"A lot of time should be allowed for negotiations"

In recent years, China's importance as a procurement market also increased very much for Germany's small and medium-sized enterprises. In an interview, Managing Director Gerald Boess of Kerkhoff Consulting International talked about what German companies need to take into account in negotiations with Chinese business partners.

Unternehmeredition: Mr. Boess, China is a popular procurement market. What do German companies have to take into account if they engage in negotiations with potential suppliers there?
Boess: For negotiations in China, it's important to get involved in the Chinese culture – western standards don't count. Under no circumstances should German business people be arrogant, quick-tempered or hectic in their actions. That would make a Chinese feel compromised in public and cornered. To be able to establish a relationship of trust – the cornerstone of any business in China – the counterpart must be able to save its face at any time. It's important to bring one's interpreter of confidence into the negotiations. Although more and more Chinese speak good English, nuances may be decisive for the outcome of talks. Also, a lot of time should be allowed for negotiations.   In China, you will hardly ever come to business conclusions after only one day of negotiations. It's not uncommon to have a meal together before and after the actual negotiations. My advice is to accept such dates even if it's not always about business matters. That's the only way your Chinese business partner can establish trust and confidence in you.
Unternehmeredition: Negotiations with Chinese business partners take much longer than German companies are used to. How can you tell in China that negotiations are coming to a close?
Boess: At first, Chinese are often non-committal and never immediately settle or agree on something. Even in the German company's interest, a contract conclusion should only come about when all details are clarified. That's the only way to guarantee that all desired specifications are implemented in the required quality. Chinese like to haggle over prices – and that may take a lot of time. But as soon as all details have been discussed, results will be repeated several times and finally laid down in writing. When that stage is reached, you can be sure: Now, we are in business.
Unternehmeredition: Many German companies have reservations of doing business in China. Especially the lax handling of contracts put them off. What's your advice to companies?
Boess: It used to be true in China: "The contract is not worth the paper it's printed on"; breaches of contract were rather frequent, and the protection of intellectual property virtually unknown. But that's also because Chinese do not consider plagiarism a legal wrong but rather an appreciation of the original. Meanwhile, there has been a shift in thinking: Since ever more Chinese companies also apply for patents, the protection of intellectual property is becoming much more important. To provide adequate protection, any contract should be prepared according to international law and with the assistance of a correspondingly qualified lawyer. Pricing, payment terms and currency issues must be defined early on with the business partner. Otherwise, it may happen that negotiations which had already been considered concluded will be started up again. And as I already mentioned: Chinese like to haggle and negotiate.

Unternehmeredition: Mr. Boess, thank you very much for talking with us!
Markus Hofelich conducted the interview.