At a recent lunch for "Old China Hands" I was asked about the differences between Chinese and American negotiation. Since these people had been around the block a few times, I didn't waste a lot of time with background.

The two main differences between Chinese and American negotiation happen at the beginning and end of the discussion. The middle part of the conversation - what most people consider the REAL negotiation - is actually pretty similar for both Chinese and Western negotiators

1. Chinese and American Businessmen Start Negotiations Differently

Chinese start with a relationship, while Americans begin with a transaction. Chinese are trying to get to know if you are trustworthy - and how long you plan on sticking around. Americans are trying to figure it how much money you are going to spend or charge - and if you've got the cash or assets to back up your offer.

Americans spend the first half of the first conversation waiting for the small talk to end so they can get down to the important part - talking about deal points, dollars and delivery dates.

The Chinese side concludes that the Americans are either sharks who refuse to reveal anything important about their character or are too dim to understand how gentlemen really do business.

2. American Negotiations End as Quickly as Possible -- Chinese Negotiations Don't End

US-Chinese deals may start from slightly different places, but they end in different dimensions. An American deal-maker wants to wrap things up as neatly and tightly as possible - as quickly as he can.

Once that contract is signed, the negotiation stops and both parties are bound to the terms they agreed to.

For the Chinese side, however, the signed agreement is more of a beginning than a conclusion. Now that both sides have agreed to general terms, it's time to start the real business.

3. Relationships vs. Contracts

Chinese do business based on relationships. Written agreements are nice for noting down important points, but the real bond that holds partners together is the relationship.

Americans do business based on contracts that both sides agree to abide by. Relationships are nice for making execution and operations run more smoothly, but the contract is what controls the commercial association.

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