1. How could the Canadians have more effectively prepared forthe negotiations with their Chinese counterparts? The Canadians could have more effectivelyprepared for the negotiations with their Chinese counterpart by following thesepoints:- Develop relationship with their partnerand develop a respect for each other before the negotiation. – Be patient while negotiating with theChinese team.
– Share more relevant information and theirposition with the Chinese. – Ask if the Chinese company had anyconcern regarding the presentation and the deal that they offered. First of all, understanding the differencebetween the 2 cultures is a key importance for the Canadian executives prior toentering the negotiation. China is the high-context country in which unspokencommunication and interpersonal relationships are more important than inlow-context cultures (textbook page 150). Chinese business people typicallyspend 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 newbusiness as inefficient and time-consuming but this is how their Chinese targetcustomers judge Canadians’ characters and see if they are trustworthy enough toconduct business with.
“There is a difference between Chinese and Canadians onhow to build trust” – said Dan Harris, a leading authority on legalmatters related to doing business in China and in other emerging economies inAsia. “Simplyspeaking, 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 trustedbecause it can’t always protect people. They can’t trust new business partnersbecause there are so many dishonest businesses out there. Nothing can guaranteethat Canadians are one of them, which is the reason why the Chinese usuallyspend time hanging out and talking out of the office in order to observe andjudge their partner. By understanding this psychological patternof their partner, Canadians should have expected a longer trip to China. Itcould have been foreseen that their Chinese partner would spend days to developpersonal relationship with Canadians, not just go straight to the main point theway that Western people tend to do. Like other countries in high-context culturesuch as Korea, Japan, India, Chinese places a large importance on long-termrelationships and loyalty.
Von Weltzien Holvik, a professor of NorwegianBusiness School, once stated that first-time negotiations with a Chinesepartner often end in failure because of the length of the time it takes to cometo the point. However, once a strong relationship is built, Chinese businessesare more likely to feel obligated to do business together. Another issue that should be identified isthat what the Canadians shared information might have been too general to drivetheir partner to the final decision. One thing the Canadian could have doneprior to the meeting is to list the information needed to resolve potentialdisputes or build a strong deal. The anticipated information that the Chineseteam would ask should have been identified so that the Canadians could have gotbetter preparation. According to staff of Program on Negotiation, Harvard LawSchool, information discussed while negotiating typically falls into 3categories:- Facts: Information about accomplishedbusinesses, relevant past events, goods and services; continuing obligationsand liabilities when cooperating with international companies.
– Opinions, values, and predictions: Informationsuch as a company’s value, the potential outcome of their machinery andtechnology should be included.- Preferences: Information expressed asnegotiators’ needs, interests, desires and especially prices.If these factors had been identified, theCanadians would have been ready to consider whether to reveal or whilenegotiating.
Other than those points indicated above, afterthe first presentation, the Canadians should have asked for more opinions fromthe Chinese company. Apparently, the Canadians noticed that their host justnodded and smiled; furthermore, they could also sense that the negotiationcould not be wrapped up that day but did not ask the other team anythingrelated to the presentation, or whether there were unclear points that theycould probably provide more details. Eldonna Lewis-Fernandez, CEO of DynamicVision International Inc.
, showed her points of view on questions necessary tobe asked that should be applied to this case of the Canadian executives. Someof them are listed below:- What part of my proposals gives you themost concern?- Whydo you think the price that you proposed is fair and reasonable?- Is there any reason that makes itimpossible to reach the final agreement? 2. The negotiating parties seemed to have different expectationsabout the time needed to complete the process. What were some of the keyreasons that caused negotiations to last longer than the Canadians anticipated?The Canadians and the Chinese entered thenegotiation with different psychological preparation and, unsurprisingly, thenegotiations lasted longer than the Canadians expected. All the reasons forthis will be pointed out below with the supporting details that I haveresearched on:- The Canadians and the Chinese are fromtwo distant culture, which led to the difference in negotiating style. – Language barriers placed a huge obstaclebetween two sides while negotiating.
– The Chinese did not seem to cooperate toproceed the negotiation at the beginning. As discussed in the previous part, thedifference between two cultures intensively affected the time needed on thenegotiating table. “People from certain cultures such as Asian and LatinAmerican place great value on creating personal relationships”, says OrlandoKelm, an associate professor of business and Spanish and Portuguese at theUniversity of Texas. If a deep personal relationship has not been formed, ittends to be more difficult to come to the final agreement between two parties. Fromthe Chinese point of view, looking for the development in their relationshipcould help speed up the negotiation while it actually made the Canadians feltlike they were wasting time hanging around with the Chinese for nothing. Theydid not understand this psychological pattern of the Chinese, and failed toutilize that time to, on the other hand, observe and evaluate their host’sbehaviors.
Language barriers is another reason thatmade the negotiation to last longer. Even if an interpreter is employed, translationproblems are still substantial in cross-border negotiations. Especially, inthis case, English and Chinese are two distant languages, so greater problemsshould be anticipated. Exact translation in international negotiations seemedto be an impossible goal. Other than that, the interpreter did not play a neutralrole when he/she had personal discussion with the Chinese side beside helpingthe two parties to understand each other.
As shown in Global Business textbookpage 147, an interpreter should always be prepared with a list of all acronymsand technical terms; while in this case, the interpreter seemed to be confusedwhen some technique-related words were used. Besides, the Chinese were also responsiblefor the longer-than-expected negotiation in this case. To speed up the progress,right on the first day of the presentation, they should have brought up theirconcerns regarding the deal and technical issues. They did not attempt to do sobut on the next day when the presentation was re-presented, many questions wereraised. Steve Dickinson, an Attorney with Harris & Moure, a boutiqueinternational law firm, argued that it’s the most common tactic for the Chinesecompany to wear the foreign side down with endless issues. At first, theChinese side raises a series of issues. Once they are resolved, other unrelated new issues are raised. By doing this,they want to wear down the foreign side in the hopes that the other side willsimply concede.
3. In communicating with the Chinese what was the key problem?What could the Canadians have done to avoid this problem? In communicating with the Chinese, the keyproblem that the Canadians faced was from the interpreter. In this case,Canadian chose to have the interpreter appointed by the host and he/she seemedto be a part of the Chinese team instead of just a neutral participant. InCanada, along with America, Germany and the Great Britain, an interpreter is supposedto provide an accurate, unbiased account of what is said (textbook page 147).This is, however, not always true. In high-context countries, interpreters aremade sure to be part of the team. Besides, the interpreter assigned was noteven capable of delivering 100% of what was mentioned due to his/her lack ofknowledge when it came to technical terms. Taking this problem into consideration, itis wise for the Canadian executives to have the interpreter’s credentialschecked thoroughly in advance.
Besides, the interpreter should have received alist of technical terms that would be used, as well as background informationof the client company. A good idea is that the Canadian team should have hadtheir interpreter as well to avoid the situation of one-sided affair betweenthe interpreter and the Chinese company. Other than that, the Canadians shouldhave broken materials into clear sections so that an idea can be translated ata time. Ambiguities should be avoided and time should be given for the interpreterto catch up. 4. Reviewing how negotiations took place from the arrival to thedeparture of the Canadians, do you think the Chinese orchestrated thenegotiations to put their Canadian counterparts at a disadvantage? If so, how? Reviewing how the negotiation took placefrom the arrival to the departure of the Canadian, I think the Chinese didorchestrate the negotiation to put the Canadians at a disadvantages byfollowing their common negotiating tactics:- Seeking to wear the foreign side downwith endless issues.- The artificial deadline.The first tactic that I mentioned is saidto be the most common one.
There are actually two alternatives for this tactic.First, different issues are raised by the Chinese. As these are resolved,another series of new issues might be raised as well.
The list of issues seemsto never stop. The second alternative is that they might make unreasonabledemands and then refuse to address the concerns of the other side. They willnot attempt to proceed the negotiation.
All of this aims to wear down toforeign side with the expectation that the other side will accept theirproposed deal. The success of this strategy results from the fact that thenegotiators being busy people with a lot to do, while it’s the job of Chinese representatives to involve themselves inthe continuous negotiation. Another obvious tactic that the Chinesealso utilizes is the artificial deadline and it seems to work really well. Atfirst, the Chinese side sets a fixed date for the final agreement of thecontract. It is set far enough to make sure that parties entering thenegotiation would reasonably expect to reach an agreement. But then the Chinesepartner provides no attempt to reach an agreement.
In conclusion, the planmakes use of the pressure of the impending signing ceremony and the fatigue ofthe negotiators will result in a crucial concession benefiting the Chineseside. Afterall, facing with language and cultural barriers is never easy and foreignnegotiators sometimes allow for tactics and behavior that they would nevertolerate in their home country. Being prepared, knowing themselves and alsotheir counterpart can help to reduce the frustration of a prolonged, seeminglyunfair negotiation.
5. What key competencieswere missing that caused the venture to fail? The key competencies that were missing fromthe Canadians that caused the venture to fall were:· First, theywere not convincing enough during the negotiation. Persuading skills arecrucial in order for the Canadians to win the contract. For fear that theymight reveal too much about in-depth information regarding technical issues,the Canadians chose to discuss in general instead of touching the main pointdesired by their counterpart. Undoubtedly, the Chinese would not be convincedto agree with the contract when there were still unsolved problems that the foreignpartner were unable to provide solutions to. A suggested strategy for theCanadian executives is that they state their argument firmly to convince theChinese that they are right; especially when the Chinese were afraid that theywould be unable to fix the machines and required direct assistance from theCanadians.
· Anothercompetency that was missing which led to the Canadians unsuccessful was theirlack of cultural understanding of the Chinese. China is known as a high-contextcountry, where values of long-term relationship and trust are consideredimportant. The Chinese are willing to spend time and money in order to get toknow more about their partner in terms of personal life, and eventually to makesure that their partner is trustworthy. However, from the Canadian executives’point of view, the Chinese are wasting time and trying to prolong thenegotiation. Because of this, the Chinese chose to sign their contract with a Japanesecompany, who share more similarities with them and it would also be easier forthe Chinese to do business with the Japanese as they are not 2 distantcountries both geographically and culturally. · Canadiansfailed the deal also because of miscommunication and language barriers.
Theywere not prepared enough and did not get needed information from the translatoras she/he seemed not to be a neutral participant when delivering contents ofthe discussion.