The Canadians could have more effectively
prepared for the negotiations with their Chinese counterpart by following these
– Develop relationship with their partner
and develop a respect for each other before the negotiation.
– Be patient while negotiating with the
– Share more relevant information and their
position with the Chinese.
– Ask if the Chinese company had any
concern regarding the presentation and the deal that they offered.
First of all, understanding the difference
between the 2 cultures is a key importance for the Canadian executives prior to
entering the negotiation. China is the high-context country in which unspoken
communication and interpersonal relationships are more important than in
low-context cultures (textbook page 150). Chinese business people typically
spend a lot of time discussing non-business matters and share personal hobbies,
family life and the like. Canadians may see this way of approaching a new
business as inefficient and time-consuming but this is how their Chinese target
customers judge Canadians’ characters and see if they are trustworthy enough to
conduct business with. “There is a difference between Chinese and Canadians on
how to build trust” – said Dan Harris, a leading authority on legal
matters related to doing business in China and in other emerging economies in
speaking, trust in American countries are built on social and legal systems,
while trust in China is built on personal relationships”. In some of Asian countries, the legal system is not trusted
because it can’t always protect people. They can’t trust new business partners
because there are so many dishonest businesses out there. Nothing can guarantee
that Canadians are one of them, which is the reason why the Chinese usually
spend time hanging out and talking out of the office in order to observe and
judge their partner.
By understanding this psychological pattern
of their partner, Canadians should have expected a longer trip to China. It
could have been foreseen that their Chinese partner would spend days to develop
personal relationship with Canadians, not just go straight to the main point the
way that Western people tend to do. Like other countries in high-context culture
such as Korea, Japan, India, Chinese places a large importance on long-term
relationships and loyalty. Von Weltzien Holvik, a professor of Norwegian
Business School, once stated that first-time negotiations with a Chinese
partner often end in failure because of the length of the time it takes to come
to the point. However, once a strong relationship is built, Chinese businesses
are more likely to feel obligated to do business together.
Another issue that should be identified is
that what the Canadians shared information might have been too general to drive
their partner to the final decision. One thing the Canadian could have done
prior to the meeting is to list the information needed to resolve potential
disputes or build a strong deal. The anticipated information that the Chinese
team would ask should have been identified so that the Canadians could have got
better preparation. According to staff of Program on Negotiation, Harvard Law
School, information discussed while negotiating typically falls into 3
– Facts: Information about accomplished
businesses, relevant past events, goods and services; continuing obligations
and liabilities when cooperating with international companies.
– Opinions, values, and predictions: Information
such as a company’s value, the potential outcome of their machinery and
technology should be included.
– Preferences: Information expressed as
negotiators’ needs, interests, desires and especially prices.
If these factors had been identified, the
Canadians would have been ready to consider whether to reveal or while
Other than those points indicated above, after
the first presentation, the Canadians should have asked for more opinions from
the Chinese company. Apparently, the Canadians noticed that their host just
nodded and smiled; furthermore, they could also sense that the negotiation
could not be wrapped up that day but did not ask the other team anything
related to the presentation, or whether there were unclear points that they
could probably provide more details. Eldonna Lewis-Fernandez, CEO of Dynamic
Vision International Inc., showed her points of view on questions necessary to
be asked that should be applied to this case of the Canadian executives. Some
of them are listed below:
– What part of my proposals gives you the
do you think the price that you proposed is fair and reasonable?
– Is there any reason that makes it
impossible to reach the final agreement?