Bargaining in Beijing: A Cross-Cultural Negotiation Role Play
Your team represents Dansk Meat A/S, a Danish firm exporting plants for processing turkeys into low-fat hams, bacon and sausage. In DM’s super-modern, ecological and ultra-hygienic plants the turkeys trot in the front door and pop out the back door two hours later as juicy sausages.
Last year you sold plants to Hungary, Mexico and Germany. Your new target market is China and you are now in Beijing on your fifth visit, hoping to conclude a sale.
Your prospective customer is China Foods, a big public sector company. Mr. Yi Er San, head of procurement, is a tough negotiator. You and Mr. Yi have agreed on all open issues except cost: he keeps insisting that your price is too high. But you have already reduced your offer by the 10% margin which your management had added to the initial quotation and you now have no room for a further reduction.
Your final offer to China Foods is DKK 2.2 million per unit, the lowest price your company has ever offered.
Nevertheless old Yi keeps hammering on the price issue and seems to expect further price concessions.
Your strategy has been to keep reminding Mr. Yi of the superior quality and efficiency of Dansk Meat’s plants, which your research confirms can command a premium price in China. But although you have built a good working relationship with Yi during numerous meetings and dinners, he smilingly responds that other foreign suppliers are offering better prices.
At last week’s meeting Yi even hinted that China Foods may decide to buy from Poland, the USA, or Italy unless you can offer him a “substantial concession.”
As you prepare for today’s meeting you continue to ponder ways to overcome Mr. Yi’s apparent obsession with price.
KEY ELEMENTS OF THE CHINESE NEGOTIATING APPROACH
Public sector counterparts
· Officials may expect bribes.
Both private and public-sector companies
· A w-i-d-e bargaining range, tendency to haggle.
· Negotiations tend to proceed relatively slowly.
· Frequent indirectness in language, often avoid saying ‘no’ directly.
· Mobile phones ring regularly during negotiating sessions.
– Great bargaining persistence.
· Frequent repetition of standpoints.
· Building guanxi with counterparts is very important.
Your team, headed by Mr. Yi Er San, represents China Foods, a big state-owned company based in Beijing. You are negotiating with representatives of Dansk Meat A/S, a Danish company exporting plants for processing turkeys into low-fat hams, bacon and sausages.
In DM’s modern, ecological and ultra-hygienic plants, turkeys trot in one door and pop out another door two hours later as juicy sausages. Last year DM sold plants to Hungary, Mexico and Germany, now they are in China for their fifth visit with you, hoping to conclude a sale soon.
You and DM have already agreed on all open issues except cost. (Actually you find the new offer of DKK 2.2 million per unit quite acceptable, but you would very much like an all-expenses-paid visit to the DM plant for yourself, your boss and wives or mistresses.)
If the Danes agree to that, then you will want to route the trip to stop in Los Angeles (your boss wants to see Disney Land) and then in Las Vegas. In Las Vegas of course you will expect some dollars for casino play…
Remember, you do want those Danish processing plants but you also want to get that trip paid for!
ELEMENTS OF THE DANISH NEGOTIATING APPROACH
· Directness in language.
· Narrow bargaining range.
· Tendency to become impatient when negotiations proceed slowly.
· Adherence to schedules and deadlines, punctuality at meetings.
· Mobile phones are turned off during negotiating sessions.
· Tendency to be task-focused rather than people-focused.
· Danish values discourage the use of bribery.