In China, the art of negotiation is often compared with the art of war.7 Therefore the “Thirty-Six Strategems” and Sun Tsu “The Art of War” are very popular literature among Chinese negotiators. This facilitates also a → win-lose perspective, even though Chinese negotiation literature also covers­ the win-win aspect of negotiations. This approach is moreover linked to the attempt to utilise the 36 stratagems and other classical recommendations, and to develop effective tactics for the own side. For example, the famous stratagem No. 6 “make noise in the east and attack from the west” is used in negotiations by deceiving about priorities and switching the own concessions in seemingly important questions with concessions of the other party in the questions that are actually essential for pursuing the own interests (→ padding).8

4.2.7  Negotiation Preparation

In China, major importance seems to be attributed to the comprehensive preparation of negotiations. However, the accessible literature does not offer any detailed information on this specific negotiation phase, although it emphasises the prior analysis of interests, the negotiation aim and possible tactics.9 Practitioners routinely report that Chinese negotiators are very well prepared. In this regard, Chinese negotiators do not solely gather the information relevant for the actual business deal (→ information procurement). According to the overall approach they also inform themselves about the other party’s market position, market behaviour and relationship network. Information is essential in the Chinese negotiation culture. This also explains why Chinese negotiators ask so many → questions. The value of information is so high that, the use of illegal information procurement methods by Chinese negotiators was at times reported in Western media.

Pre-negotiations concerning the venue, time and the → agenda are very common in bigger projects. The first contact before the actual negotiation preparation often takes place using a mediator with a powerful relationship network and high social rank. In some instances, international enterprises have employed the grandchildren of the originally leading cadres of the Chinese communist party as mediators.

4.2.8  Venue, Time and Composition of the Negotiation

Delegation

Negotiations with Chinese companies predominantly take place in China. This applies regardless of the fact that many Chinese negotiators are interested in negotiating contracts abroad, not only to get to know the country better, but also the

7 Cf. Mehring (2017) with further references (translated and commented edition of the book (with the same title) by Liu Birong, one of China’s leading negotiation experts).

8 Cf. Mehring (2017), p. 287 footnote 416.

9 Cf. Mehring (2017).

technologies employed by their negotiation partner. Interest in a return visit is often reciprocated at a later stage. Negotiations usually take place in a conference room of the Chinese company. Other conference rooms near the company are also a suitable location.

Traditionally, Chinese negotiators prefer to set a negotiation date with a long temporal forerun. Having said that, appointments for negotiations with e.g. entrepreneurs are commonly made at short notice. In addition, Chinese negotiations are very lengthy. This is mainly due to the long acquaintance phase as well as proceeding carefully throughout the actual negotiation. In contrast, Chinese negotiators are also familiar with the different practice of short, effective negotiations, as prevalent in the USA or Germany. They do not, however, appreciate this manner of negotiating. Since Chinese negotiators sometimes attempt to use time pressure (→ deadline) shortly before their date of return, it is common that foreign negotiators visiting Chinese companies are flexible regarding their return journey or opt for a sequenced negotiation process with different stages and will under no circumstances reveal their return date. For normal length negotiations, periods from Tuesday to Thursday are ideal.10 Due to the significance of hierarchy and age, the ideal negotiation delegation mirrors the opposing party regarding their choice of chief delegator, taking their hierarchical structure and age into account too. Hierarchical differences among foreign negotiators are generally compensated by the creation of special titles especially to be used in the negotiation with Chinese business people. Age differences can generally be overcome by choice of clothing and attitude. In the past, Chinese negotiation delegations generally included a large number of negotiators. These days, although Chinese delegations are still bigger than Western negotiation delegations, the difference between the two seems to be diminishing. Rank, age, and decision authority matter to Chinese negotiators and are the recommended alignment points for their Western negotiation partners. Chinese negotiation books differentiate between teamleaders and main negotiators.11 In order to build trustful personal relationships, personal constancy among the respective negotiators is essential.

4.2.9  Acquaintance Phase/Small Talk

Based on the reasons aforementioned (i.e. no trust in legal security, significance of Guanxi for trust in the business partner), Chinese negotiators do not tend to practice short → small talk, but prefer a longer period of becoming acquainted. This phase usually includes not only joint dinners but also sightseeing tours etc. At this stage, the parties do not discuss the actual agreement. Observations focus on the other party’s group structure and the social behaviour of individual negotiators. The main

10 Cf. Mehring (2017), p. 285. 11 Zhang et al. (2018), p. 115 et seq.

aim is to build trust between the negotiators of both sides, especially at the leading level.

4.2.10  Tactics in Contract Negotiations

As previously stated, strategies and tactics are highly valued. This promotes the application as well as the development of new tactics. Since there are numerous specifically Chinese tactics, the following section only mentions selected tactics. In this regard, tactics using deception (see topic list “deception”), which are anchored within the “Thirty-Six strategems” or “The Art of War” by Sun-Tzu, play a significant role. According to these traditional strategems, tactics, as well as the Confucian tradition, indirect deceit is far more common than making explicitly untrue statements. Among others, these deception tactics include bluffing about the value of negotiation points (→ padding) as well as the degree of concessions possible on the Chinese side.

Pressure tactics (see topic list “pressure and threats”) primarily focus on the competition situation. In some cases, for example, it is common to invite several Western companies which compete with one another for parallel negotiations. This creates an auction-like pressure according to the idea of → negotiauctions. In other cases, pressure is exerted on single negotiators once their individual weak spots have been identified.

That is the reason why the open threat to terminate the negotiation is rare. Furthermore, pressure and deceit can be combined. Oftentimes deceit only refers to the aim of pressure (see stratagem 6). False statements concerning content are far more seldom, even though this approach is governed by a specific stratagem (stratagem No. 7). This could conceivably be linked to the fact that the threat of the deceit being disclosed is significantly higher and would inevitably lead to a loss of face. Many tactics are based on the great importance of face saving. Hence, there are specific shaming tactics, whereby Western negotiators are accused of threatening the relationship with their behaviour. Past disputes are mentioned in the hope that this will give the other party a bad conscience. The aim is to achieve concessions in essential points. Chinese negotiators greatly appreciate Western negotiators helping to save the Chinese negotiator’s face, e.g. by foregoing a discussion of false statements and rather setting these facts right under four eyes. The importance of Guanxi and the according personal relationship promotes the use of manipulation tactics, aimed at exploiting the opposing negotiator’s personal relationship towards the business deal. Chinese negotiators are often very skilled at defeating tactics. Hence, they do not only explore the seriousness of a set → deadline but also exhaust the period of this deadline. This procedure aims not only to make the most of the time limit but also to expose the negotiating partner to negotiation stress (insecurity concerning the need to terminate the negotiation if the deadline is exceeded). Sometimes the Chinese side uses bilingual signs for the negotiation. Sometimes the wrong Chinese name sign is deliberately given to a Western negotiator. This is a ploy aimed