The ability to negotiate successfully with the Chinese is an important part of success in the Chinese market. Chinese negotiators have different principles and use strategies that are often unfamiliar.

The Chinese are generally not comfortable with negotiation. Implicit in the process of negotiation is the potential for conflict and confrontation, whereas theirs is a culture used to compromise and harmonising relationships. The Chinese instinct is for agreements worked out behind the scenes on the basis of give and take, harmony and long-term interest. The key to successful business dealings with the Chinese lies in the cultivation of friendships. The concept of friendships and relationships is culturally important and achieving them leads to a smoother business venture based on trust, mutual respect and long term gains for all parties. Especially at the commencement of a relationship, the Chinese will spend a great deal of time getting to know their potential partner.

Trust is a concept highly valued by the Chinese and it also represents a good modus operandi. In the Confucian tradition living up to one’s promises is a major moral virtue. This does mean that every Chinese negotiator is trustworthy and above suspicion. But it does mean that the Chinese see no basis for entering into negotiations which are aimed at long-term objectives and mutually acceptable gains, if, within a broad framework of how things are expected to operate, either party must constantly be on guard and cannot leave better judgement to the other party in times of necessity. There should be scope for either party to act appropriately and independently to achieve mutual benefit. However, this can only be achieved through some form of mutual reliance and ultimately trust. The Chinese find it difficult to comprehend how business partners can co-operate on a long-term basis if there is not trust between them.

Implicit in the concept of trust is friendship and friendship and trust form the key elements of business relationships between Chinese and foreigners. The Chinese, therefore, take particular trouble to establish friendship and relationships before they are ready to enter into business. Problems can be solved more readily by negotiators who have mutual respect and who have established close personal relationships than by those who choose to remain aloof. It is estimated that especially in the early stages of a negotiation, up to one third of the time can be spent in getting to know the potential partner and building the relationship. The giving of gifts becomes an essential part of establishing and developing relationships. The giving of a gift symbolises an intent to cultivate and maintain goodwill. For the Chinese, it is a way of giving "face" to the recipient to promote friendship and promote rapport.

In the Chinese business culture, dining together is an important part of the negotiation process. A Chinese banquet not only helps to foster inter-personal relationships, it also provides a less formal setting in which problems and difficulties encountered at the negotiating table can be discussed in a more relaxed manner and solutions can be proposed in an atmosphere which will not lead to a loss of "face" if they are declined.

The discovery of mutual friends on either side of the negotiation is regarded as an important asset and it can facilitate the negotiation. Because of BDI’s wide relationships at senior level throughout China, we can provide clients with these mutual friends and thus smooth the course of negotiations.

BDI helps clients to understand the Chinese business environment, to prepare thoroughly for negotiations and assists them to develop long-term relationships with the Chinese.

The rules of the game are set by the Chinese and winning is decided by who wins the trust and the approval of the Chinese. The Chinese are hard bargainers and use the bargaining process itself as a tactic to win. It should always be remembered that for the Chinese, everything is negotiable and they are negotiating all the time. In China much of their education is done by rote and the Chinese have excellent memories so it is essential always to be on your guard and refrain from making ill-considered remarks otherwise they will use them against you at a later date. This can be of particular importance when they are discussing matters with individuals who are not directly involved in the negotiations such as technical personnel or, dare we say it, some top management!

To the Chinese, foreign companies are too often inflexible in their business approach to China. The rationale of the Chinese is simple; the business climate in China has undergone and continues to undergo wrenching changes and any business strategy must be sufficiently flexible to adapt to changing circumstances. Accordingly, even after a contract has been negotiated and signed, it only forms the basis for future negotiation as circumstances change.

An important negotiating forum is the informal meeting away from the negotiating table. We have already alluded to the Chinese fondness for working out agreements behind the scenes and it is here that solutions to problems can be floated without the fear of losing "face" if rejected. BDI plays a particularly valuable role in this area, as, interposed between the two negotiating partners, we are viewed as honest brokers and our experience and knowledge of both Chinese and Western business practices allow us to suggest creative solutions to what are often difficult problems.

For both sides in the negotiation, the key to a successful negotiation is thorough preparation. Many foreign companies are too impatient and want to enter into face-to-face negotiations immediately, neglecting the preparation phase. The most famous Chinese military strategist, Sun Tzu, a writer whose ideas have widespread acceptance among Western business thinkers, wrote, "knowing the strength and weakness of both yourself and your enemy will guarantee victory in every battle".

It is therefore important to examine your own company to determine exactly what it is that you bring to the

The Chinese prefer to obtain as much information as possible before they actually sit down to negotiate. This is partly due to their lack of information on foreign companies, their products and their technologies. Foreign companies going to China should not assume that their company is well-known and should prepare a package of information which will answer many of the questions that the Chinese may raise. BDI also recommends that a company produces a "China Prospectus" which, when translated into Chinese, will provide information on the company and its objectives in China.

Chinese companies, too, will have their own objectives in any co-operation and wise negotiators will spend some time determining what it is that the Chinese require from a deal and how they might help them to achieve these objectives in a win-win negotiation. It is important, where possible, to build these objectives into your proposal, so for example, if you have determined that one of the attractions for the Chinese is a visit abroad (as is often the case), this is already costed and included in your offer.