Alexander BONDAR

Negotiations with Chinese companies. Risks, tricks, fakes, nuances

// Officelife.media - Officelife magazine. - 2019.

China has high hopes for Belarus as suppliers, potential investors and buyers. But such cooperation is not easy to ensure. Alexander Bondar, a partner at SBH Law Offices, spoke about the many features and risks in the negotiation process with Chinese companies Office Life.

- First of all, it is impossible to remotely check the Chinese counterpart without knowing the Chinese language and not being in China. To understand who you work with, you need to hire some local partners. Not an easy question how to choose a reliable partner in the ratio "price - quality". The bases for checking counterparties are closed there. There were cases when a person even after such a check flew to a meeting, and a figurehead met him, posing as a company representative. Negotiations lasted for six months, deals were made, which turned out to be fake.

Basic risks in negotiations with Chinese companies arise at the dating stage. There is a prevailing stereotype about the tricks and cunning of Chinese negotiators. It really is. But it is difficult from the first time to understand what this cunning is about. The Chinese usually negotiate for a long time. In this case, the trick is manifested in the fact that the negotiators are non-decision makers. This is done so that by the time when the really responsible manager joins, there will be a drastic change in the terms of the negotiations. But the Chinese themselves do not want to waste time on junior executives who do not make final decisions.

It should be remembered that the Chinese are subtle psychologists. They are preparing for negotiations much better than Europeans, they are studying the corporate structure of contractors, with whom to negotiate and how to plan them.

When arriving in China, Belarusian entrepreneurs often do not understand with whom they are negotiating, what are the traditions, mentality and corporate culture of this country.

There are always difficulties in translating both verbally and in the preparation of documents. It is preferable to compile them immediately in Chinese and Russian, as well as in Chinese and English. Then it becomes clear that they may differ in significant conditions. Therefore, the presence of a Chinese-speaking negotiator is crucial. Then the thought process is different. The final texts of the documents should be rechecked. Nearby must be a partner who has lived 10–20 years in China and has experience writing documents in Chinese.

It makes sense to contact the European lawyers who live long in China. Or vice versa, to the Chinese, who have lived in Europe for a long time and are equally good at legal vocabulary in both Chinese and English. With such specialists, there are no questions about the consistency of the texts.

The favorite trick of the Chinese during the negotiations - to limit the time to make a decision. Usually, they find out when you are going to leave, for what date a return ticket is bought, and appoint the last round of negotiations on the day of departure.

That very day the terms of the contract on price and terms change dramatically. In such a time trouble, a delegation that has already spent time and money on negotiations will rather agree to changing conditions than return home without a signed contract.

Therefore it is better not to take a return ticket in advance when you fly to China to sign contracts.

The general recommendation to the negotiators is to study the culture, traditions of China and the corporate culture of counterparties.

The Chinese love to build personal relationships with the person with whom they then want to do business. This is misleading for many. It seems that it is better to build personal relationships that will lead to the transaction than to fix the documents and then make final contracts.

In fact, large Chinese companies have long been working according to international standards. For them, a detailed fixation of the terms of the contract is already the norm. Therefore, it is impossible to “peck” on the proposal of the Chinese side “we will sign everything on one page”. Due to incorrectly drafted documents, distributors register all trademarks. In China, the judicial practice is such that the real right holder most often cannot subsequently challenge such registration. Not only individual entrepreneurs, but also large well-known corporations - for example, Danone, fall for such tricks.

Chinese companies make decisions slowly and unhurriedly. This is a risk that should also be considered. To minimize the timing of negotiations, it is necessary to take into account a number of nuances. The size of the company is important. Large corporations never make decisions quickly. But you have to imagine their hierarchical structure and understand with whom to negotiate.

If you are working with a head of sales, over whom there are another 25 supervisors, get ready that you are at the beginning of a long journey.

The Chinese respond well to deadlines if you put them. Counterparties need to understand in what time you need a specific contract.

A common misconception is that Chinese companies do not sue when concluding investment agreements. In fact, over the past few years, 5 court cases have been considered at the International Center for the Settlement of Investment Disputes. The arbitrages of neighboring countries are conducting quite a lot of lawsuits against Chinese corporations. Chinese business actively protects its rights. Therefore, the contract should provide all the conditions for the court according to its scenario.

Negotiations with Chinese companies. Risks, tricks, fakes, nuances
Negotiations with Chinese companies. Risks, tricks, fakes, nuances




Specialization:

Corporate law, M&A

Banking and finance

FinTech, IT

Antitrust regulation


Language(s):
Belarusian, Russian, English, Latvian
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