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Video Three

How to Negotiate Effectively?

Hi, this is DeCima, and I am back with a new lesson on how to negotiate effectively. Well, what is it to negotiate or what does negotiation really mean? Negotiation basically means an exchange of things between two people or two parties. So if I were to negotiate with you, I would be exchanging something that I have for something that you have, so for example, say, I have a car, I have a car but I don't have a lot of money. Now I am in need of money, but you are in need of a car. So what am I going to do? I'm going to exchange my car in return for the money that you are willing to pay me for my car. So the talks that follow depending on whether we like to exchange the car for the money is what negotiating is all about. So negotiating, should I say, is making a deal.

So if I'm done with negotiating I have made a deal. Okay. Well, please note: that there are various steps to making a deal or negotiating effectively. The first one is: decide on your break-even point. What is a break-even point? A break-even point is basically the lowest amount, or shall I say, the cheapest price in non financial terms I would call it the worst case scenario. So when you are trying to exchange something that you have for something that someone else has, you've got to decide on what is the lowest amount, the cheapest price, or the worst-case scenario you are willing to accept before making a deal, or before saying yes I'm willing to take that and give you this. So for example, you know, I may have say, 100 thousand dollars in my bank account what I don't have that much money, but suppose I do and I want to go and buy a house. Now I’ve seen this really wonderful house, you know, with the really large living room, two nice bathrooms, a study in everything, and you know, the person who is selling me his house is willing to give it away, for say, one hundred thousand dollars. Now that's the exact amount I have in my bank account. Do you think and that is my break even point? I wouldn't say so. A break-even point is, as I said, the lowest amount or the cheapest price I'm willing to accept to exchange what I have for something that I want. So you gotta be very careful about knowing what is your break even point, otherwise you might end up accepting a deal that is not in your best interests.

The next point to negotiating or making a deal work in your favor is to know what you are worth. What does it mean to know what I am worth? Okay, you gotta two questions to yourself. Do I have something the other person needs?

Question number two: does the person need me more then I need him? So when you know what is your worth, you are in a position to negotiate more effectively, so suppose I am a jewelry vendor, so I am trying to sell very rare diamonds, you know, say for example, or really rare pearls which you know are not very common in the market these days. Now does that mean put me in a position to bargain more effectively? To make a deal work in my favor? Yes, it does. Because now I have something that the person needs in fact the person who is buying something from me wants it more than I want to sell it and that puts me in a better position to negotiate more effectively. So when you are trying to negotiate a deal in your favor always, always, try to know what you are all about, what you are worth.

Video Four

Chinese Negotiating Styles (1)

Hi, I’m Andrew Hubert, for china solved. Today we're taking a look at the five Chinese negotiating styles or types. All negotiators, Chinese, Westerner or any other, fall into one of five categories, or types of negotiators, and that those five are competitive, compromising, accommodating or yielding, avoiding or collaborating. If you’re interested in reading more about this topic, I refer you to G. Richard Shell’s Bargaining for Advantage. What Shell did was divided each negotiator’s style into two dimensions. uh... he looked at how important the goals of outcomes were to you and how important the counterparties uh... now comes and goes work to you. So if you look at the left side this is how you view the negotiation if you do you uh... the outcome of this negotiation as a top importance, you really want to maximize the value of this individual transaction. Maybe you have a unique asset, maybe you have a very strong bargaining position or maybe it was extremely confident about your abilities.

Sometimes you take more of a moderate approach especially you're a professional salesman or professional purchaser and the value of this transaction is not that high, it’s not to live or die. You just want to get the deal done, and sometimes you're not that worried about the benefit or the goal of the ... uh... negotiation, you're more worried about the risk of not having transaction, and using example, the guy who has a warehouse full of ice cream in August, and your freezer just broke and if you don't sound like you have to clean it up, so you don't really care that much about making a huge profit, you are more concerned about avoiding the large loss. And then, we are going to look at your view towards your counterparties, benefits for goals, if you have a low opinion of your counterparties, where you don't worry too much about his feelings of his reaction, then maybe you feel that time is in your favor, the circumstances are in your favor or you have non-economic considerations, you know really care what he thinks.

In most negotiations, you will have some regard for your counterparties uh... feelings about the outcome, officially professional salesman or normal business. It’ll be nice to see him again. And such will be a very high regard uh... for your counterparties’ opinion about this transaction, you really need this client, uh... you wanna uh... see him again or you wanna have a strategic relationship with a very few buyers or sellers and uh... you really need to transact with this person and you need him to say good things about you and you want to see him again. And there you see the chart that will be filling in. On the left on the Y axis is the benefits to you, and across the bottom, the X axis is how you see the benefits going to him. So if you are top left, all that you care, that is, the benefits to you, you don’t really care at all about the benefits are outcome to your counterparty, you’re, we call, a competitive negotiator. It’s typical win-lose aggressive negotiator on ninety nine uh... to one in my favor is proper and about that would be a fine outcome for me. On the other end, the bottom right is an accommodative negotiator. All the cares about is making the other guy happy. Who’s that? This is someone who really needs to make that sale uh... this is the uh... the ice cream vendor with the broken refrigerator that we talked about earlier. One to ninety-nine (not in my favor), one to ninety-nine against me is Ok, as long as we can finish the business and transact, as long as you’re happy, I’m happy.

Now we go to the other corner, the top right corner is collaborative. This is the Win-Win negotiator. This is the guy who wants to work together to cooperate to enlarge the pie and create value, two plus two equals five for this type of negotiator, he's always looking for a way to uh... make both sides happy. And the bottom left is the avoiding type. The avoider wins by not playing.

He doesn’t want to transact, he doesn’t want to get involved uh... he doesn’t gain from this transaction but maybe just a work harder, or maybe as to take a risk and this is a typical bureaucrat uh... who gets paid whether he you happy or not uh.... It’s a reluctant buyer. Someone who is afraid of spending the money you're afraid of making a commitment and he would prefer not to transact, not to complete the negotiation.

And in the middle of all these, we have the compromiser. He transacts often, but he doesn't really maximize his value, and this guy is sort of the exploded different meet in the middle type of negotiator, but this compromiser does the deal, the compromiser always leaves the table with a signed an agreement of some kind.

Video Five

Chinese Negotiating Styles (2)

Now let's take a look at the Chinese negotiating personalities. The first we look at is competitive types of it. The competitors in china will often not appear as competitors. uh... they may appear to be very accommodative, they're trying to be your friend and try to build a relationship as it is, commonly Chinese negotiating an internship offer uh...to help you any way they can, and they may be very flexible on certain issues, sometimes it would be price, sometimes uh... a competitive negotiator will be very flexible on issues of having to do with schedules, timetables, uh... your ability to handle large quantities of sales targets and other things that can't be enforced very easily later after you return to your home or office in the states. Don't fall into the trap of negotiating solely about price with uh... competitive counterparties. That might not be the real interest and the real interest uh... it might be in technology, intellectual property, or if you've invested assets uh... maybe in your customers may be your client lists uh... maybe in uh... certain other deal terms like exclusively for territory uh... competitor or negotiator uh... in united states is usually going to be very visible, usually he's after your money. In china, he may not be after your money, so it might be a lot harder to spot.

The next type of negotiator we’re looking for in Chinese is the accommodator, and accommodator in China comes in two varieties: first is that guy we have discussed, secretly competitive negotiator who's gonna come up across uh... as an accommodator who's going a bend over backwards to help you, but he's really gathering information on your talk to property or your technology and your customer list, but this is not necessarily the most dangerous type of negotiators. The most dangerous accommodators: the wolf in sheep's clothing is not you were necessarily your main problem. In China kindness really can kill... because passive colleagues and partners and counterparties won’t tell you what you need to hear, the only tell you what they think you want to hear. Now in all fairness, sometimes, I feel that are telling you with gesture or with the raised eyebrow uh... by looking away, by expression on the face and you won’t pick up on it because of cultural differences and different communication styles, but still this is something beyond the lookout. The Chinese uh... as a general rule because of rules of etiquette and culture, tend to look more accommodative than westerners even though in reality they are not.

A compromising and compromiser are our interesting aspects of Chinese negotiating uh... China is a consensus-oriented culture and they have a tradition of trying to smooth over difficulties and smooth over differences and this manifest itself and uh... are certain type of negotiating behavior, they come into negotiation expecting to compromise. It's very common for a

Chinese salesman to set the price outrageously high. Maybe four hundred-percent above their real target, because he expects you to compromise him down to uh... two hundred-percent above what he expects uh... someone else to pay, the key here is to gather information and use your negotiating time to get usually ship building uh... opportunities to learn as much as you can and to build your own sources of information. Don't start negotiating as soon as they call item number, just because they say a five hundred doesn't mean you are required to shout back a counter offer right away.

Avoiding plays a big role in the larger Chinese negotiating behavior or four percent of tactics which is quite frankly passive-aggressive. Chinese will use knowledge user insider information and use their connections to their advantage and one of the ways is to avoid engaging with you until you make the first second for it, so you may have to come back to negotiation several times and come back to negotiation counter party several times before you make actual progress. One America stations of avoidance in Chinese negotiation is that you may find it very difficult to make face-to-face contact with the actual decision maker, and you'll spend a lot of time working with subordinates even if you speak Chinese began receiving a few have translators who say it's a language issue but it might not be. They gain a lot of power by having the key decision maker avoid the face-to-face contact with you and your group, so what you've got to beware of this yes you can probably do a deal through its hierarchy or through its subordinates and the people he sends to meet with you, but you've gotta be careful because if you can't meet with him, meet face to face with the real decision maker, now when things are still relatively friendly, it may show that you can have a problem later on when thing's aren't quite that friendly.

Post-listening Activities

Video One

Business Negotiations — Business English for Negotiations

Welcome to twominenglish.com. Teaching you English through two-minute lessons. In this lesson you will learn how to negotiate in English.

1. Negotiations on service

Mark: So Richard, I'd like to hear more about how you charge for your service. Richard: Sure, Mr. Mark. We offer one-year unlimited data storage for $2000.

Mark: Can you clarify the data rate? Exactly how much data storage can be used, when you say it is unlimited?

Richard: We have a fair use policy of 10 TB.

Mark: Can you bring down the rates? We won't need that much storage anyway.

Richard: We have 7 TB storage for 2 years at the same price. I'm sure this is the best package for you.

Mark: I don't know, Mark. Let me sleep on it.

2. Negotiating an d contract

Mark: Mr. Smith, can you please give me your best offer?

Smith: Sure, Mr. Mark. I can give you 15 seconds of airtime for $2500 if you sign a contract for 100 such ads.