6. Learn the Price Game

In a country where they bargain for apples on the street, they're not shy about bargaining, and they bargain hard. Don't be put off by an outrageous initial price. It's all part of the game. Whether or not they move to a reasonable price in short order is a clear indication of whether or not they're ready to bargain seriously. Let the opening moves play out. With apples on the street, some will overcharge a foreigner just on principle, as well as to defend their national pride and to save face. So keep a clear eye on your own range of acceptable prices, and stick to it rigorously.

If you're putting up the money, don't let them talk you into quoting the first price. The first move should be theirs, though exceptions may be allowed if you already have a good relationship with them through past dealings. Present it as your firm's policy, and refer to proper procedures. It's a game of polite assertiveness, and this may be the opening power struggle. Insist they provide figures to back up their price, and eventually settle for just a first price offer. But keep up the demand for backup data as the price discussion progresses. Don't let them win this opening round, or they'll have the upper hand.

Be prepared to deal with an outrageous price, which will be especially outrageous if they've lost the battle over the first offer. Match an outrageous price with a fairly-outrageous counter, because they may only inch their way down and you need room to manoeuvre. Be prepared to walk if their moves are only tokens. Do your homework, and know the market, so that you can confidently hold the line until they bring it into the ballpark. Then the real bargaining begins.

Don't accept a high price on a promise that they'll lower the price in the near future,

"when we get the new technology online", "when we move to the new facility", "when we develop the new product", "when we hire the new engineer", "when we get approval from the government', "when we finish the merger".

Maybe they're sincere. But maybe they're wishful thinking. Hold out for the price you need. Cut them off quickly. "Not a chance. We don't do speculation. We need to work with real prices right off the bat."

And you may have to leave your fancy management theory behind. It's quite fashionable in the west to seek win-win solutions. But China's a developing country, not long out of poverty, in a brutal marketplace. They're quite accustomed to win-lose, and they're quite happy to win. But again, you'll find them somewhat more refined in the major centres.

7. Pay Attention to the Non-price Issues

Many traders will tell you that Chinese are motivated by price alone. They will attach little importance to issues of quality or delivery or service, assuming these are secondary issues that can be put aside. That view of Chinese negotiators is someone outdated. A narrow price orientation is not as prevalent as it used to be, but you will still run into it often enough, and you may need to insist that the price is contingent on the whole package. Insist that the price agreement will be void if certain conditions are not met. Price cannot be negotiated in isolation. Some may try to brush that off, figuring that you won't push it. Push it. Be picky. Insist on engineering specs on the useful life of the product. Have them explain their quality control procedures, and their warrantee policy. Get a pricise definition of how satisfactory performance is specified, and what constitutes a completed project.

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