New Rules of International Negotiation

Table of Contents

Title Page

Copyright Page

Dedication

Acknowledgments

Foreword

Introduction

Close-Ups and Snapshots of the Highlighted Countries

NOTE:

Part I: The Cowboy in a New Frontier

Chapter 1: Crossing the Cultural Divide

Define Culture

Examine Exclusion

Close-Up of Asia

Snapshot of China

Chapter 2: Competition is King... and Queen

Compete and Collaborate

Be Open to Gain Trust

Talk. Don’t Tell.

Snapshot of Japan

Chapter 3: The Gated Community: Corporate America Lives Here

Close-Up of Eastern Europe

Snapshot of Russia

Chapter 4: Superiority Complex: Sophmores of the Global Campus

Level the Playing Field

Prioritize Values

Put Up or Shut Up

Understand Youthful Arrogance

Snapshot of the United States

Chapter 5: Values: A Matter of Priorities

Interpret Language

Understand the Mirror-Driven Society

Embrace the Other

Art Is Universal

Prioritize Values

Snapshot of Poland

Chapter 6: Build a Trustworthy Relationship: The Trust Model

Organizational Alignment Model

Trans-cultural Alignment Model

Behavioral Approach

Snapshot of Hong Kong

Chapter 7: The Business of Good Actions: Four Strategic Virtues

Snapshot of India

Chapter 8: The Charismatic Multi-national: Lending a Hand to Neighbors vs. Managing a Business Arrangement

Build Business, One Customer at a Time

What Could Be More Important Than a Total Reorganization?

Embrace Diversity in Thought and Culture

Prioritize Differences

Support the Integrity of the Individual

Close-Up of South America

Snapshot of Colombia

Part II: Negotiating to Shi

Chapter 9: Crossing the Cultural Divide

Define Your Style

Set the Right Tone

Achieve Mutual Comfort

Chapter 10: Recognizing the Needs of the Other Side: The Fastest Route to Getting What You Need

Negotiating Fluidly

Balance Power

Snapshot of Argentina

Chapter 11: The Mandate: A Blueprint of the Dance Floor

Getting the Mandate

Set the Mandate

Set the Objective, Determine Strengths, and Identify Key Issues

Establish Best- and Worst-Case Scenarios

Ask—It’s the Only Way to Receive

Snapshot of Chile

Chapter 12: Common Ground: Cultural and Contextual

Planning Strategically

Developing a Clever Strategy

Examples of Strategies

Effective Questioning

Plan, Issue by Issue

Overcoming the Cultural Handicap

Embracing Long-Term Thinking

Recognizing the Mutually Beneficial Approach

Snapshot of Venezuela

Chapter 13: Building Trust: Vulnerability and Consistency

Establish Trust

Individualism Versus Collectivism

Consider Consideration

Trust Model

Evaluating Emotion

Chapter 14: A Nation of Superiority: Ask and Listen

Identify the Other Side’s Priorities

Question Empathetically

Asking Questions

Embrace BATNA

Chapter 15: John Wayne is Dead: The Most Difficult Negotiators—From Two Perspectives (Ours and Theirs)

Battle Silence

Chapter 16: Verbal Behaviors: What You Say and How You Say It

Behavioral Approach

Respect Individual Integrity

Influencing Behaviors

Negotiating Behaviors

Show Digital Respect

Ask. Don’t Tell.

Build Through Action

Minimize Misunderstandings

Prioritize Values

Prepare Options

Be Consistent

Snapshot of Brazil

Chapter 17: Getting Ahead of the Cultural Changes

Mind the Gap

Beware Your Inner John Wayne

Embrace the Other

Recognize Your Own Behavior

About the Author

"Catherine Lee’s The New Rules for International Negotiation is a must-read for anyone who desires to become more effective in the global marketplace. This is neither a simplistic how-to book nor a long list of do’s and don’ts. Lee provides you with basic principles and models to will help you prepare and think through cross-cultural negotiations. The result will be more productive and successful long-term relationships."

—Ken G Kabira, Executive vice president, Lipman Hearne,

former chief marketing officer, McDonald’s, Japan

I have personally witnessed Catherine Lee’s practical wisdom and insight as she helped Motorola University prepare professionals for joint ventures in the global marketplace. This book is a compendium of invaluable advice for anyone embarking on a trans-cultural journey.

—Bill Wiggenhorn, principal, Main Captiva,

LLC and founding president, Motorola University

Do you travel overseas in business? Does your company have partners in other countries? Do you feel sometimes confused about how to negotiate with people from other cultures? Do you teach international business? If your answer to any of these questions is yes, this book is a must for you! Comprehensive approach, firsthand experience, solid theoretical base, practical suggestions—everyone will find something valuable here.

—Dr. Krzysztof Gluc, vice president, Wyzsza Szkola Biznesu, Poland

"Carrying her multicultural experience, intuitiveness, and keen analysis, Lee successfully delivers innovative applicable techniques and practical behavior adjustments that lead to negotiation enhancement in a corporate and personal setting. The Rules for International Negotiation delivers the message loud and clear: build trust, earn the right to influence, and negotiate successfully!"

—Hedy M. Ratner, president, Women’s Business Development Center

"The New Rules for International Negotiation is an important read for anyone who desires a better understanding of the critical role that culture plays in negotiating internationally. Catherine Lee has hands-on experiences and personal successes in using this process in a variety of organizations and is a strong testimony for the complexity of not only the face-to-face negotiation process, but the intangible cultural aspects as well."

—Tom Menzel, business owner/investor and consultant

This book is bound to work for people who work in an environment of diversity of cultures. It provides wisdom that can benefit people who work with people from other countries. It is helpful to read from time to time.

—Charles Wang, a business consultant in China

The New Rules

of

International

Negotiation

BUILDING RELATIONSHIPS, EARNING TRUST,

AND CREATING INFLUENCE

AROUND THE WORLD

CATHERINE LEE

Copyright© 2007 by Catherine Lee

All rights reserved under the Pan-American and International Copyright Conventions. This book may not be reproduced, in whole or in part, in any form or by any means electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system now known or hereafter invented, without written permission from the publisher, The Career Press.

The New Rules of International Negotiation

Edited by Kate Henches

Typeset by Michael Fitzgibbon

Cover design by The Design Work Group

Printed in the U.S.A. by Book-mart Press

To order this title, please call toll-free 1-800-CAREER-1 (NJ and Canada: 201-848-0310) to order using VISA or MasterCard, or for further information on books from Career Press.

The Career Press, Inc., 3 Tice Road, PO Box 687,

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www.careerpress.com

Library of Congress Cataloging-in-Publication Data

Lee, Catherine, 1941-

The New rules of international negotiation : building relationships, earning trust and creating influence around the world / by Catherine Lee.

        p. cm.

     Includes index.

     ISBN-13: 978-1-56414-973-2

     ISBN-10: 1-56414-973-0

     eISBN : 9781601638175

          1. Negotiation in business. 2. Cultural awareness. 3. Business etiquette. 4. International business enterprises—Management. I. Title.

        HD58.6.L43 2007

        658.4’052—dc22

2007029046

Dedication

This book is dedicated to my dear husband, Timothy, and to my children Stephen, Andrea, Cassie, and Moira.

To Timothy for consistently giving a positive response to my every doubt or fear, and to my children for supporting every effort of mine as if it already was a success. And to Quin, John, Cortney, and Andy for being there with confidence in my work when I questioned its purpose. Without the caring of each of them, my contribution would be shallow and meaningless.

Acknowledgments

To Alicia Karapetian for her editing and support through the unknown. For their contribution to the snapshots of various countries, I’d like to thank: Dr. Sharon Badenhop, consultant and professor, Rochester Institute of Technology; Camilo Escobar, senior manager, BP, Bogota, Colombia; Dr. Krysztof Gluc, vice director, Wyzsza Szkola Biznesu [WSB], the business university in Novy Sacz and Krakow, Poland; Gary Jamison, principal, Jamison Group and affiliate, Japan Intercultural Consulting; Rasheed Ahmed, vice president, EXENSYS, India in the United States, Ramonda Talkie, colleague in development of the negotiation process, John Willig, a literary agent who reflects the best in the negotiating style, and Chang Lu Wang, business consultant, Beijing, China.

Foreword

Globalization is no longer a concept. It is a reality that speaks to the interdependence of countries through an increasing number of cross-border transactions, capital flows, and diffusion of technology. Business today is global and encompasses every corner of the world—from advanced economies to emerging markets.

Executives working in this environment have to be nimble, knowledgeable, and open-minded. Business professionals may wake up one morning in New York and the next morning in New Delhi. The diversity of work and growth of cross-border business means that executives must be prepared to negotiate complex deals with different cultures whose priorities and perspectives differ greatly from their own.

Markets in the United States may pulse to the beat of time is money, but other cultures, such as the Chinese, prefer to take time— a lot of time—to consider a deal and finalize it. More importantly, the Chinese want to take time to understand the people with whom they are negotiating and learn the motivations that are driving the team on the other side of the table. In such a culture, negotiations are about something more long-lasting than the signing of a contract. They are about relationships and respect.

Too often people focus on the deal that is currently being negotiated and fail to realize that if they get the relationship right, there will be multiple deals down the road.

Establishing respect among different cultures is essential, particularly in emerging markets. In the end, people buy from other people, and they usually buy from people they trust.

A confident swagger and self-promotion may score points in the United States, but, in many parts of the world, humility is the greatest virtue. These cultural differences necessitate that business professionals adapt their approach and show sensitivity to the people with whom they are negotiating and who they are hoping to call partners.

Today, Motorola generates the majority of its revenues outside the U.S. While this is a recent phenomenon, it demonstrates that the company is becoming increasingly dependant on foreign markets and diverse cultures for its growth and future.

Global companies, such as Motorola, have an obligation to adapt to foreign markets and operate, when possible, as a local business that relies on local managers for results. Organizational design in different countries cannot be conceived in a vacuum, and consideration must be given to the wants, needs, and culture of a particular market.

Increasingly, the world is focused on two dominant emerging markets: China and India. With each country claiming more than a billion people and annual economic growth of close to 10 percent, China and India have truly become the new business frontier. For established North American companies in search of new ventures, these two countries offer big markets, big opportunities, and big risks.

Although China and India are advancing at rates not seen since the industrial revolution, they are each struggling with developing financial markets, legal systems, and corporate governance regulations. In these countries, the best way to achieve business objectives is to understand Chinese and Indo cultures, and build long-term relationships.

It is also important for executives to understand that the North American way of conducting business does not always translate well in these cultures. The straight-talking, shoot-from-the-hip approach to negotiations that is valued in Chicago or Dallas may come across as arrogant and defeatist in the boardrooms of Shanghai or Bombay.

This brings me to this excellent book by Catherine Lee, The Rules of International Negotiation: Building Relationships, Earning Trust, and Creating Influence Around the World.

A top management consultant and negotiations expert who has provided senior counsel to global companies such as General Motors, Milwaukee Insurance, BP (Amoco), and Korea Telecom, Ms. Lee’s book correctly focuses on the need for business executives to bring cultural sensitivity and understanding to the negotiating table.

This book, which grew out of a series of presentations Ms. Lee gave to Motorola’s World Wide Management Group, is timely and relevant given the increasingly global business environment in which people work.

Having been fortunate enough to participate in Ms. Lee’s presentations and to have read this book, I can say that Ms. Lee injects some much needed empathy, insight, and thoughtfulness into the realm of Corporate America. Using a series of anecdotes that are familiar and relatable, Ms. Lee makes a compelling case for business professionals to look at the wants and needs of the customer before their own, and to see people with whom they’re negotiating as human beings rather then adversaries.

The book looks long and hard at business practices and cultural priorities around the world including China, where Ms. Lee has spent much of her professional career and where many U.S. executives increasingly find themselves conducting business. The examination of China draws comparisons to U.S. business practices and negotiating techniques, and offers some valuable lessons.

They key learnings I took away from this book are the importance of respecting customers enough to learn about their country, customs, and culture, and to focus on relationships that will lead to long-term success rather than a one-shot deal. In fact, without a solid relationship even a one-shot deal has a minimal chance of success.

I strongly recommend this book, and encourage each of you to keep an open mind and learn from Ms. Lee’s experience and wisdom. Apart from its business teachings, the book contains a great deal of humor, charm, and practical advice.

As the world becomes more connected and the interdependence of countries grows, cultural sensitivities will become as valued as a focus on the bottom line. Globalization will continue to define the world in which we live and business will become increasingly international. In this environment, we each have an obligation to understand the people we work with and rely on for our success.

By Michael Hortie

President of Motorola, Canada

Introduction

Negotiation is an ever-present aspect of business. Being elected and serving on the Board of Education for a consolidated school district in the Chicago suburbs was my introduction into business, politics, and diversity. The district encompassed 14 municipalities; the Barrington area, an affluent community; Hoffman Estates, also a most comfortable community for young people starting out, educated and skilled immigrants, and academic professionals; and Carpentersville, a blue-collar community with a growing, hard-working Hispanic population.

Learning to work with the varied municipalities and with each elected ego, with the public while being public, and hearing the vastly different perspectives, made me uncomfortable with the enormous differences that had to be served or at least answered to. I wanted everything to be simpler and more categorized, not so threatening as with all those unknown and nonunderstood differences. If everyone’s need was the same, it would have been simpler and easier. Sameness seemed comforting and doable.

Circumstances pushed me back into the paid workforce after a 20-year absence. My husband’s (mentor) advice was, Whatever they ask you to do, say you can feel comfortable with that, and then come home and figure out how. Motorola became my first contract—a three-day training program for their first level managers. In 1990, after a year and a half of work with Motorola, I was asked if I would go to Beijing, China, to help set up some training. Once again, I thought I could feel comfortable with that. I knew they must have asked everyone else before me, but I had the freedom of little work. From that first trip in November of 1990 my education began, and I ultimately earned an on-the-job degree through experience in organizational development, training, and an MBA. My formal background was in the romance languages—a masters in the arts from the University of Michigan—and Ph.D. course work followed in medieval literatures at Wayne State University. All my practical education had come from the political arena.

For the past 19 years, in international training and management development, I have been able to observe behaviors of businesspeople from different business cultures and different national cultures. I facilitated many executive team meetings and worked with numerous post-joint venture teams in negotiations and in on-the-job team building— multi-national team building. My purpose was and is to help U.S. businesspersons and others of Western culture work more effectively and more respectfully with the diversity of cultures. This goal kept me to an intensity of focus and was reinforced by the perspective of a westerner who values and understands the paradoxical mix of her country’s business style. Just as a member of a family feels they may criticize their own family but no one outside it can, I also feel, as a U.S. citizen and business person, that—I may critique my country but no one else better do it. Not all United States businesspeople fit into this description—it’s more a reflection of the accepted (not necessarily appropriate) behaviors of our business culture in general.

Traveling to different countries and continents to work, I have had many lonely hours, especially on weekends, to observe, to listen, and to interpret. Every airport, hotel lobby, train station, open-air market, restaurant, and conference room became my laboratory. Occasional hotel tour buses would affirm the extremes for me. A person’s words, tone, and expression would either influence the other side to respond, to listen more, or to graciously retreat—or not so graciously shut down. For 11 years, I observed, noted, and documented. Motorola had trained me as a behavior analyst, so I had a framework for my data. My partner trained me in assessments and their intended results. It was the best experience that anyone could have to formalize their learning—firsthand observation and an opportunity to elicit immediate feedback.

In November 1990, I left for Hong Kong. I was petrified by the thought of standing in front of businessmen from every different country in the Pacific Rim and instructing them in leadership and management skills. I worried about whether they would understand me, or my off-center sense of humor. I didn’t know if my woman-ness would affront them, or if their cultural bias would offend me. I wanted to be knowledgeable in every aspect of their culture. I almost couldn’t talk the first day because my mouth had the dryness of fear, of ignorance, and of inexperience. Now, I have that same feeling when I have to facilitate a group of white Americans from the corporate culture. With the diverse groups, I have the vast lenience of every other culture.

The participants in many of the sessions, if asked respectfully, would tell me the agenda of a typical workday in their country. Many times in the cross-cultural groups we would use an agenda from a different country each day. It kept change a respectable force in our sessions.

The unexpected benefit was often seeing more clearly the values of a new and different culture. I worked several times with a group of software developers in Turin, Italy. I once mentioned I would love to see the Shroud of Turin. It’s put on display for the public only every 25 years. The year was 2000! A couple of the engineers decided to take me. By the time word got out, about 27 of them went with me. Afterward, we all went to a restaurant to eat, drink, and discuss the validity of the shroud as that of Jesus Christ, or of any other man of 2,000 years ago. I realized later that evening that I was at the end of my fifties and no one in the group was older than 35 years old.

The engineers had always included me in dinners after work, their regular Wednesday night parties, and at lunch. I began to see the differences in a culture’s values and their priority. Age wore a softer face in Turin, Italy, and young people searched out an older person’s opinion, judgment, and support. Later, I discovered firsthand that age is honored and loved in China. In China, I was more deserving of their respect because I was older.

My interest in another’s culture, religion, and people was the genesis of new relationships. Their interest in me expanded our understanding of each other and promoted the relationship. The artificial restrictions were not there—such as, no expression of feeling, of belief, or of humaneness. It was good to talk about spirituality and art and family. It was freeing for me, who was used to working in a U.S. business culture, where everything personal is regarded as not professional except for competition, aggression, and absolute confidence. A perceived offensive attitude of superiority and arrogance often accompanies a United States businessperson into the cross-cultural meetings.

My job introduced me to the continents and to numerous islands, and my schedule allowed me time to contemplate and understand better the people. In training sessions such as Motorola’s Manager of Managers, a five-day work session, I had the opportunity to know better the men and their cultures. They were always eager to help me get better acquainted with their motherland. The unknown and the mystical of a culture can be alluring and influential in developing an interest into a fuller understanding of custom and tradition.

As a grandchild of Russian/ Poilish immigrants I feel close to all ethnicities, from any non-English speaking country. There is instant, recognizable, common-ground of feeling and of placement or displacement. I always felt I was the protector of my mother, my grandmother, or my grandfather. I had to tell people their accent or the way they dressed didn’t mean they were bad or stupid, just different. I knew different was not always acceptable or respected. It gave good enough reason to exclude someone. This was my original impetus for writing the book—to bring back a dignity, respect, and value of difference to my ethnic heritage. From a professional perspective, working in Asia, South America, Europe, Canada, and Mexico during the past 17 years identified an urgent business need of my clients—how to be able to lead in this global market through a negotiating style.

Working with a diversity of cultures introduced me to a myriad of customs, traditions, and foods. Interacting with the individuals convinced me that recognizing these differences is not what would support building a relationship. A knowledge and appreciation of these differences was the beginning, yet the establishment of trust, the basis for a long term relationship required some behavioral modifications to the United States style for doing business.

Negotiation is inherent to doing business globally. Today working side by side with four or five cultures has become the norm—in the United States and across the world. This study brought me back to a simple understanding that you can’t change someone else’s behavior. Being married for 40 years, dedicating every effort to change my spouse, should have chiseled this in my brain and my heart much earlier. One can only change one’s own behavior, and we do it many times in a day depending on who walks in the room or which child in the family we’re reprimanding.

This book develops within an objective to make you aware enough to want to change your behaviors as a businessperson, so that you will be able to negotiate and influence in a veritable global marketplace. It’s not stating that other cultures don’t have their hang ups in the way they behave—it’s stating we can’t change their behavior, but we can certainly influence them by changing some of the ways we work with other cultures, including our own.

This is not primarily a do-and-don’t book taking you through a variety of cultures. Although snapshots of regions and several countries they house are included, the emphasis is on how to work and negotiate well with all cultures. The background and cultural considerations of emerging markets serve as an introduction to the country and its customs. Most important, it is a guideline for how to work within different cultures, using a universal base for building trust and earning the right to influence. It doesn’t negate the value of the do’s and don’ts, yet it emphasizes the skills and behaviors that will convince someone to listen to you. It then includes stories and examples of what will show another culture that you value their traditions enough to clumsily and awkwardly bow or read their business card. It’s the clumsy and the awkward that are important. This book identifies ways to modify the accepted U.S. business style to a more universally and respectfully accepted style in order to better negotiate and influence in other more mature cultures.

The book is structured into two main parts. The first half describes a business style through examples and stories, which matured out of a culture of free enterprise, and a capitalistic, competitive society focused on business and sports—both recognized by the money involved. Many of the aggressive behaviors that are appealing and acceptable to organizations are not appropriate when working across cultures. In fact, these behaviors are also rude in this culture, but have