5100_PDF.fm - negotiation-in China.pdf

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• In Chinese business culture, a person’s reputa- tion and social standing rest on saving face. If Westerners cause the Chinese embarrassment or loss of composure, even unintentionally, it can be disastrous for business negotiations. The Chinese notion of saving face is closely as- sociated with American concepts of dignity and prestige. Mianzi defines a person’s place in his social network; it is the most important measure of social worth. Sources of face can be wealth, intelligence, attractiveness, skills, position, and, of course, good guanxi. But, while Americans tend to think in absolute terms—a person either has prestige and dig- nity or doesn’t—the Chinese think of face in quantitative terms. Face, like money, can be earned, lost, given, or taken away

• had won negotiation rights for an order of 100 ATMs from the Bank of China. Toward the end of the process, the bank buyer asked for deeper price cuts. To him, the sticking point wasn’t just a matter of thrift. He told Honey- well-Bull representatives, “If the price isn’t re- duced further, I will lose face.” This is Chinese for “The deal will be off, and we’ll talk to your competitor.” The seasoned Honeywell-Bull ex- ecutive responded that he had some room to move in the bid, but the lower price would not allow for training Chinese managers in the States. The Chinese representatives then asked for a ten-minute break and came back smiling, agreeing to all the terms. In retrospect, the training program was much more important to the Chinese executive. The U.S. trip for his staff yielded him more mianzi than the re- quested price break.

• By contrast, when those negotiating with the Chinese break promises or display anger, frus- tration, or aggression at the negotiation table, it results in a mutual loss of face. In the West, sometimes a mock tantrum is used as a negoti- ating tactic, but in China it invariably backfires one way or another. Causing the Chinese busi- ness partner who brought you to the table to lose mianzi is no mere faux pas; it’s a disaster