Selling Big to China

Negotiating Principles for the World's Largest Market

Morry Morgan

• Publisher: Wiley
• Year: 2011
• Print ISBN:
  9780470825976
• Edition: 1
• eBook ISBN:
  9780470826232
• Topic: Business
• Subtopic: Sales
• Index: Business

This book is a complete sales and negotiating guide for mainland China and includes practical and measurable techniques that have been tested and proven to work with Fortune 500 companies operating in the 'Middle Kingdom'. It is divided into four main areas:

• The Knowledge
• The Sales Call
• The Negotiation
• The Maintenance

The book is the result of my 8 years of training in sales and negotiation skills across mainland China, as well as running a multi-city, multicultural company in the 'World's Most Stressful Country' (according to Newsweek). The book includes a collection of anecdotes from this experience, as well as case studies developed by working closely with leading companies in China. Some of these companies include Rockwell Automation, Microsoft, Thomson, SAP, and NBC.

Sales and negotiating is not easy, particularly when done in a country with completely new values and rules of engagement. The purpose of this book is to lay the rules out clearly, and provide the reader with an easy to understand strategy to doing business in mainland China.

Part One

The Knowledge

CHAPTER 1

The Target Acquisition Equation

Here are the ropes:

Needs + Features = Benefits
Goodwill + Reputation = Trust
Benefits + Trust = Agreement × Price Quotient

The target acquisition equation (TAE) makes it easier to estimate the chance of a successful sale by breaking down each component into measurable values. I developed the TAE as a result of observing the sales process across the world, but mainly in Australia and China. These countries have strikingly different business cultures. In Australia, sales are relatively straightforward. Magazines like Which Car? have taken advantage of the public’s increased understanding of their own needs in the search of a specific product, in this case, a suitable automobile. Australians are also a people used to asking questions, which may be why the country has a relatively high number of Nobel Prize winners, at 13, of which 11 were in the field of science. Chinese, on the other hand, are not the questioning type. This is even ingrained in the language. For example, the concepts of “question” and “problem” share the same word (

wèn tí ). When I worked at Jiaotong University as a business administration teacher, I my Chinese workmates told me they felt their lecture was inadequate if students, mostly Balinghou, asked questions at the end of the class. I felt the complete opposite. Initially at the end of each class, I would leave five minutes for Q&A, but this was only met with silence. Q&A soon disappeared from my lectures as well. Therefore the first part of the TAE, that is, finding the benefit, may be more challenging for Chinese readers, because it involves more questioning than is the cultural norm.

The second part of the TAE was developed in China, hence the ″Selling ... to China″ title of this book. The text is still relevant to other sales and negotiations. The concepts of goodwill and reputation only became clearer to me when I found myself in China, a country that has the specific term Guanxi

, which equates to “it’s not what you know but who you know.” The fact that the Chinese have a term for this phenomenon highlights how important it is in their culture. (They also have an extraordinarily large number of words for tofu.)

Brands in China are also more immature, which means there is more white space for new brands to develop. Hence the importance of reputation, and the speed at which it can be gained or lost. Both eBay and Google sat on their laurels when entering the Chinese market, and they did poorly. While Google currently sits in second place behind Baidu.com, eBay eventually pulled out of the Chinese market altogether as it was unable to compete against its Chinese competitor, Taobao.com. Both American companies thought that their reputation could be transferred directly over to the Chinese market. Obviously, that wasn’t the case.

So, once you show a benefit and develop trust you will reach an agreement. Well, almost. There is still one factor that could disrupt that—money, but more on that later. The elements of the TAE form the basis for the next few chapters.

CHAPTER 2

Needs

Understanding human needs is half the job of meeting them.

—Adlai E. Stevenson Jr. (1900-1965)

If you enter the name “Adlai Stevenson” in a search engine, you’ll see that he was U.S. Ambassador to the United Nations in the early’60s. It’s good to know that a man holding that much responsibility, particularly during the volatile Cold War period, understood that his primary role was to understand people’s needs. This is also your primary role, as a salesperson or negotiator.

I don’t want to discuss semantics at length, but to avoid confusion it’s useful to point out that the term needs has a few synonyms in the field of sales and negotiations. Grande Lum, in The Negotiation Fieldbook, and Roger Fisher and William Ury in Getting to Yes, use the term interests. Jeffrey Gitomer, author of The Sales Bible, refers to needs as “buying motives.” Please consider Lum’s and Fisher and Ury’s interests, Gitomer’s buying motives, and my needs as one and the same. So what are needs?

Needs are (usually) hidden reasons for doing something. In sales, that “doing” is more specific; it means buying. However, don’t confuse wants with needs. This is a simple and common mistake, so here’s a simple way of explaining the difference.

Say you are in the market for a new mobile phone. The chances are that you already have one, so for this exercise assume that you lost it. You want a mobile phone. This is because you want the ability to call your friends and send SMS messages. Of course, all mobile phones do this, so the salesperson in a Motorola shop can assume with 99.999 percent accuracy that you (or any Joe Blow or Wang Wei who walks in off the street) want a mobile phone. (Or are blind and want to buy a kilo of sausages, but let’s not go there.)

But the target’s needs are harder to determine. Here’s a typical dialogue between one of my trainees and me to determine the need for buying a specific mobile phone:

“Why did you buy this phone?” I asked, holding up a Sony Ericsson.

“Because I like the functions,” replied Sun.

“What functions do you like?”

“I like the MP3 player.”

“And why do you like the MP3 player?”

“Because I like to listen to it when I am bored.”

“Specifically when is that? When do you get bored and listen to the MP3 player?”

“When I travel to work on the bus.”

“OK, but why a Sony Ericsson phone? There are many phones that have MP3 functions.”

“Because I trust Sony Ericsson. I’ve used them before.”

From this dialogue, can you assume Sun’s need or, in fact, needs?

If you said “MP3 function” then you are incorrect. If you said “reputation” and “reducing boredom” then you are correct. The key with needs are that they are always subjective—that is, opinion. Sun prefers Sony Ericsson, because to him, Sony Ericsson phones have a great reputation. As you read this, you might object. That’s fine, because, remember, needs are subjective. Just like the old saying, “Beauty is in the eye of the beholder.”

Reducing boredom is his other need. Sun takes a lot of time to travel to and from work each day. There are a lot of ways to reduce boredom on public transport, and one is certainly an MP3 function. You could also match this need with “computer game,” “video,” or “word processor” functions. We refer to these functions as features. Features are fact, that is, objective descriptions of the object (or service, in some cases). They meet the needs, as in the equation, needs + features = benefits. But more of that later. Of course Sun might have more needs, but this is enough to go on with.

FIGURE 2.1 Wants and Needs Iceberg

No doubt you know the role an iceberg plays in business metaphors. Eighty percent or more of an iceberg may be hidden from view. In my metaphor (see Figure 2.1), the top, smaller percentage, represents our wants. Sun wanted a mobile phone. Just like when you are hungry, you want to eat. Needs are hidden under the water. The submerged section of the iceberg represents needs. Sun needed “strong brand reputation” and “boredom reduction” and consequently bought a phone that he perceived as matching those needs. If you were hungry but short of time, then you might choose McDonald’s or KFC. Alternatively, if you were hungry but had to finish a report, you might phone for delivery, or go to a café that has Internet access. Finding the needs of others is more difficult, because, as the iceberg metaphor suggests, people’s needs are both hidden and the largest reason for decision making. You have to drop beneath the waterline.

My company provides soft skill training, but that doesn’t mean that my clients need training. When they call me or one of my staff they actually only want training, like Sun wanted a mobile phone, or you want to feed your hunger pangs. Just as people can choose among many mobile phones and restaurants, my potential clients have literally hundreds of alternative training companies in mainland China and Hong Kong from which to choose. To be successful and win their business, I must be able to find the clients’ need or needs, and just as the iceberg metaphor suggests, the number of possible needs is large, and they are often hidden from view. I discuss the how in Chapter 9, under funneling technique. For now I’ll discuss the what. What are their possible needs?

POSSIBLE NEEDS

As mentioned earlier, I run a service business; one that trains the personnel of multinational companies in soft skills such as presentations, communications, and, of course, sales and negotiations. The first step to training new sales staff for my own company is getting them to complete a needs audit.

The needs audit is a list, the longer the better, of possible needs that a target might have. If you are conducting this audit for the first time, then I advise that you do it as a group brainstorm. There’s a good chance that some of your sales team will not be exposed to all of the possible needs, so teamwork ensures that nothing is missed. I get my sales team to conduct a brainstorm on a regular basis, as new needs may develop that were not there a few years, months, or even weeks before. Take, for example, the needs that would develop suddenly if a target found out she was pregnant, or that her superior was stepping down. One minute the need wasn’t there, the next it was. Remind your staff, as they conduct the audit, that needs are subjective and are different for each person.

The following sections present a needs audit for some of the more common needs that I’ve uncovered working in the training industry. I have also included an example of why that specific need was suspected.

Risk Aversion

Annie, like many Chinese, was risk averse. I had met her two years earlier when she was working in the human resources department of Hong Kong real estate giant Shui On Properties, and when she moved to work for a large automotive company she gave me a call to arrange a meeting to discuss possible training cooperation. At the first meeting I was able to read (between the lines) that she was frightened. Annie was now responsible for the training and development of a much larger staff than in her previous role, and I could sense that she was stressed from the added responsibility. It was clear that Annie was not a risk taker. She needed to reduce as much risk as possible from her decision making. Her need was risk aversion.

Support (Process)

Jeff had been newly appointed to training manager of one of the world’s largest financial services companies in its IT division, in Shanghai. This new role put him in charge of the training of more than 200 newly hired and young IT engineers. At the first meeting, Jeff informed us that he was the only member of the training department. This phenomenon is particularly common in China due to the country’s high growth in GDP, and so junior staff are often given increased responsibility compared to their Western counterparts overseas. And this responsibility can include choosing suppliers. As a consequence, these new staff find themselves overloaded with work and so often look for training suppliers who can reduce their workload and assist with their daily routine. It was therefore an educated guess that support, specifically in relation to assisting in the physical process of the training, was Jeff’s need.

Support (Knowledge)

I tell my sales team that they are not selling milk. They need to consider themselves as experts who add value by sharing knowledge gained from working in the training and development industry, not simply passing a carton across the counter and collecting money. It’s amazing how many salespeople in the world give the impression that they are just order-takers. These salespeople take “the customer is always right” or, as they say in China, “the customer is God” to the nth degree. Consequently, customers begin to doubt the expertise of the salesperson, and sales begin to fall. So, if you’re a sales manager, make sure that your sales force understands that they are an extension of your company’s service or product. They are experts, or at least they should be.

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Table of contents

• Title Page
• Copyright Page
• Dedication
• Acknowledgments
• Introduction
• Part One - The Knowledge
• Part Two - The Sales Call
• Part Three - The Negotiation
• Part Four - Keeping Your Target Satisfied
• Part Five - Now What?
• Appendix
• Bibliography
• Index