Contract negotiations
Planning for contract negotiations is the first step to success. Often the outcome is decided before any face-to-face negotiations occur.Negotiation is one, but important, step in the contractual process.
Start planning early at Request for Proposal (RFP) stage.
This is the point at which you need a strategy to achieve your preferred outcome.Ideally the contract terms and conditions should be drafted and attached to the RFP or tender and the prospective supplier should be requested to comment. The issues, which you now know about, can then be discussed in negotiations.
Research the other party in advance.
Knowing what the other party expects to achieve will assist with your strategy. Negotiate from strength because knowledge is power in contract negotiations. Is their aim to get the best deal on price, is it to gain market share, expand into new markets or defeat their opposition? Find out if they have a walk-away position and what it is.
Structure your negotiating team
It sounds obvious that the interests of all the team members should be
aligned but often they are not so. Finance want to get the best price,lawyers was to make the contract watertight, procurement want to see the cost savings secured, others may want to close the deal quickly and go home. Contract negotiations can fail if each person’s loyalties,preferences and priorities are not voiced.
Before and at the table
Preparation is vital – conclude your own internal team negotiations before you engage with the suppliers. Undisciplined behavior and emotional outbursts can undermine even the best thought-out strategy.Simulate the negotiation with rehearsals including role plays using a lead negotiator and allocate individual roles to eliminate surprises.Overall, negotiating as a team has been more successful than using a sole
negotiator despite the inter-personal challenges.
n don’t expect there to be a resolution to issues during the meeting. To come to a resolution might mean having to tell someone that they are wrong and therefore cause them to lose face. Loosing face is a big insult to many Chinese.
Instead of making major decisions during a group meeting, the Chinese will often meet afterwards in smaller groups of 2-4 people and come to a resolution in the post meeting get togethers. This is perfectly acceptable to the Chinese because it helps them maintain harmony and nobody loses face.
Remember this does not bother them because it is part of the Chinese cultural customs and Chinese business etiquette.
Just realize that you may encounter this as part of the Chinese negotiating style and it will help you be more successful when conducting business in China.
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