On the other hand,if the project goes with the categories mentioned above the firms are
in the better position in negotiation and implementation.As a rule the foreign exchanges
are approved by financial authorities.It is also important to gather information of
Chinese negotiators .
Time and patience is the most important assets of foreign firms exercising negotiating
process in China.Many potential investors get frustated since the Chinese ,sometime,are slow in signing of a contract even if the everything has been settled.The Westerners
get impatient waiting for final agreement .Probably it is rather incommodious participating in many stages of negotiating processes for several months.
For swedish Ericsson it took more than two years to conclude an agreement a telecom-
munication contract while for Otis it took 5 years to establish a joint-venture.And the story of the French businessman who went insane is quite well known:
After about one year of discussions and travelling back and forth between different
departments ,he was told by the Chinese that they were willing to buy his technology.
He telegraphed his office that the contract of $500 million has been concluded.
The chief executive wired back immediately that he was on his way to sign the
formal contract .And the next morning a high ranking official from the Ministry
of Foreign Trade and Economic Relations approached to him and said,“Now that
we are willing to buy your technology we can start negotiations“.
The negotiators,therefore should have a plenty of time,patience and strong nerves.Many
of the negotiators have tried to set deadline and give other ultimatums to Chinese negotiators,but it normally does not help.
Price The Western firms should be very careful in calculating the price for their technology.It is the most difficult and cruicial factor.If a foreign firm reduces its price
radically,say by 15-20 percent ,the Chinese negotiators get suspicious and there is a
risk that the firm will lose its credibility.The Chinese get more convinced of “evils of
capitalism”and would try to press the firm even more.
The concessions given on price should be remained behind the all stages of negotiations
except for the last one.The timing of such concessions is important as,if given too early,
they can have too early.The Chinese do not like to pay for the personnel of selling firm.
When they hear the costs of the foreigners,they get very sucpicious,and allegations about
the “evils of capitalism”rise again.Therefore it is advisable for the Western firms should
hide these costs in their offers and include them at the cost of production,technology
development or project administration cost.
CONCLUSIONS
Having tried to describe the process of project sales negotiation between Western firms
and their Chinese counterparts we reveal that the common course of negotiation implies
its specifications that have not been known before for investors.
The issues that are most sensitive in the negotiation process are the equity shares management control.These two issues have also been a great concern while investing to China since the Westerners do usually rely on Chinese counterparts when dealing with
the local governments and environment .But it is not so.The control over the process of management should be in their hands.Chiefly ,the Chinese want a local chief executive
while foreign firms want to send their own staff.
In most the deals in China, buy-back and export is the matter of lengthy period with many stages.While foreign firms are entering China due to the size of its market,
the Chinese,in its turn see the foreign firms as the source of technology and foreign exchange earnings.
The pace of negotiation in China is very slow .The presentations are formal and orderly.
The third part such as government still plays a major role in the negotiation process,
since the people there are still collective minded and it plays a large role.
RECOURCES
1.Easson,A The incentive for Foreign Direct Investment in the People’s Republic in China.Paper presented at The International Conference on Management in China Today,
June 20-21 ,1988 Leuven,Belgium.
2.Ingmar Bjorkman The management of human resources in Western Companies in
ChinaTo match or not to match with the environment .1992.Stockholm.
3.Henrikki Tikkanen.Marketing and International business.1998.Turku.
4.Kerin.A.Rodger &Peterson.Robert. Perspectives on Strategic Marketing Management. 1983.Boston .