Bewilder the Dragon

Negotiating amongst confusion

Leonie McKeon

• Publisher: DoctorZed Publishing
• Year: 2020
• eBook ISBN: 9780648131496
• Edition: 1
• Topic: Personal Development
• Subtopic: Negotiation

With over three decades of experience as a China-Educated Strategist and business owner, Leonie McKeon has helped hundreds of business owners and executives understand how to do business with Chinese people and to be better negotiators. Based on The Art of War, Leonie shares her deep understanding of the 36 Strategies used in Chinese culture and business. She provides invaluable practical tips for any business person looking to improve their overall negotiation skills, as well as become better negotiators in China. More Control, More Success, More Wins!Bewilder the Dragon: Negotiating amongst confusion contains ancient Chinese negotiation secrets that are part of everyday Chinese business practices. Discover how you too can use this ancient wisdom so you can have More Control, More Success, More Wins!•Understand the rules of the game of negotiation •Become a great negotiator anywhere, any time•Learn how to respond when Chinese negotiation tactics are used on you •Master the ancient secrets of negotiation so you remain in control•Implement culturally appropriate strategies for doing business in China•Avoid the traps of classic Chinese negotiation strategies•Take more control of every negotiation •Get more success in business•Win more in businessAbout Leonie McKeonLeonie McKeon is an Australian China-educated strategist and author who is passionate about sharing her knowledge of the rules that drive business success in the China market. Leonie has lived, worked and travelled in the Greater China Region for several years where she learnt Mandarin, and observed the mastery of Chinese negotiation tactics in business and daily life.Leonie is a workshop presenter and a keynote speaker who teaches business people how the 36 Chinese Strategies are used in the contemporary business world. Leonie enables people to feel confident and therefore able to enjoy being part of the game of negotiating whether in China or in any other business environment.www.leoniemckeon.com

Strategy Twenty-Two

Shut the door to catch the thief
means “lock them in to retain your power”

If you have the chance to completely capture the enemy, then you should do so, thereby bringing the battle or war to a quick and lasting conclusion. To allow the enemy to escape plants the seeds of future conflict. But if they succeed in escaping, be wary of giving chase.

In China’s Tang Dynasty, during the reign of Empress Wu Ze Tian, there were two ministers who were favoured by her, and their job was to devise torture instruments. Their names were Lai Jun Chen and Jhou Sing. Criminals who were tortured using the instruments these two ministers designed experienced so much suffering that the pain they endured would quickly send them to the point of confession. Empress Wu Ze Tian received information from a reliable source that Jhou Sing was plotting a revolt against her power. The empress talked with Lai Jun Chen about this situation and ordered him to find out how Jhou Sing was planning this revolt against her. Once he had gained this knowledge, Lai Jun Chen was then ordered to arrest Jhou Sing. To successfully accomplish this task Lai Jun Chen applied Strategy Twenty-Two – Shut the door to catch the thief on Jhou Sing. His plan was to set a situation up so he would have the chance to ‘completely capture’ Jhou Sing, and therefore ‘bring the situation to a quick and lasting conclusion’. If he ‘allowed Jhou Sing to escape this would plant the seed for future conflict’. This was quite a difficult task for Lai Jun Chen because he was aware of Jhou Sing’s excellent torture techniques, and therefore it would be hard to perform a torture technique on Jhou Sing to make him confess to this planned revolt against the empress. To apply Strategy Twenty-Two he invited Jhou Sing to eat a meal with him, and he told Jhou Sing he needed his help to solve a problem. Lai Jun Chen explained to Jhou Sing that he felt that criminals were becoming more resistant to torture techniques and they were refusing to confess even under the harshest of conditions. He was seeking advice from Jhou Sing to see if he had any other torture techniques that would push people to confess. Jhou Sing shared with Lai Jun Chen that an excellent torture technique was to use a large jar, big enough to fit a person, filled with boiling water. The suspect would be immersed in this boiling water if they did not confess. They would often confess straight away, and if they didn’t confess straight away they would be put into this boiling water and soon after they would confess. After Jhou Sing had shared this torture technique, Lai Jun Chen expressed how disgusted he was that Jhou Sing had a plot planned against Empress Wu Zu Tian. He said that the empress was aware of this plot and had ordered him to investigate Jhou Sing. He ordered Jhou Sing to confess, and stated that if he did not confess he would have him forced into the jar of boiling water. Lai Jun Chen had successfully applied Strategy Twenty-Two because Jhou Sing confessed his plot against the empress.

Strategy Twenty-Two requires the strategist to conduct some detailed research. When Strategy Twenty-Two is applied the initial offer may seem very good. However, all possible outcomes of the deal need to be considered.

Negotiating with Chinese People

EXAMPLE ONE

Strategy Twenty-Two in action (against you)

You are planning to export your high-quality cheese to China. You have heard cheese is fast becoming a popular consumable in China. You have also attended several export presentations in your home country which have discussed the popularity of your product in China and validated your future export plans. China is a new place for you to export your products. Knowing that it is a very different culture, you decide to hire a space in a food exhibition to introduce your products. This exposure gives you an understanding of the Chinese market. At the exhibition you have diligently organised samples of your cheeses and also hired an experienced interpreter. Everything over the two days of the trade show goes very well. You have many people tasting your cheeses and the interpreter is doing a good job of explaining the different varieties, the geographical locations they are from, and the etiquette that goes with eating cheese. During the exhibition you meet a company you perceive to be an excellent distributor. You base your judgement on the fact that they have solid guanxi in many of the upmarket supermarkets in Shanghai, Beijing, and Qingdao. They also have a team of people who speak very good English, and because you do not speak or understand Mandarin Chinese, this makes your situation much easier.

You have been in the business of making cheese for over three decades, and in the last five years you have developed a unique piece of technology, which is an automated system to produce your boutique product.

The distributor you meet at the exhibition is very interested in marketing your product, because of the quality and the uniqueness of how the product is made. This kind of product will give your distributor ‘face’ to their clients. Your distributor is able to negotiate with the supermarkets they are connected with to give you free space to set up tasting samples. They say the time frame for this deal is unknown, but this is not an issue as the supermarkets are very interested in your cheeses. During the year following the exhibition things seem to be going very well. In the second year some of the distribution team allude to wanting to visit your country to see how your cheese production technology works. In order to develop guanxi you not only invite two people to your country, you also pay for their travel costs. They stay in your country for five days and spend each day in your cheese factory. They are given the chance to completely understand the technology. In your opinion this is a good idea because the more they understand about your product the easier it will be for them to market it in China. You have not asked them to sign a confidentiality agreement because you perceive them as trustworthy.

After two years of dealing with this Chinese distributor they inform you that the main supermarket chain you are dealing with now needs to charge for the space to offer samples inside the supermarkets. To cover these new expenses you need to increase your product prices. After this increase in price your distributor reduces their imports of your products. The people at the distribution company are also aware of how your technology works because of the time they spent in your factory. They use their new knowledge of cheese to look for other cheese exporters with whom they share your unique technology to significantly reduce labour costs. From this application of Strategy Twenty-Two you will quickly reach a conclusion that your current export strategy is not profitable. It will be difficult for you to rebuild your China business because you have only dealt with one distributor and have not built up any guanxi with other distributors. What seemed like a perfect situation has resulted in another company using something very similar to your technology.

The Chinese distributor has been able to slightly modify your technology so it is not exactly the same, and they are still staying within the boundaries of the intellectual property laws. They have successfully applied Strategy Twenty-Two.

EXAMPLE ONE

Guarding yourself against Strategy Twenty-Two

In this situation there was not enough research conducted. Just one trade show was not adequate research and experience of the Chinese market to make a judgement about who to work with. Using only one distributor in China is very risky because if things change, there are no alternatives. When you are in the position of needing distribution in China it is advisable to use at least two or three different distributors. This structure also creates a situation where the distributors will be in competition with one another, and will be more likely to give you high-quality service and a good deal. The fact that the distributor’s staff have good English is also not a good enough reason to decide on any one distributor. Relying on their English places you in a dependent position, and gives the distributor additional power. In this case it would have been wise to employ at least one Mandarin speaker. Then the distributor would perceive you as having more cultural resources. While it was a great idea to invite the distributors’ staff to the cheese factory to educate them, the five day visit was too long, as it enabled them to learn too much about your unique technology.

A signed confidentiality agreement, presented in both English and Chinese, should have been required before they viewed your unique technology. When asking Chinese people to sign an agreement it is important to ask them what the confidentiality agreement means to them. You may find that what such an agreement means to you may be different to what it means to your Chinese contact. To read the words is only one step. Getting the person to explain back to you what it means will show you their understanding of the conditions of the agreement.

When visiting China with the aim of discussing issues such as price it is highly unlikely you will be able to get your Chinese contacts to sit down and talk with you directly. It is likely that they will steer the conversation away from your main topic and onto other potentially unrelated matters.

Instead of agreeing with everything the distributor advises you to do, push back and show you are in charge, and not a subordinate willing to simply accommodate all of their ideas. Constructing the intellectual property in such a way that it cannot be duplicated easily would have been a good business decision from the beginning. Given the uniqueness of your method and the risk of it being copied, you could have considered licencing your intellectual property, because in this way you would get an ongoing fee. A strategy may be to give your distributor the task of selling licences, which would give them a sense of ownership.

When something is offered free of charge, such as free space inside supermarkets to distribute samples of your product, it is probable that such a situation will not go on indefinitely. There should have been a plan in place for when the supermarkets begin to charge a fee. In this situation many things were not considered, so it was easy for the distributor to successfully apply Strategy Twenty-Two.

EXAMPLE TWO

Strategy Twenty-Two in action (against you)

The trend in China is toward older people in their retirement wanting to live in a retirement village. In traditional culture, when people retired, they looked after their grandchildren. However, with smaller families and many parents sending their children to childcare there is not as much need for grandparents’ help. The strong economy means that China’s large middle-class population also have more money to spend for their retirement years to reside in communities of similar aged people.

Your area of business is in the development and management of retirement villages. You explore this opportunity by visiting China, and your in-country government office has organised several meetings for you with possible business partners and companies interested in building retirement villages. On your trip to China you show potential partners photographs of the retirement villages you have built and now manage in your country. You have three decades of experience in this industry, which is impressive to Chinese business people. One company in particular shows enormous interest in your company, and requests to visit your country to see your work firsthand. After visiting five of your retirement villages they are very keen to work with you. They want you to sign a contract for the development of a retirement village project to be finished in China within three years. The contract requires that two of your experienced team will travel to China four times a year for the next three years. They would like your consulting fees to be at a slightly lower price in exchange for 10% of the retirement village business when it is operational. At the beginning of the project this seems like a very good deal, and you agree to their requests and start the project. You were not aware that from the time you were introduced to them they were planning to sell the completed retirement village. To have this plan in place may be unusual business behaviour to a Western business person. However, for a Chinese business person this is something that is quite normal. Such practice is explained by Strategy Twelve – Seize the opportunity to lead a sheep away in...

Table of contents

• Cover
• Title Page
• Copyright Page
• Contents
• Acknowledgments
• Leonie’s Journey Continues
• Introduction to Confucianism
• Confusion Strategies
• Strategy Nineteen
• Strategy Twenty
• Strategy Twenty-One
• Strategy Twenty-Two
• Strategy Twenty-Three
• Strategy Twenty-Four
• Your Next Steps
• Back Cover