THE LONG AND WINDING ROAD: NEGOTIATING WITH THE CHINESE

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I made my first trip to China in 1985. The journey over had been an arduous one: from the East Coast to the San Francisco; from San Francisco to Hong Kong; from Hong Kong to Beijing. And Beijing, although mistily beautiful, was sunless and, at night, dark. There were no neon lights—only a few streetlights at strategic intersections—and very few hotels and restaurants. China was just beginning to fully open its door to the outside world (Deng Xiaoping came into power in 1978, and emphasis on Science and Technology and infrastructure began in full sway in the early 1980s (Fairbank, 1992)), inviting foreign business interests to the table. I made the trip as an attorney for a telecommunications firm with the hope that China’s reputed hunger for technology would result in one or more joint ventures.

It would be fair to say that my first trip to China put me into cultural shock. Beijing is one of the great cities of the world. However, it was, during the eighties, unlike any I had ever seen. While during the day the city bustled with buses and bicycles, a few cars, and many pedestrians, at night, the streets were empty and dark with large knots of Chinese gathered under mercury vapor street lights talking and laughing. Our party stayed at a relatively new hotel owned by the state, one with some architectural style, and unlike the concrete-block buildings the Russians had built, formerly used for visiting guests. There were no commercial establishments other than The Friendship Store for foreigners. Without the outward veneer of Western commerce, some in our party felt that we were going to be dealing with "primitives" who rightfully should be in awe of our demands for eggs and bacon for breakfast, five hundred dollar suits, unlimited science and technology, and aggressive negotiating. These assumptions proved to be wrong.

In spite of the lack of restaurants and other evening diversions found in London, Paris or Santiago, the Chinese treated the party to nightly banquets at the hotel, with unusual and exotic foods, numerous toasts with Mai Tai's, and various other elaborate rituals. They also scheduled trips to the Great Wall, Fragrant Hills, and other attractions. This continued each night we were in Beijing, and, in spite of cultural differences, I found these banquets to be delightful and the Chinese people to have a sense of humor and a twinkle in their eyes. I believe this to be their natural inclination, but as it turned out, these very qualities and others, as we discovered, played an important part in negotiating agreements.

When negotiations finally began several days into the visit, to our surprise, we found an entirely new team of people as negotiators, including several women. Fortunately, we had our own interpreter who gave us a comfort that our positions were getting into Chinese as we wished. The Chinese also had an interpreter, which I thin k helped them also. Thereafter, we began a long—and I might say laborious—effort to get the ball rolling. We stated what we had to offer: the best communications systems in the world, and the expertise to back it up. We wanted a piece of the enormous Chinese market. The Chinese were not impressed. This was surprising in view of the government’s stated position that it was open to deals and joint ventures which would enable China to upgrade its infrastructure, particularly its telecommunications network. But, instead, they wanted to talk about who we were, where we were from, how we were liking our stay, how we liked the food and banquets, and they wanted to know how we enjoyed the acrobatic circus we had seen the night before. In short, they wanted to discuss everything but giving us a part of the Chinese pie and transferring expertise and technology to China. The executives on our team were frustrated: they wanted to come back with a neatly packaged, if not extremely ambitious, joint venture agreement. That was not to be, at least on the first trip.

We did discuss finally with the Chinese how such a venture might look. And, again, we were surprised that their openly announced desperate need of infrastructure did not give us the upper hand in bargaining, or so it seemed. As they saw it, a joint venture would mean that we would pay Chinese employees of the venture United States wages. This did not mean that these employees would become the wealthiest citizens in Beijing; no, it meant that these workers would make exactly the same wages as their counterparts in non-joint venture endeavors (the telephone system, for example), while the overage went to the Peoples Republic of China. The completed agreement would call for a transfer of technology, but we would not be able to get our money out of the venture because, as the negotiators said, other authorities in the government prohibited them from allowing hard currency to leave the country. They suggested that we get into the counter trade by exporting Chinese rugs, lacquer products, and so on, selling these products in the United States for our share of the profits. It was frustrating, but we learned a lot, and, eventually, we did form a joint venture on a later trip.

As a result of the efforts on the first trip, as well as additional research, several things became apparent about negotiating with the Chinese.

1. Civilization and Philosophy. Time, to the Chinese, does not mean the same as it does to us. Historically, wisdom is thought to evolve from long and laborious study and scholars are revered who work as if time is eternal. (Davies and Clark, 1994). Thus, they do not value time as we do in the West. The Chinese have a long-range view of things; they are not in a hurry. As a corollary, in their view, we do not have anything to tell them about civilization, as they have been at it much longer than we have. Science and Technology, to the Chinese, is only one aspect to their life and civilization. The Chinese, as a result of their various cultures, strive for perfection. They want to be as sure as they can about agreements; they want to get it right, and they want to feel comfortable in personally investing in the end result of the negotiations.

2. Sociology. Contrary to Western business culture, the Chinese are group oriented and do not place any stature on aggressive behavior. They strive to gain their objectives though consensus. Harmony in life is considered to be the ideal. This springs from a concept called guanxi, "connections" or "friendship." (Fairbank, 1992) This is a concept that is deeply embedded in all of Chinese culture. It implies that each party will be able to make unlimited demands upon one another. But it also means that there should be a self-depreciating attitude. Thus, often the quietest, least likely person on Chinese negotiating team, is actually the leader of the team. Or, the actual leader may be one with an inferior rank (thus, Deng Xiaoping was called the "paramount leader" even though he was a vice-premier in formal status). Often, on a superficial level guanxi means that the Chinese will often welcome Westerners with elaborate offers of friendship, as our hosts did in 1985. Customarily the Chinese will try to establish a special relationship with opposite negotiators. This places the negotiations on a difference level, often alleviating the worst of Chinese negotiating tactics called the art of war, which I will discuss below.