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Sun Tzu and the art of winning negotiations

For many of his colleagues, Sandro is an old Chinese pawn. Having been working in various cities in China for the past 7 years, he has more work experience here than most of his Chinese colleagues.

One of the key success factors that he attributes to the success of Sandro’s career in China is that he takes the time and patience to listen and understand his Chinese colleagues, suppliers and partners. While some of the business practices in China can be very different, even contradictory, to those in his native Germany, Sandro has always been patient enough to understand why certain things are done a certain way, and then seeks out his counterparts. Chinese understand. why some things have to be done internationally.

So when it came time to negotiate a major deal with a key supplier, Sandro decided to let his Chinese project manager take the lead in the negotiations. Since Sandro had not yet had the experience of negotiating such a large project in China, he thought it would be a good idea to learn from the local expert.

The Chinese Project Manager, Mr. Chen, shared with Sandro his negotiation strategy, which is to divulge nothing and squeeze them for the lowest price. And that was what he did.

Halfway through the negotiations, Sandro discovered that things were drifting off track, such as:
• Although the company has a policy of minimizing purchasing costs, there have been frequent cases of suppliers unilaterally increasing prices because they realized that the agreed prices were below their costs. If the buyer does not agree to the price increase, the seller will cut off supplies. And since the agreed prices were below cost, the buyer could not find alternative suppliers to supply at those prices as well.
• One of the key requirements for this agreement is that the supplier commits to various quality and delivery guarantees, which are critical to the buyer’s production. However, these issues have not been discussed as Mr. Chen fears that discussing them will increase his purchase price. Mr. Chen thought it best to secure the best price and then set these requirements once the price has been agreed upon. Sandro knows that if these requirements are set after the price has been agreed, the supplier may not meet his quality and delivery guarantees because the price he gets does not cover the costs of the additional work.

Bearing these observations in mind, Sandro wondered if there was a better way to obtain a long-term commitment to the agreements negotiated in China.

Formulating your trading strategy

“The victorious army plans victory before it fights, the defeated army fights before it plans victory,” says Sun Tzu in The Art of War. The same principle also applies to the formulation of trading strategies. We can use the 5 elements of Sun Tzu:
• The Path: Your Goal or Desired Outcome
• The weather: external factors beyond your control
• The Terrain: External Factors Within Its Influence
• The General: The people who lead your negotiation
• The method: how the negotiation should be carried out

To begin with, you will need to define what the goal or desired outcome of the negotiation is. The most important concern you need to have is whether you just want to win the negotiation or whether you would like to have a sustainable outcome of your choice.

Interestingly, while it is often mentioned that Chinese businessmen expect negotiated agreements to be renegotiable later should unforeseen circumstances arise, most Chinese negotiators tend to view a signed contract or agreement as an indication of success. the negotiation. They are often too short-sighted to see that if the deal is not sustainable in the long run, or if it is seen as unfair, their negotiating opponents will want to re-negotiate. As such, negotiated outcomes are NOT sustainable

Therefore, to reach a sustainable trading result, you will also need to consider a few more factors, such as:
• What is the result of the negotiation that you want to achieve, other than price or immediate gratification?
• What is the best case, the second best case and the worst case scenario?;
• Why should your adversary agree to your demands or requests?;
• What are you willing to give in exchange for what you receive?
• When to withdraw and negotiate with another person?

The next question then is: would it be safe to tell our adversaries what we want?

The best victory is the one won without fighting

In simple terms, negotiation can be defined as: getting others to give you what you want by giving them what they want.

The problem is that most of us would like others to give MUCH MORE than we want, while we give the least of what they want. While the rationale behind this thinking is to control costs or maximize profits, however, there are some flaws in this logic:
• It doesn’t mean that if you give them too much more than they want, it will cost you too much. There are some things that you can give at little or no cost, but that can greatly benefit your opponent;
• Often times, the costs of NOT getting what you really want (other than the lower price and immediate gratification) are higher than the savings of giving so little of what you want; Y
• Sometimes you need to educate your opponents so they understand what a sustainable outcome they really want too!

As Sun Tzu says, “The best victory is the one won without a fight.” If you want your opponents to give in to your demands or give you much of what you want, you may want your opponents to feel that:
• When they give you what you want, they will get what they really want (besides price and immediate gratification);
• You will make sure that any deal you make with them is something they are happy with, even if it is done in their best interest;
• Makes a conscious effort to move from negotiating adversaries to long-term partners.

Sun Tzu also says, “Use conventional methods to organize, but use out-of-the-box methods to achieve victory.” Talking endlessly about price will end in an impasse, but if both parties are willing to explore the reasons why they want what they want, they might come up with a creative solution that meets mutual needs.

There is a Chinese expression called “words spoken from the bottom of the heart”, which is actually quite common among buyers and sellers who have done business together for a long time. It goes back to the Chinese ideal of looking after the well-being of its trading partners, even if they may be its adversaries in the negotiation. The trick is to get your opponents to trust you quickly enough for this effect to take place.

Know yourself and your adversary

When we mention that we need to earn the trust of our adversaries, it does not mean that we are just being nice and sacrificing all our gains. Hence Sun Tzu says: “Know yourself and know your adversary, fight a hundred battles and do not endanger yourself in any.”

What this means for the negotiator could be:
• You can’t win with ALL opponents. Knowing who you can trust and having them trust you is key to winning results;
• You don’t just learn about your opponents by just talking to them. You can learn more about your adversaries (even if there’s a dire need for you to give them what they want) from your colleagues, business partners, or general industry news; Y
• In negotiation, knowing your opponent can be just as important as letting your opponent know you. If the adversary is someone you don’t know, start by revealing less sensitive details in smaller deals.

In short, while there are overwhelming tips, techniques, and other resources on how to win in negotiations, there is only one thing on your opponents’ minds: “Why should I let YOU win?”

Here’s one last little story to illustrate why it’s important to make your opponents want to let you win, rather than crush them. We often see some unreasonable and rude guests in hotels or restaurants who make unreasonable demands on the service staff in a very rude way, knowing that because they are paying the money, the service staff will have to say “yes” to most of the guests. their rudeness. demands. While some service staff simply suffer in silence, some experienced service staff know how to get revenge by secretly spitting or adding other unspeakable “ingredients” to the rude customer’s food.

The moral of the story: Even if you have overwhelming bargaining power, you may still want your opponents to want you to win. As in the Art of War, “To win, use reason to connect with your people and use discipline to implement your strategies.”

by cjng

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