Sun Tzu and the art of winning negotiations

For many of his colleagues, Sandro is a China veteran. He has worked in various cities in China for the past 7 years and has more work experience here than most of his Chinese colleagues.

One of the key success factors that he attributes to Sandro’s professional success in China is that he takes the time and patience to listen to and understand his Chinese colleagues, suppliers and partners. While some of the business practices in China may be very different, even contradictory, from those in his native Germany, Sandro has always been patient enough to understand why certain things are done in certain ways and then seek to get his Chinese counterparts to understand. . why some things need to be done internationally.

So when it came time to negotiate a major deal with a key supplier, Sandro decided to have 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 not divulge anything and squeeze them for the lowest price. And that’s what he did.

Midway through the negotiations, Sandro found that things were deviating from his goals, such as:

• Although the company has a policy of minimizing purchasing costs, there have been frequent cases of suppliers that have unilaterally increased prices because they realized that the agreed prices were below their costs. If the buyer disagrees with the price increase, the seller will cut off the supplies. And since the agreed prices were below costs, the buyer could not find alternative suppliers to also supply at those prices.

• One of the key requirements for this agreement is that the supplier commits to various quality and delivery guarantees, which are fundamental to the buyer’s production. However, these issues have not been discussed as Mr. Chen fears that discussing such issues will increase his purchase prices. Mr. Chen thought it best to secure the best price and then set these requirements after the price has been agreed. Sandro knows that if these requirements are established after the price is agreed, the supplier may not meet their quality and delivery guarantees because the price he receives does not cover the costs of additional work.

Given these observations, Sandro wondered if there is a better way to achieve a long-term commitment to the agreements negotiated in China.

Formulation of your trading strategy

“The victorious army plans victory before fighting, the defeated army fights before planning victory,” says Sun Tzu in The Art of War. The same principle also applies to the formulation of negotiation strategies. We can use the 5 elements of Sun Tzu:

• The path: your goal or desired outcome

• The climate: external factors beyond your control

• The terrain: external factors within its influence

• The general: the people who direct your negotiation

• The method: how the negotiation should be carried out

To begin, you will need to define what is the goal or desired outcome for the negotiation. The main concern you should have is whether you just want to win the negotiation or whether you want to have a sustainable outcome of your choice.

Interestingly, although it is often mentioned that Chinese businessmen expect negotiated agreements to be renegotiable later in the event of unforeseen circumstances, most Chinese negotiators tend to view a signed contract or agreement as an indication of the success of the business. negotiation. They are often too shortsighted to see that if the deal is not sustainable in the long term, or if it is deemed unfair, their negotiating opponents will want to renegotiate. As such, the negotiated results are NOT sustainable.

Therefore, to achieve a sustainable negotiation result, you will also have to consider a few more factors, such as:

• What is the negotiation outcome you want to achieve, other than price or immediate gratification?

• What is your best, second best, and 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 walk away and negotiate with someone else?

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

The best victory is the one that is 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 MORE of what we want, while we give what they want. While the reason behind such thinking is to control costs or maximize profits, there are some flaws in this logic:

• It does not mean that if you give much more than they want, it will cost you a lot. There are some things that you can offer at little or no cost, but that can greatly benefit your adversary;

• Many times, the costs of NOT getting what we really want (other than the lower price and immediate gratification) are higher than the savings of giving so little of what they want; and

• Sometimes it is necessary to educate your adversaries to understand what sustainable outcome they really want, too.

As Sun Tzu says, “The best victory is the one obtained without fighting.” If you want your opponents to give in to your demands or give you a lot of what you want, you can make your opponents feel that:

• When they give you what you want, they will get what they really want (in addition to the price and immediate gratification);

• Make sure that any deal you make with them is something they will be happy with, even if it is done in their best interest;

• You make 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 a stalemate, but if both parties are willing to explore the reasons why they want what they want, they may be able to find 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 business partners, even if they may be your adversaries in negotiations. The trick is to get your opponents to trust you fast 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 of our gains. That is why Sun Tzu says: “Know yourself and know your adversary, fight a hundred battles and do not put yourself in danger in any”.

What this means for the negotiator could be:

• You cannot win with ALL opponents. Knowing who you can trust and getting them to trust you is key to getting positive results;

• You don’t learn about your opponents by just talking to them. You can get more information about your adversaries (even if there is a great need for you to give them what they want) from your colleagues, business partners, or general industry news; and

• In negotiation, knowing your opponent may be just as important as knowing your opponent. 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 adversaries’ minds, and that is “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 making unreasonable demands on the serving staff in a very rude way, knowing that because they are paying the money, the serving staff will only have to say “yes” to the majority. of its rude. demands. While some service employees simply suffer in silence, some seasoned service employees know how to return 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 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 cj Ng