By Joe Robinson email
| bio
In the international arena, those who are most
successful in the long term are those whose negotiating skills
consistently produce favorable outcomes for all sides.
We have all heard the phrase “closing
the deal.” I prefer the more positive phrase “making”
or “structuring” the deal. This infers agreement
rather than a mandate. Something that is closed assumes a degree
of finality, whereas the term making or structuring something
conveys a constructive dynamic that tends to grow and prosper.
There is a perceived benefit in the deal for all sides.
I do not like the term “win-win”
in international parlance because there are often more than
two parties to a commercial transaction. A typical example is
the every day selling and buying of products involving the manufacturing
exporter, the buying importer, and the agent representative.
All three parties need to benefit for long-term success.
Webster’s Dictionary defines negotiating
as “conferring, discussing, or bargaining to reach agreement.”
Those things that are agreed upon tend to do better than what
is mandated or dictated.
Don’t misunderstand me. I still believe
that the marketing sales manager for the exporter should strive
to position himself to make the best agreement possible for
his company. To do this, he needs to practice good negotiating
skills and techniques.
One of the first negotiating skills is to develop
the habit of understanding the background and position of your
buyer. Do as much research as possible. Being prepared means
to know where your buyer is coming from. Know your customer’s
needs so you can fulfill them. For example, is quality and durability
top on your customer’s list? Is quick delivery a top priority?
Or is pricing the number one consideration of your customer?
Do a competitive assessment to ascertain your
relative position. When I went to the south of the Philippines
many years ago, I was the only international supplier who showed
up, so my position and leverage was much better than in Japan
where I had competitors from several countries.
Do not overlook the importance of relationship.
I received a large contract from a major Chinese conglomerate
even though I was high bidder against both a Japanese and an
English competitor. In my negotiating package, I offered to
train four Chinese technicians for two weeks. My competitors
overlooked this enticing aspect of the offer. I simply increased
my price to cover the added costs of hotel, meals and ground
transportation.
Part of the training was a three-day tour of
Washington, D. C. with me acting as tour guide. I also enjoyed
the trip, fully paid, of course, courtesy of my company!
We Americans tend to come from a one-price
culture where, unlike other cultures, people learn to negotiate
at an early stage. Prior to my first trip to China, I convinced
my president and controller to let me increase all our prices
by 30 percent. I then created an “official” price
list in an attractive wire-bound book. I realized that from
a psychological aspect, the Chinese absolutely had to bargain
for the best possible discount.
They began the process asking for a fifty percent
reduction in my price. I countered by conceding 10 percent.
We ultimately settled for a 23.5 percent price reduction that
was 6.5 percent above our domestic price. We both felt good
about the outcome.
One word of caution on pricing: do not create
official pricing that is below your domestic pricing. This may
cause you to violate anti-dumping laws that could cause serious
negative consequences for your company. Besides, it is more
fun to increase prices rather than reduce them.
In negotiating, be aware of the time factor.
Do not tell your customer upon arriving when you are scheduled
to leave. In my example of the China negotiation I introduced
above, a purchasing agent from the company I was negotiating
with asked if he could reconfirm my return flight. I thanked
him, and advised him that I had taken care of this and planned
to leave at noon in two days.
On the morning of the second day, the request
for price reduction and other concessions became more intense.
Just before noon, the purchasing agent reminded me that I needed
to conclude the deal and get to the airport in order to make
my flight. I told him that I had moved my flight to the next
day. This surprised the entire team and especially the factory
manager, who needed to catch a train out of Beijing at 2:00
that afternoon.
In this very moment, the position and leverage
shifted to my favor. That evening at a dinner reception, the
Chinese presented me with a purchase order that exceeded my
boss’s expectations.
When you negotiate, be careful about language
and word meaning. It is better to ask what, when and how questions
rather than yes/no questions. For example, asking Japanese if
your delivery schedule is acceptable, he might say “yes”
meaning “Yes, I hear you.” The Japanese do not like
to say no. It is impolite to do so. A better situation is to
ask: “What timeframe is preferable to you for delivery?”
Additional techniques for successful negotiations
include initially aiming high; making concessions slowly and
in small increments; being aware of deadlines; avoiding the
“take it or leave it” offer that may result in deadlock
or damage a relationship; utilizing the very best interpreter
you can find; developing an appreciation and tolerance for patience;
and including potential small aspects in your offer that you
can concede as a token of good faith in arriving at a profitable
and agreeable yes.
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