1.    
How could the Canadians have more effectively prepared for
the negotiations with their Chinese counterparts?

The Canadians could have more effectively
prepared for the negotiations with their Chinese counterpart by following these
points:

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– Develop relationship with their partner
and develop a respect for each other before the negotiation.

– Be patient while negotiating with the
Chinese team.

– Share more relevant information and their
position with the Chinese.

– Ask if the Chinese company had any
concern regarding the presentation and the deal that they offered.

First of all, understanding the difference
between the 2 cultures is a key importance for the Canadian executives prior to
entering the negotiation. China is the high-context country in which unspoken
communication and interpersonal relationships are more important than in
low-context cultures (textbook page 150). Chinese business people typically
spend 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 new
business as inefficient and time-consuming but this is how their Chinese target
customers judge Canadians’ characters and see if they are trustworthy enough to
conduct business with. “There is a difference between Chinese and Canadians on
how to build trust” – said Dan Harris, a leading authority on legal
matters related to doing business in China and in other emerging economies in
Asia. “Simply
speaking, 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 trusted
because it can’t always protect people. They can’t trust new business partners
because there are so many dishonest businesses out there. Nothing can guarantee
that Canadians are one of them, which is the reason why the Chinese usually
spend time hanging out and talking out of the office in order to observe and
judge their partner. 

By understanding this psychological pattern
of their partner, Canadians should have expected a longer trip to China. It
could have been foreseen that their Chinese partner would spend days to develop
personal relationship with Canadians, not just go straight to the main point the
way that Western people tend to do. Like other countries in high-context culture
such as Korea, Japan, India, Chinese places a large importance on long-term
relationships and loyalty. Von Weltzien Holvik, a professor of Norwegian
Business School, once stated that first-time negotiations with a Chinese
partner often end in failure because of the length of the time it takes to come
to the point. However, once a strong relationship is built, Chinese businesses
are more likely to feel obligated to do business together.

Another issue that should be identified is
that what the Canadians shared information might have been too general to drive
their partner to the final decision. One thing the Canadian could have done
prior to the meeting is to list the information needed to resolve potential
disputes or build a strong deal. The anticipated information that the Chinese
team would ask should have been identified so that the Canadians could have got
better preparation. According to staff of Program on Negotiation, Harvard Law
School, information discussed while negotiating typically falls into 3
categories:

– Facts: Information about accomplished
businesses, relevant past events, goods and services; continuing obligations
and liabilities when cooperating with international companies.

– Opinions, values, and predictions: Information
such as a company’s value, the potential outcome of their machinery and
technology should be included.

– Preferences: Information expressed as
negotiators’ needs, interests, desires and especially prices.

If these factors had been identified, the
Canadians would have been ready to consider whether to reveal or while
negotiating.

Other than those points indicated above, after
the first presentation, the Canadians should have asked for more opinions from
the Chinese company. Apparently, the Canadians noticed that their host just
nodded and smiled; furthermore, they could also sense that the negotiation
could not be wrapped up that day but did not ask the other team anything
related to the presentation, or whether there were unclear points that they
could probably provide more details. Eldonna Lewis-Fernandez, CEO of Dynamic
Vision International Inc., showed her points of view on questions necessary to
be asked that should be applied to this case of the Canadian executives. Some
of them are listed below:

– What part of my proposals gives you the
most concern?

–  Why
do you think the price that you proposed is fair and reasonable?

– Is there any reason that makes it
impossible to reach the final agreement?

 

2.    
The negotiating parties seemed to have different expectations
about the time needed to complete the process. What were some of the key
reasons that caused negotiations to last longer than the Canadians anticipated?

The Canadians and the Chinese entered the
negotiation with different psychological preparation and, unsurprisingly, the
negotiations lasted longer than the Canadians expected. All the reasons for
this will be pointed out below with the supporting details that I have
researched on:

– The Canadians and the Chinese are from
two distant culture, which led to the difference in negotiating style.

– Language barriers placed a huge obstacle
between two sides while negotiating.

– The Chinese did not seem to cooperate to
proceed the negotiation at the beginning.  

As discussed in the previous part, the
difference between two cultures intensively affected the time needed on the
negotiating table. “People from certain cultures such as Asian and Latin
American place great value on creating personal relationships”, says Orlando
Kelm, an associate professor of business and Spanish and Portuguese at the
University of Texas. If a deep personal relationship has not been formed, it
tends to be more difficult to come to the final agreement between two parties. From
the Chinese point of view, looking for the development in their relationship
could help speed up the negotiation while it actually made the Canadians felt
like they were wasting time hanging around with the Chinese for nothing. They
did not understand this psychological pattern of the Chinese, and failed to
utilize that time to, on the other hand, observe and evaluate their host’s
behaviors.

Language barriers is another reason that
made the negotiation to last longer. Even if an interpreter is employed, translation
problems are still substantial in cross-border negotiations. Especially, in
this case, English and Chinese are two distant languages, so greater problems
should be anticipated. Exact translation in international negotiations seemed
to be an impossible goal. Other than that, the interpreter did not play a neutral
role when he/she had personal discussion with the Chinese side beside helping
the two parties to understand each other. As shown in Global Business textbook
page 147, an interpreter should always be prepared with a list of all acronyms
and technical terms; while in this case, the interpreter seemed to be confused
when some technique-related words were used.

Besides, the Chinese were also responsible
for 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 their
concerns regarding the deal and technical issues. They did not attempt to do so
but on the next day when the presentation was re-presented, many questions were
raised. Steve Dickinson, an Attorney with Harris & Moure, a boutique
international law firm, argued that it’s the most common tactic for the Chinese
company to wear the foreign side down with endless issues. At first, the
Chinese 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 will
simply 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 key
problem that the Canadians faced was from the interpreter. In this case,
Canadian chose to have the interpreter appointed by the host and he/she seemed
to be a part of the Chinese team instead of just a neutral participant. In
Canada, along with America, Germany and the Great Britain, an interpreter is supposed
to provide an accurate, unbiased account of what is said (textbook page 147).

This is, however, not always true. In high-context countries, interpreters are
made sure to be part of the team. Besides, the interpreter assigned was not
even capable of delivering 100% of what was mentioned due to his/her lack of
knowledge when it came to technical terms.

Taking this problem into consideration, it
is wise for the Canadian executives to have the interpreter’s credentials
checked thoroughly in advance. Besides, the interpreter should have received a
list of technical terms that would be used, as well as background information
of the client company. A good idea is that the Canadian team should have had
their interpreter as well to avoid the situation of one-sided affair between
the interpreter and the Chinese company. Other than that, the Canadians should
have broken materials into clear sections so that an idea can be translated at
a time. Ambiguities should be avoided and time should be given for the interpreter
to catch up.

 

4.    
Reviewing how negotiations took place from the arrival to the
departure of the Canadians, do you think the Chinese orchestrated the
negotiations to put their Canadian counterparts at a disadvantage? If so, how?

Reviewing how the negotiation took place
from the arrival to the departure of the Canadian, I think the Chinese did
orchestrate the negotiation to put the Canadians at a disadvantages by
following their common negotiating tactics:

– Seeking to wear the foreign side down
with endless issues.

– The artificial deadline.

The first tactic that I mentioned is said
to 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 seems
to never stop. The second alternative is that they might make unreasonable
demands and then refuse to address the concerns of the other side. They will
not attempt to proceed the negotiation. All of this aims to wear down to
foreign side with the expectation that the other side will accept their
proposed deal. The success of this strategy results from the fact that the
negotiators being busy people with a lot to do, while it’s the job of Chinese representatives to involve themselves in
the continuous negotiation.

Another obvious tactic that the Chinese
also utilizes is the artificial deadline and it seems to work really well. At
first, the Chinese side sets a fixed date for the final agreement of the
contract. It is set far enough to make sure that parties entering the
negotiation would reasonably expect to reach an agreement. But then the Chinese
partner provides no attempt to reach an agreement. In conclusion, the plan
makes use of the pressure of the impending signing ceremony and the fatigue of
the negotiators will result in a crucial concession benefiting the Chinese
side.

 After
all, facing with language and cultural barriers is never easy and foreign
negotiators sometimes allow for tactics and behavior that they would never
tolerate in their home country. Being prepared, knowing themselves and also
their counterpart can help to reduce the frustration of a prolonged, seemingly
unfair negotiation.

 

5.    
 What key competencies
were missing that caused the venture to fail?

The key competencies that were missing from
the Canadians that caused the venture to fall were:

·      
First, they
were not convincing enough during the negotiation. Persuading skills are
crucial in order for the Canadians to win the contract. For fear that they
might reveal too much about in-depth information regarding technical issues,
the Canadians chose to discuss in general instead of touching the main point
desired by their counterpart. Undoubtedly, the Chinese would not be convinced
to agree with the contract when there were still unsolved problems that the foreign
partner were unable to provide solutions to. A suggested strategy for the
Canadian executives is that they state their argument firmly to convince the
Chinese that they are right; especially when the Chinese were afraid that they
would be unable to fix the machines and required direct assistance from the
Canadians.

·      
Another
competency that was missing which led to the Canadians unsuccessful was their
lack of cultural understanding of the Chinese. China is known as a high-context
country, where values of long-term relationship and trust are considered
important. The Chinese are willing to spend time and money in order to get to
know more about their partner in terms of personal life, and eventually to make
sure that their partner is trustworthy. However, from the Canadian executives’
point of view, the Chinese are wasting time and trying to prolong the
negotiation. Because of this, the Chinese chose to sign their contract with a Japanese
company, who share more similarities with them and it would also be easier for
the Chinese to do business with the Japanese as they are not 2 distant
countries both geographically and culturally.

·      
Canadians
failed the deal also because of miscommunication and language barriers. They
were not prepared enough and did not get needed information from the translator
as she/he seemed not to be a neutral participant when delivering contents of
the discussion.

 

 

 

 

 

 

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