Chinese and Western negotiators view contracts and relationships very differently. Experienced Westerners often say that the real negotiation starts AFTER the contract is signed with their Chinese counterparty.

1. Conflict Management in China
Post-Negotiation Stress Syndrome
Presented by ChineseNegotiation.com
& ChinaSolved.com
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2. Now available on Kindle and other
eBook formats:
In The Fragile Bridge
Andrew Hupert,
publisher of
ChinaSolved, shows you
how to avoid conflicts in
China when you can,
minimize them when
you can't, and manage
them when you must.

3. Post Negotiation
Stress Syndrome
• What is the most difficult aspect of
successfully completing a business deal?
– Western answer: Finding appropriate counter-
parties.
– Chinese answer: Post-agreement implementation.
• The most important negotiations in China
take place AFTER a contract has been signed.
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4. What’s the biggest
business challenge?
• We ran a pair of surveys on Linkedin recently.
• One survey appeared on a set of Linkedin
business groups with NO specific geographic
orientation and asked, “What is the most
difficult aspect of doing business?”
– A second survey targeted China-oriented groups
• We broke down the deal process into 5
phases:

5. What is the most difficult part?
1) Finding appropriate counter-parties
2) Clarifying deal terms
3) Finalizing the deal – signing the contract
4) Executing the agreement / doing the actual
business
5) Post-deal compliance & Quality Control
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6. What is the most difficult aspect of doing
business?
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7. What about China?
• A similar survey was run among China-
business oriented groups that asked the same
question – with the addition of 2 words.
What is the most difficult aspect of doing
business in China?
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8. What is the most difficult aspect of doing
business in China?
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9. What is the most difficult aspect of doing
business?
Globally:
Pre-Signing
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10. What is the most difficult aspect of doing
business in China?
China:
Post-Signing
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11. 3 possible explanations:
1. Cheats & Liars; Buffoons & Idiots
2. Inappropriate counter-parties
3. Just another day in China.
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12. Cheats & Liars /
Buffoons & Idiots ?
• Whenever a cross-border negotiation goes
awry both parties tend to hit the ‘cultural
panic button’.
– Westerners accuse the Chinese side of dishonesty.
– Chinese tend to blame the Western side of being
dim-witted & inexperienced.
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13. Cheats & Liars /
Buffoons & Idiots ?
• If there were truth to this argument then few
Westerners would stick around for a second
attempt -- and international trade in China
would collapse.
• Research indicated that even among
experienced, successful Western business
people in China - post-signing renegotiation
was the rule and not the exception.
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14. Inappropriate
counter-parties
• In China the opportunities are vast, the
culture different
• Due diligence procedures are cumbersome.
• References are hard to get – and harder to
check.
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15. Inappropriate
counter-parties
• The result:
– Western deal-makers often hear what they want
to hear in order to report good news to the home
office quickly.
– Chinese counter-parties tend to preserve harmony
by glossing over problems and making promises
they can’t keep.
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16. Standard Procedure in China
• Chinese negotiators put more emphasis on
the relationship, and less on the contract.
• Chinese businesspeople feel that as long as
the relationship is intact, negotiations are
ongoing.
• Negotiations don’t end because they aren’t
supposed to.
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17. Standard Procedure in China
• Experienced Westerners anticipate the post-
contract negotiation, and plan accordingly.
• They budget the time and resources for
extended negotiation.
• Prepare HQ, clients and downstream partners
that the contract signing doesn’t mean the
end of the negotiation.
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www.ChineseNegotiation.com

18. Remedies for Chinese
Post-Negotiation Stress Syndrome:
1. Manage time differently
2. Vet counter-parties carefully
3. Discuss difficult details early
Even the most careful & experienced deal-
makers should plan for a second ‘post-deal’
negotiation
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19. 1. Manage time differently
• Negotiators who fly into China with a firm
timetable and a deadline for a signed contract
are most likely to end up with a worthless
piece of paper.
• The best negotiators know that the answer to
‘how long will spend in China?’ is:
‘as long as it takes to get an agreement that is
good for everyone.’
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20. 2. Vet your counter-parties
• Honest & reputable are vital prerequisites in
potential partners – but only as a first step.
– Competence and APPROPRIATE experience are
what make good partners.
• Avoid being anyone’s first international deal in
China.
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21. 3. Discuss difficult details early
• Inexperienced negotiators are so sensitive
about ‘building guanxi’ and ‘making others
lose face’ that they fail to nail down an
enforceable agreement.
• Ask for references and perform thorough due
diligence.
• Keep smiling – but keep drilling down for
details until you get 100% transparency &
complete answers.
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22. Final Caveat
• Even the most careful & experienced plan for
a second ‘post-deal’ negotiation at the
execution phase.
– Make sure you budget the time, expense and
managerial bandwidth for the inevitable second
round.
– Lawyers and consultants must prepare their
clients IN ADVANCE.
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23. Now available: The Fragile Bridge
The Fragile Bridge:
Managing Conflict in
Chinese Business
Developing relationships
with Chinese partners,
suppliers and clients is hard
work — but profiting from
them can be even more
difficult. The bridges you
painstakingly built to cross
the cultural divide are more
fragile than you thought.

24. www.ChinaSolved.com
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www.ChinaSolved.com
October 24, 2009
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