Unit 5 Blog: Negotiations that resemble The Great Wall

After a recent conference call where a deal was being discussed, a colleague asked the question: “Will these negotiations ever end?” For months there have been negotiations and discussions on the details of a new machine that is being purchased to save the company millions of dollars.

The company quoting the machine is from Canada, with its headquarters in China. Negotiations have been done directly with the owner, a Chinese national. Harris, Moran, & Moran (2011) make the claim that the Chinese are among the toughest negotiators in the world. This deal’s negotiations seem to resemble the Great Wall of China, formidable and very long, almost appearing to have no end.

The quoting / design approval process has not been the same as past practice has been with other machine purchases from US or European based companies. Many of the typical details were not flushed out, and the machine’s various design parameters seem to change and testing has not been fully performed. Drawings are not properly scaled, and the design seems infantile when compared to other similar systems. There seems to be continuous changes made in who will be providing various components relating to the installation of the machine, and also the labor for the installation. Even with a detailed corporate standard that is to be followed for machine purchases, these dealings seem to be fluid and there is a lot of back and forth between the two companies. Even when the deal seemed set in stone with iron clad purchase orders and terms & conditions, the machine supplier came back with their hand out for more concessions. This shows that Hofstede, Hofstede, & Minkov, (2010) are likely correct in calling the Chinese culture thrifty and persistent. Many individuals are not comfortable with the machine’s ability and are crying foul, but with so much potential for saving money, those in the highest level are pushing for the system to be purchased and implemented.

Harris, et. al. (2011) write that many people believe the Chinese culture takes advantage of American’s typical rush to get things implemented swiftly and they will slow the process down when making deals. In this example the executives are pushing for the machine quickly to start the savings, the corporate executives put a year-end deadline on installation. The machine supplier had promised an October delivery but this did not happen. It is the end of November and the machine is still not fully designed. The supplier is fully aware of this push to meet corporate deadlines but is dragging the details out. By doing this they are attempting to receive various concessions as a way of helping things move faster. This appears to be working as some coworkers have defended the machine and the supplier instead of vetting its design and quote for flaws that could be disaster once installed.

As one of the brokers of the deal, it is somewhat disheartening that the machine’s claimed abilities were not fully tested. The machine is beyond anything this supplier has built in the past. If it fails it would be a substantial amount of money lost. This causes an ethical dilemma, follow orders and forge ahead, or try and derail this questionable deal. Harris, et. al. (2011) explain that the Chinese culture prefers long term benefits in deals, and also states that they usually stick to their word. Learning these two aspects from this course and readings has alleviated a little of the stress being caused by this never-ending negotiation. There are alternative machines, some in place that could be further developed, especially with the amount of money being invested with the Canadian / Chinese machine supplier. With the push coming from the top of the company food chain there seems to be no stopping the deal. PSY539 (2017) teaches in Lesson 12 that one must avoid stereo typing individuals and companies, just because a culture has a trait or value, doesn’t mean every individual in that culture does. This causes pause when thinking of the negotiation and the company’s owner doing what is ethical regarding the machine build and install. What appears to be a bad decision, might be just that.

References

Harris, P. R., Moran, S. V., Moran, R, T. (2011). Managing cultural differences leadership skills and strategies for working in a global world. Burlington, MA, Butterworth-Heinemann.

Hofstede, G. H., Hofstede, G. J., & Minkov, M. (2010). Cultures and organizations: Software of the mind. New York, NY, McGraw-Hill.

PSY533, (2017) Ethics and Leadership Retrieved from https://psu.instructure.com/courses/1868786

Photo

Manuel Joeseph (2017). Mountains clouds historical Great Wall of China Retrieved fromhttps://www.pexels.com/photo/mountains-clouds-historical-great-wall-of-china-19872/

2 Comments

  1. Terra I November 29, 2017 at 5:24 AM #

    Hi Don-
    This was quite an interesting read. Like Peter, I enjoyed the comparison to the Great Wall. It sounds to me like maybe the Chinese group is doubting their ability to produce the machine that you guys want. Perhaps they are delaying/stalling so that they can have more time to design/develop what your company needs and wants? I can certainly understand where you are coming from in terms of your ethical dilemma. Are there others that feel the same way you do? For me personally, I’d have to find out if others were as upset about this deal as I was, and then maybe approach your senior leadership together with questions about the deal going through. Already facing these huge delays, I suspect that it will only get worse as time progresses. I’d be curious why they chose to go with this company versus others that you mention that already have a similar product to what you are looking for. Given the amount of money that is being spent, I’m not sure if I could “be okay” with not saying anything… if the deal went south or the product failed, well… at least you tried!

    Good Luck!
    T

  2. Peter Marceta November 27, 2017 at 11:41 AM #

    Hi Don,
    A very interesting real world example indeed. I work in Cybersecurity Sales Engineering and I thought that some of my deals often drag out, but this really makes my sales/negotiation cycles pail in comparison. I particularly liked the clever comparison of the negotiations to the Great Wall.

    The ethical dilemma that you raised was also quite interesting. You mentioned that Harris and colleagues (2011) state the Chinese “usually stick to their word,” however I would be wary of this. Without legal assurances there seems to me a potential for the already spent hours to be squandered if negotiations and promises fall through!

    Thanks,
    Pete

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