use those information that you are revealing them against you eventually.
China is a modern culture of high-context. Which means that in this type of society there is no need to state or write to much to make clear what you are meaning. For the Chinese language business people it isn't only verbal communication, but also a whole lot of non-verbal communication to express yourself. You merely have to make a little part of your meaning explicit, because almost all of the information has already been implicit in the environment or in the assumed preceding knowledge of the person.
The Chinese business people don't like the direct phrase 'no'. They will find it very rude and disrespectful. It is better to avoid to state the term 'no' to the Chinese party. It really is difficult to avoid to say 'no', but there are several ways to state 'no' indirectly. Little example: Within the Western culture they would say: 'No, we cannot do that' and in the Chinese language culture would say: 'That may be difficult for us to do so'.
So it is actually essential that you think very plainly how you heading to disagree to a Chinese language party. A choice is to switch you responsibility for your decisions to something else in the negotiation.
If you are doing say 'no' to a Chinese language person you will lose 'face' (mianzi in Chinese language). This means that you are sacrificing your good reputation and sociable standing compared to you Chinese business associate. This could be bad for the business enterprise negotiation.
Chinese people are very good in saying 'no' indirectly. The design of the Chinese people of stating 'no' is to apply objections to disagree with a proposal.
Chinese are very collectively set. Performing/thinking as a group and creating a good romance between get-togethers has a big importance in the Chinese language society.
Relationship is called in Chinese: Guanxi. During negotiation this is vital for the Chinese language business people to set-up with the other get together. If you have the ability to have a good Guanxi with the other it is a lot easier to discuss and to reach your goals.
During the negotiation with your Chinese language associate you have find out if you are talking with the right person who makes the ultimate decisions. The truth is that it's very common in the Chinese language way of negotiating that the person who makes the ultimate decisions is not the person who is sitting in front of you but another person. These folks are intermediaries. It is because there's a hierargy in the Chinese language society. This implies they may have limited authority to make final decisions. If you know it isn't the right person before you who makes the final decisions, you can expect that they first have to discuss it with their companions before making the final deal.
Chinese people appreciate if their international party speaks their language. As a foreign get together this will improve your position compared to the Chinese get together.
Chinese people want to negotiate for a long period to make you impatient and worn out to get the best package possible from it. They want you to feel like you need them more then they need you.
At last Chinese culture is based on a 'success of the fittest' culture. They will say to the other get together that they need the best package for both, nevertheless, you that they doesn't imply that seriously. They want to have a win-lose offer. Win-win is mainly no option.
American way of negotiation:
If we look at the way American people negotiate, these are totally the opposite in doing negotiation then the Chinese people. People in america want to discuss to reach their goal, to make the best deal out of it and at the end to produce a contract immediately. American's are incredibly individual minded. For the coffee lover matters the fewer the individuals the less confusion the quicker of earning a deal. Time is money for the kids so they want to have the negotiation done in a hurry. This action is a big disadvantage for the Chinese language people who want to make to negotiation as long as possible. The utilization the situation of the American's happy to do everything as quick as it can be.
American's are incredibly straight to the idea. They just want to attain their goals and don't go through the whole of this issue. If indeed they would do this more they maybe could easily get more from the package. American's do nothing like to work out. They are incredibly informal when doing discussions.
Because American's are very individualistic they may have full authority during negotiations. They would like to lead the negotiation and they want to help make the last decisions. They are not an intermediary. They make a lot of proposals and they like to talk a lot.
Unlike China, America is a low context society. These are a modern culture which uses a whole lot of verbal communication. This helps it be very hard for Americans to understand the Chinese, since it isn't always the words, it's the meaning behind the words which are essential.
It is wonderful for an American to comprehend how the culture of the Chinese people works. Because if you don't, it would be difficult to get the best deal out of the negotiation. As an American it is important that you can adjust the behaviours of the Chinese language. Be flexible. When you can make an effort to speak their language this will improve your position set alongside the Chinese. Do not be impatient, because the Chinese will use this against you. Find the right person to talk to, because if you are talking to an intermediary you know that he/she isn't the person who makes the ultimate decisions. Make an effort to minimize your 'no's' to be not disrespectful and rude. Try to put your no in a indirect way. Be careful with presenting too much information. Chinese are dynamic listeners. They would like to make you discuss. Make an effort to get an exchange of information. If you discuss with your Chinese language partner the main thing you must do is to set up the marriage/partnership (Guanxi).
Now that I have done the study about the Chinese and the American culture, I am now heading to look how these variations in culture apply to the Guanxi in Jeopardy case.
Our company Electrowide
We are a multibillion money ($5B) supplier company called Electro large located in the United States. We are an organization which manufactures a wide range of automotive electronics products. Considering the today's increasing competitive automotive consumer electronics and becoming more proactive in this kind of market, we are undergoing an enormous structural reformation. The purpose of this reformation is that the business's various products departments have significantly more autonomy. So that eventually each department will be responsible for its own earnings and loss claims. One of our key proper objectives is to become a big competitor on the market of Asia.
We are looking for an Asian affiliate to help manufacture and sell engine motor management systems that run emission-control, fuel nozzle, and ignition systems for Chinese-made vehicles.
In the first place the productivity would be sold to the Chinese market with future programs to export later.
We believe, as the business Electrowide, that the collaboration with the Chinese language associate will play a important role not only in the advertising of Electrowide business progress, but also in providing product development skills in your community.
The Chinese language company 'Motosuzhou'
Motosuzhou is an business of the Beijing municipal administration. This small enterprise has a top-heavy hierarchy with a representative director overseeing daily businesses and different supervisors in charge of functional units. This means decision making is top-down. The company runs its operations clear of government treatment. Its work force is is composed mainly of rural employees.
The company's durability is in attaining economies of size in assembly-line production of engine motor control subassemblies. The competition in the neighborhood market is starting to grow.
Motosuzhou's reason to do business with a international company is to develop a long-lasting marriage that will continue to work in tranquility with local government policies. Also acquire technology through copy by importing equipment and designs and conform these to the motor vehicle industry in China. They don't want to are unsuccessful in the eyes of the federal government or the city.
We as the company Electrowide are considering Motosuzhou due to Chinese company's specialized skills in its design of automotive subsystems. Obtaining this type of knowledge would give Motosuzhou a competitive gain on the market. Motosuzhou would also rely on Electrowide because of financing most of the cost incurred in establishing the joint venture.
The target of Electrowide is to determine a jv with Motosuzhou of China to carry out manufacturing businesses in China.
Before we commence to negotiate with Motosuzhou we need a dependable BATNA (Best option to a negotiation agreement). Our BATNA is very important, because we cannot make a smart decision about whether to simply accept the negotiated agreement unless we know what our alternate is. Possessing a good BATNA boosts our negotiating capacity to make much out of it. So if the negotiation is no longer working we always can fall back on our BATNA. But the key point in our BATNA is to make us in a reliable and strong position related to the other get together Motosuzhou.
Regarding to your study of the problem we have determined that we have a average BATNA set alongside the Motosuzhou. We presume that people have a moderate BATNA considering the fact that China is now world's number one economy. It really is predicted that by the entire year of 2025, China's economy will be by far the largest overall economy on earth. Throughout all the years, China always has been a independent country. They would prefer not to get any help from in another country. They want to solve their own problems and offer using their own situations. This may also be the reason for Motosuzhou to choose to do business by themselves and make an effort to improve their own situation without any help of Electrowide.
If this might take place our BATNA would be as follow: we will take a glance on certain other strong economic developed countries to work with. If we check out Japan we also could do business with them if not we could do business with Brasil which is now quickly a strong financial country.
Regarding to the ideals, we wish Motosuzhou to signal a deal for the joint venture.
One of the ideals is the fact that Motosuzhou will help us to make and sell engine unit management systems that run emission-control, fuel nozzle, and ignition systems for Chinese-made vehicles.
The output of this creation would be sold to the Chinese market. From then on we wish to export this result immediately abroad.
Another ideal would be that both gatherings Electrowide and Motosuzhou funding each 50% of the investments incurred in building the joint venture. This would be considered a good offer, because the jv will eventually have advantages of both get-togethers.
Regarding to the fallbacks, our fallback will be that Motosuzhou is not inclined to sign the contract to start out the joint venture. That they do not buy into the terms and conditions that people have establish. This will mean that people have to find other people to work out about starting a joint venture. Another fallback will be that Electrowide would funding most of the cost incurred in creating the jv instead of the 50%-50% section what we had set as an ideal.
Deciding our priorities will allow us to become more efficient, since not all issues tend to be equally important. To begin with we have to keep in brain that people are employing another type of culture. We realize that they could take a look at certain issues in another way than us. That is why a good culture research is really important. This is our main top priority to look at before doing business.
Because we are in their country and we have to respect their rules and values. To have a good position compared to the Chinese affiliate our priority is to review their priorities they want to see from a foreign company. Which means that we must be respectful, genuine and trustful towards our Chinese language associates. We must be patient and not willing to execute a quick deal, because it is also best for us to locate all the issues that will emerge starting a joint venture. We have to choose a long-lasting relationship to have a good position and to have a good chance of reaching our deal with them. It is also pre easily could speak their terms or other people of my team. So that they can note that I am really trying to get to know their culture which I am enthusiastic about them.
The second main concern is to attain an arrangement for having a jv in the foreseeable future with Motosuzhou. By understanding their culture and eager to truly have a long-lasting partnership it would be easier for us to come to a agreement. We have to take time to get to know one another.
The final goal would be that both people Electrowide and Motosuzhou fund each 50% of the investments incurred in creating the joint venture. This would be considered a good offer, because the joint venture will eventually have advantages of both get-togethers.
During my research I've investigate the way the Chinese culture will effect the negotiation behaviour and positions. I suppose that in this negotiation about the jv, they will set up a cool frame of mind and which will be very introvert and formal. They would like to see what we have to say and what we have to offer. They would like to see if we have been a company who'll offer them opportunities for increasing their business on the Chinese language market and not just trying to make the best package for ourselves. We believe that they first want to get to know us better. They'll look if we are potential for them to make a long term marriage with. They would also looking to get whenever you can from the deal. They will put us on the test, by arriving with exaggerated offers to look what lengths they are able to go with us. We believe that the negotiation could last a long time. This can be one with their tactics understanding that Americans do not like to truly have a long negotiation. They will use a lot of silent occasions because they know People in the usa will be uncomfortable with this. They know that if indeed they negotiate so long as possible the North american gives up and easily trust a certain proposal. They will try to use our impatient against ourselves. We also believe that they are going to look for a good marriage (Guanxi). We presume that building a good relationship will need lots of time. This means that we must accept that to make much.
Given our moderate BATNA, a bargaining approach will be used during the negotiation. This would be the only way we can use, because in our average position to work out resistant to the other party and as a result of distinctions in culture. Through the research we have found out that they are growing in their bargaining stance. To be able to discuss we will trade options with one another. We use the tactic of presenting and taking. It'll be a back and forth through the negotiation. With the right procedure of bargaining we're able to make some arranges that will give eventually a win-win situation for both gatherings. We want to have a deal to make the joint venture and if we have an agreement they want us to financing most of the cost incurred in building the jv. Which means that we must look for the possibilities which will explain our bargaining procedure. We must keep in head that we do not have yet a good relationship with the Chinese. We have to not demand to much of the other get together. In the foreseeable future we can look for other opportunities, but first it's important to create a good relationship. It is good for an American to comprehend how the culture of the Chinese people works. Because if you don't, it would be difficult to get the best deal out of the negotiation. As an American it is important that you can conform the habits of the Chinese. Be flexible. If you can try to speak their vocabulary this will improve your position set alongside the Chinese. Don't be impatient, because the China will use this against you. Find the right person to speak to, because if you are speaking with an intermediary you know that he/she isn't the person who makes the final decisions. Try to lessen your 'no's' to be not disrespectful and rude. Try to put your no in a indirect way. Be cautious with presenting too much information. Chinese are productive listeners. They would like to make you discuss. Try to get an exchange of information (bargaining). When you discuss with your Chinese language partner the main thing you need to do is to proven the romance/partnership (Guanxi). Furthermore, a lot of body language as eyes contact will be utilized. Finally, active being attentive will be very important also used to confirm understanding.