商务英语阅读材料3

PAGEPAGE8材料3SellingWaterforChinabyDrBobMarchThisnegotiationcaseispublishedwithpermissionfromDrBobMarch'sexcellentbook"ChineseNegotiator".OverviewAcquaInternational(AQ)isaEurope-basedmultinationalcompanythathasinterestsinwaterandenvironment-relatedbusinesses.InChina,thecompanyhasjointventureswithmedium-sizeandlargemunicipalitiestoproducepotablewater.ToincreaseitsinvestmentsinChina,theAQGrouparranged,throughitslocalsubsidiaryPacificAcquaInternational(PAQ),toenterintostrategicalliancewithTakFoyandCo.,aChineseconglomeratewithstrongrootsinChina andHong Konginthe serviceindustry(mainlyleisure-related).TheventureiscalledHaoyuChinaLimited(HCL).TheSceneThesenegotiationsconcernedanurbanwatersupplysystemprovidingpotablewatertoaroundonemillionpeople.Throughanagentintheprovince,theChinasubsidiaryPAQhadsecuredacontracttoconstructawatertreatmentplantforthesystem.Sometimeafterthecompletionandcommissioningoftheplant,PAQlearnedfromthesameagentthatthemunicipalityshortoffundsforsomeurgentdevelopmentprojects.Oneofitsoptions was to privatize the municipality’s water supplyfacilities.Thesalevalueofthefacilities wassetbythemunicipality,biddersweresoughtfromwithinitsjurisdiction;therewouldbenorecoursetothecentralgovernmentforapproval.HCL, located in the municipality, submitted a proposaltobuythefacilities,tosetupajoint venturewiththemunicipality’swatercompanyona3:1ratio,andtooperatethefacilitiesonatwentyfive-yearcontract.Theunresolvedissueswhenbidswerecalledforwere:InitialInitialwater charges. Theonly things that hadbeenagreedonuptothisdatewerehowmuchwouldbeinvestedinthefacilitiesandspentonimprovements.Thedemandfor water.Tomakethe businessfinanciallyviable, a take-or-pay mechanism would have to beintroduced,andlocalwellswouldhavetobeclosed.TheformulatocalculateannualwatertariffTheformulatocalculateannualwatertariffrevisions.Devaluationoftheyuanwouldaffectforeignexchange–basedinvestment.The new company’sstructure.Who would be theshareholders,boardmembers,andthoseresponsibleforitsday-to-daymanagement?NegotiationsBeginAttherequestoftheChinese,amemorandumwassignedHCLandthemunicipalitytorecordtheissuesstilloutstanding.ItwasonlythenthatPAQ—andthroughitHCL—wasinformedbythelocalPAQagent(whowassupposedlyveryclosetohighlevelsinthemunicipality)thatotherinternationalcompetitorshadalsovisitedthemunicipalityinconnectionwiththesameproject.Aftermeetinghigh-rankingofficialsinthe city,thePAQteamwasadvisedtoloweritsstartingpriceforwatersupplyifwishedtoremainthepreferredpartner.Inabidnottolosethemunicipality’sinterest,PAQorganizedvisitstoPAQoperationsinotherprovincesforagroupofmunicipal officials, whose reaction was positive. believingitagoodtimetostart negotiations,PAQsubmittedarevisedproposal, whichitfollowed upbyvisitsrequestingdiscussion.Themayor’sofficearrangedanegotiatingsessiontobeattendebyrepresentativesofallthemunicipaldepartmentsconcerned,atwhichPAQandHCLwererepresentedbyfourpeople:JohnKing,HansChristian,ChengPengLi,andXuJing.Forseveralweekstheunresolvedissuesandothermatterswerediscussed,andeveryeveningthemunicipalityhostedaformalbanquet,whichlentambiancetothetalks.Cheng andXuweretherepresentativesonthesesocialoccasions,whileKingChristianremainedinthebackground.StrategyAppliedPAQdidnotbeginnegotiatingusingthewaterratesasthedecidingfactorinthebeliefthat,wereitsideasnotaccepted,theentireprojectmightbeplacedonhold.Instead,itpickedsecondaryissueswithnoncriticalimpacttogivebothpartiessomewinstobalancethelosses.Discussions started with water demand. Municipalities generallyoptimisticaboutdevelopmentand,therefore,readytoacceptor proposerelatively high demandlevels wheretake-or-paymechanismisapplied.Moreover,PAQbelievedthemunicipalitywouldnotbeinthejointventureifitwerenotreadytoenforcethelawsconcerningwells.Soanagreementwasreachedquitequicklyonwaterdemand.Nexttobenegotiatedwasthetariffadjustmentformula.Bothpartiesagreedtoaninflation-adjustedtariff,whiletheprovincialgovernmentrepresentativeinsistedthatforeignexchangeshouldrepresentlessthanfivepercentofinvestmentandbeusedfornomorethantenyears.DuetoPAQ’sfavorablereputation,agreementsontheshareholdingstructureandmanagementwerereachedwithouttoomuchdifficulty.Lastcamethewaterratenegotiations.PAQimpressedonthemunicipalitythat,asanoldfriend,itwasrightfortheproject,beingtechnicallyandfinanciallysoundwithagoodtrackrecordinChina.PAQ’ssinceritywasdemonstratedbythenumberofChinesestaffonitsteam.CoupdeFaceAgreementwasreachedintwoweeks,withthemayorhimselfvoicinghissupport.Wishingtogivefacetotheirleadnegotiator,andawareofChinesesensitivitytopricing,PAQthenofferedtoreducethestartingwaterrate.Inreturn,togivefacetoPAQ,reducethestartingwaterrate.Inreturn,togivefacetoPAQ,themunicipalityofferedpreferentialtaxtreatmentoverafive-yearperiod.InRetrospectLater,PAQmanagersdescribedsomeoftheproblemscommonlyfacedbyforeignersinnegotiationsituations,andhowtheymightberesolved:MostMostforeigners newtoChinadonotknowhowtheChineseperceivethem,nordoesitbotherthem.ManyChineseseeforeignersascheats,motivatedonlybythedesireforprofit.TheChinesepointtohistory:relationshipswithforeignersareshortterm,theforeignersleavingafterattainingtheirshort-termgoals.Chinahasahigh-contextsociety. Whoyouandassociatesareismoreimportanttosuccessthanthemereexcellenceofyourproductoryourcompetitiveprice.TheChinesemayrenegotiateacontractevenafteritissigned.Theybelieveinpeople—notlegalpackages.ChinaChinahasahagglingculture;therearenoethicswherepriceisconcerned,andtheywillstopatnothingtoyoutoloweryourprice.TimeisnotmoneyinChina,althoughthisisstartingtochange.TheChinesewillnotsignonthedottedlineuntiltheyfeelintuitivelythatthetimeisright,evenifallpointshavebeenclarified.Chinesenegotiatorsarenot decisionmakers;theCEOorthegovernmentistheultimateboss.LanguageisabigbarrierinChinese-foreign negotiations.SolutionsBepatient.InChina’sSolutionsBepatient.InChina’sfamily-centeredsocietyittakestimetobuildtrustwithnon-familymembers.Local Chinese employees can help establish trustingrelationships.Once theChinese trustyou, negotiationsare lesstroublesome.Identifythe negotiators. Theymay betopleaders centralandlocallevels.ItisimportanttobehonestandsincerewiththeChinese.Itisimportant