For many of his colleagues, Sandro is an old Chinese peon. Having been working in various cities in China for the past 7 years, he has more work experience here than most of his Chinese colleagues.
One of the key success factors that he attributes to the success of Sandro’s career in China is that he takes the time and patience to listen and understand his Chinese colleagues, suppliers and partners. While some of the business practices in China can be very different, even contradictory, from those in his native Germany, Sandro has always been patient enough to understand why certain things are done a certain way, and then looks to his counterparts. Chinese understand. why some things have to be done internationally.
So when it came time to negotiate a major deal with a key supplier, Sandro decided to let his Chinese project manager take the lead in the negotiations. Since Sandro had not yet had the experience of negotiating such a large project in China, he thought it would be a good idea to learn from the local expert.
The Chinese Project Manager, Mr. Chen, shared with Sandro his negotiation strategy, which is to keep quiet and squeeze them for the lowest price. And that was what he did.
Halfway through the negotiations, Sandro discovered that things were deviating from his objectives, such as:
• Although the company has a policy of minimizing purchasing costs, there have been frequent cases of suppliers unilaterally increasing prices because they realized that the agreed prices were below their costs. If the buyer does not agree to the price increase, the seller will cut supplies. And since the agreed prices were below cost, the buyer could not find other alternative suppliers to also supply at those prices.
• One of the key requirements for this agreement is that the supplier commit to various quality and delivery guarantees, which are critical to the buyer’s output. However, these issues have not been discussed as Mr. Chen fears that discussing them will increase his purchase price. Mr. Chen thought it was best to secure the best price and then set these requirements once the price has been agreed. Sandro knows that if these requirements are set after the price has been agreed, the supplier may not meet his quality and delivery guarantees because the price he gets does not cover the costs of the additional work.
With these observations in mind, Sandro wondered if there was a better way to gain long-term commitment to the agreements negotiated in China.
Formulating your trading strategy
“The victorious army plans victory before fighting, the defeated army fights before planning victory,” says Sun Tzu in The Art of War. The same principle also applies to the formulation of trading strategies. We can use the 5 elements of Sun Tzu:
• The Path: Your Goal or Desired Result
• The weather: external factors beyond your control
• The Terrain: External Factors Within Its Influence
• The General: The people who conduct your negotiation
• The method: how the negotiation should be carried out
To begin with, you will need to define what the objective or desired result of the negotiation is. The most important concern you should have is whether you just want to win the negotiation or whether you would like to have a sustainable outcome of your choice.
Interestingly, while it is often mentioned that Chinese businessmen expect negotiated agreements to be renegotiable later should unforeseen circumstances arise, most Chinese negotiators tend to view a signed contract or agreement as an indication of the success of the business. the negotiation. They are often too myopic to see that if the deal is not sustainable in the long term, or if it is seen as unfair, their negotiating adversaries will want to negotiate again. As such, the negotiated results are NOT sustainable.
Therefore, to reach a sustainable trading outcome, you will also need to consider a few more factors, such as:
• What is the outcome of the negotiation you want to achieve, other than price or immediate gratification?;
• What is the best case, second best case and worst case scenario?;
• Why should your adversary agree to your demands or requests;
• What are you willing to give in exchange for what you receive?;
• When to withdraw and negotiate with someone else?
The next question then is: would it be safe to tell our adversaries what we want?
The best victory is the one won without fighting.
In simple terms, negotiation can be defined as: getting others to give you what you want by giving them what they want.
The problem is that most of us would like others to give MUCH MORE of what we want, while we give the least of what they want. While the reason behind this thinking is to control costs or maximize profits, however, there are some flaws in this logic:
• It does not mean that if you give them much more than they want, it will cost you a lot. There are some things that you can give away at little or no cost, but that can greatly benefit your opponent;
• Many times, the costs of NOT getting what we really want (other than the lowest price and immediate gratification) are greater than the savings of giving up so little of what they want; and
• Sometimes it is necessary to educate your adversaries so that they understand what sustainable outcome it is that they really want too!
As Sun Tzu says, “The best victory is the one won without fighting.” If you want your adversaries to give in to your demands or give you a lot of what you want, you may want your adversaries to feel like:
• When they give you what you want, they’ll get what they really want (plus price and immediate gratification);
• You will make sure that any deal you make with them is something they are happy with, even if it is done in their best interest;
• Makes a conscious effort to move from being negotiating adversaries to being long-term partners.
Sun Tzu also says, “Use conventional methods to get organized, but use ready-made methods to achieve victory.” Endlessly talking about price will end in deadlock, but if both parties are willing to explore the reasons why they want what they want, they might come up with a creative solution that meets each other’s needs.
There is a Chinese expression called “words spoken from the bottom of the heart”, which is actually quite common among buyers and sellers who have been doing business together for a long time. It goes back to the Chinese ideal of caring for the well-being of its trading partners, even if they may be their negotiating adversaries. The trick is to get your opponents to trust you quickly enough for this effect to occur.
Know yourself and your adversary
When we mention that we need to earn the trust of our adversaries, it doesn’t mean that we are just being nice and sacrificing all our gains. Hence Sun Tzu says: “Know yourself and know your adversary, fight a hundred battles and do not put yourself in danger in any.”
What this means for the negotiator could be:
• You cannot win with ALL opponents. Knowing who you can trust and getting them to trust you is key to winning results;
• You don’t just learn about your opponents by just talking to them. You can learn more about your adversaries (even if there is a dire need for you to give them what they want) from your colleagues, business partners, or general industry news; and
• In negotiation, knowing your adversary can be just as important as letting your adversary know you. If the adversary is someone you don’t know, start by revealing less sensitive details in smaller deals.
In short, while there are overwhelming tips, techniques, and other resources on how to win in negotiations, there is only one thing on your adversaries’ minds: “Why should I let YOU win?”
Here’s one last little story to illustrate why it’s important to make your opponents want to let you win, rather than crush them. We often see some unreasonable and rude guests in hotels or restaurants who make unreasonable demands to the service staff very rudely, knowing that because they are paying the money, the service staff will have to say “yes” to most of them. your rudeness demands. While some wait staff simply suffer in silence, some experienced wait staff know how to get even by secretly spitting or adding other unmentionable “ingredients” to the rude customer’s food.
The moral of the story: Even if you have overwhelming bargaining power, you may still want your adversaries to want you to win. As in the Art of War, “To win, use reason to connect with your people and use discipline to implement your strategies.”
by cj ng