Learn how to effectively negotiate across cultures, with a specific focus on Asia Pacific.
In this article, we’ll be looking at:
1. Body Language
2. Saying «No»
3. Cultural Differences
4. Trading Variables aka Bargaining Chips
5. How to Successfully Prepare for the Negotiation
6. Buying Tactics
7. Negotiator Rulebook
Here’s a very effective, 30 minute video to learn all you need to know about negotiation, managing relationships with stakeholders in the Asia Pacific Region and always achieve the most successful outcomes from a negotiation.
Body Language
93% of communication is non-verbal.
Although we pride ourselves to be rational animals, the vast majority of communication in humans occurs on a subconscious level. What we actually say only counts for a tiny percentage. What really matters is what we do while we say it and how you say it.
This is a hugely important consideration, because it means that, in general, we are disadvantaged in a virtual world.
Now that most meetings have moved online there is no longer that safe space and time outside the boardroom to build a rapport, get to know the other party, get a feeling on their body language. This has strong implications.
No informal space – where trust and connection is established the easiest
Easier to say NO – conversation is less divergent
Lack of physical interaction and coordination – people become more risk averse and conservative
Common mistakes
Let’s look at the common mistakes most people make in a virtual setting.
- Avoiding silence – people find virtual silence uncomfortable (silence can be useful)
- Not clarifying constraints and assumptions – leads to misunderstanding and lack of trust
- Not setting an agenda and managing expectations – surprises are usually not welcome if opposing side is not prepared
- Lack of awareness on culture difference – be aware of cultural influence, communication styles, and boundaries
How to successfully negotiate virtually
- Connect at the outset and manage expectations
Set the scene by sending the agenda to align on expecations, set up the meeting so you stay in control. Note there is less patience and time to work together
- Create informal moments
Ensure everyone has a face and know their background. Use this time to build a connection
- Clarify constraints and assumptions
Leave no room for any misunderstanding. Ask more questions and take lead in sharing interests. This helps others reveal more information and gain more trust
- Smile
A smile goes a long way to prevent negative facial expressions on screen, and gives the perception that you are more welcoming
- “Zoom” fatigue
Meeting fatigues are real, so direct viewers gaze to where they should look, grab audience attention through emotions and movement, and keep meetings short and introduce breaks.
- Touch base after the meeting
Send an email or a note summarizing what was discussed/ agreed to ensure everyone is on the same page
Saying “No”
In a face to face negotiation, we must be very mindful of the other party’s cultural background and accept that we may actually stimulate a positive outcome by allowing the other person to say “no.
This is because someone saying “no” feels more protected as well as feeling in need to now give back to the other party. This makes them more open to listen and reach a positive outcome.
Use the “no” to your advantage and prompt a “no” from the other party precisely when you want them to pay more attention to what you have to say next to then drive a positive response.
Face to face negotiation
- People are generally more empathetic and more open to finding a common ground, because there is a possibility for more trust and understanding
- People are more emotionally alert so tactics such as Mirroring, 3 Yes Rule, and Pacing are more effective
- Cultural difference is more prominent, so it is important to be aware cultural differences and knowing how to build the cultural gap
Let’s look at some practical examples of cultural divergences.
- Eye contact in UK, US, Europe is a sign of strength, while eastern countries like Japan can be deemed impolite, and middle east as uncomfortable (if working across genders)
- Acknowledging hierarchy is a formal rule in Asia. Therefore, where you sit speaks volumes, unlike less hierarchical cultures such as Canada, Sweden, or Britain
- Time is important in some cultures, where being late is considered unprofessional, while other cultures like Spanish, Arab, or Nigerians is considered normal
Trading Variables aka Bargaining Chips
Before arriving at the negotiating table, plan in advance everything you want to take away from the other party and every chip you can put on the table in exchange.
Trading variable can be classed according to four macro categories.
Here are some examples of the main trading variables:
•Price discounts
•Volume discounts
•Total business discount (volume rebates)
•Credit terms
•Payment in instalments
•Extras / add-ons / giveaways
•After sales services
•Specification / quality
•Period over which prices are guaranteed
Preparing for the negotiation
It is good practice to lay down all of your trading variables ahead of the negotiation.
#Rank each variable in order of importance to you (e.g. does it matter more quality, cost, speedy service, etc.)
For each variable, set out a clear range or playing field. What is the best case scenario you aim to take away? What is the worst case, where do you draw the line beyond which you walk away?
Doing this for each and every variable on the table will allow you to be much better prepared and know exactly how much room for compromise you have for every item.
Ask questions. Find out what is the perceived value for each variable from the other party. Always try and give away variables which are low cost to you but perceived as high-value from the other party.
Monetise. How much is each variable worth to the other party? By asking the right question you’ll be able to assign a monetary value to each item. Giving a specific price tag to every variable will help you quantifying how much value you’re adding for your counterpart.
Buying Tactics
Here are some of the most effective buying tactics you can apply.
The Dutch Auction
An open comparison of two or more competitors, often with the competitors sitting in front of one another! This usually translates into a downward auction where each competitor tries to openly undercut the others.
The Budget Bluff
“I really want what you are offering, but this is all I have in my budget so I cannot afford any more…”
The Competitor Quote
“I had more competitive quotes than yours so if you cannot drop your price I will have to go with someone else”
The best friend
Pretending to be friends and leveraging the relationship for a better price.
The future promise
If you give me a really good deal on this first small order I will get you more business in the future.
The Stall
Buyer pretending to be in no rush to find a deal. Remember, in every negotiation one of the parties is always under time pressure. The more the clock ticks, the more they’ll be inclined to making concessions. If the one not having a time constraint is not you… happy days!
Buy Now bargain later
If you are the guy with a time pressure… well this trick may just do for you.
“Given that we have come so far, why don’t you start processing my order and we can sort out the minor details later?”
Negotiator’s Rulebook
- Never ever give something away for free. For every variable you concede, get something back from the other party.
- When making a concession, ensure it is always a low-cost / high-value variable.
- Always act in good faith. Adopt a collaborative approach from the onset. Remember this is business, we’re all in it to achieve a positive outcome. Let’s clarify what is the other party wants to achieve beyond the single transaction. Let us approach the negotiation with (almost) all our cards on the table and let’s invite the other party to do the same. Only then we’ll have visibility of what the other party wants to achieve and we can work together towards a WIN-WIN outcome.
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