The Types of Negotiating

THERE ARE TWO types of negotiating. Each of them has a different purpose and a different desired outcome. The problem is that they often become confused in the mind of the negotiator, leading to worse results than you could achieve if you were absolutely clear what you were doing and what you wanted to accomplish.

The first type of negotiating, or Type I, is what I’ll call a “one-off” style. In this situation, you only plan to negotiate or deal with the other party once, and never again. Each party to the negotiation has only one goal: to get the highest or lowest price and the very best terms and conditions for this one purchase or sale.

Take No Prisoners

In Type I negotiating, you are in an adversarial position with the other person. His goal is to pay you the very least, if buying, or to extract from you the highest possible price, if selling. He is not your friend. No matter how much he smiles, or how polite and courteous he is in the negotiation, he is thinking only about himself and his own benefit or reward. At the end of the day, he does not really care if you pay too much or get too little.

In this type of negotiating, you must be calm, crafty, and selfish. You are entitled to use any possible trick or maneuver to get the best possible deal. Once this transaction is complete, you should assume that you will never see or hear from this person again. It does not matter whether this person likes you, respects you, or wants to be your friend. All that matters is that you get the best deal possible. In later chapters, you will learn a series of strategies and tactics that you can use to increase your success in this type of negotiation.

Long-Term Negotiating

The second style of negotiating is long-term negotiating, or Type II. This is where you intend to enter into a more complex agreement that must be carried out over an extended period of time. In this case, because of the nature of the product, service, contract, or agreement under discussion, you may be working with the same person or organization for many months or years into the future.

Thirty years ago, when I began producing audio and video learning programs with a manufacturer/distributor in Chicago, I was grateful for the company’s willingness to market my programs nationally and internationally, and fortunately, the company offered me a set of terms and conditions that were both fair and standard for the industry. Today, thirty years later, I am still working closely with that company and the key people in that organization, from the president on down.

Over the decades, the market has changed, many people have come and gone, and more products have been introduced into the market, become popular, and eventually disappeared. But throughout, my relationship with the key people in that business has been friendly, cordial, polite, and professional. Because I always treated the relationship as a long-term involvement, it has led to some of the best business opportunities and results of my life.

The Chinese Contract

I began using this strategy years ago and have taught it to thousands of businesses and executives who have gone on to use it as well with great satisfaction and excellent results. Let’s start by understanding the difference between a standard Western contractual agreement and a Chinese contract.

In the West, an enormous amount of time is spent negotiating the fine print of a contract. “The party of the first part shall do this … and the party of the second part shall do that….” This contract, then, becomes the basis for the entire business relationship. Each party is expected to fulfill commitments as stated, word for word, in the written contract. Any deviation from the written contract can lead to breakdowns in the arrangement, penalties, and even litigation.
In the Chinese culture, where I spend a good deal of time each year, the terms and conditions of the agreement are negotiated, discussed, and agreed to. They are then written down on paper, reviewed, revised, and duly signed by both parties.

In a Western contract, this step is the end of the discussions or negotiations. But in the Chinese contract, this is the beginning of the negotiations and discussions.

In the Chinese mentality, everything that can be thought of or anticipated is written down. But there is a clear understanding that, as the arrangement goes forward, new information will emerge and new situations will arise. This new information and these new situations will necessitate revising the contract so that it is still fair and equitable for both parties.

Whenever I negotiate with a counterpart (and I have agreements with clients in more than sixty countries), we often conclude complex, multipart agreements, involving many thousands of dollars, with a couple of pages.
Right at the beginning, I’ll state, “Let us create a Chinese contract between us. In this type of contract, you and I will agree on the basic terms and conditions of the business that we will do together. But I want us both to be happy. If at any time something happens that changes the situation around this contract, let us sit down together and renegotiate the terms and conditions so that both of us continue to be happy.”

And the good news is this: My partners and I have never had an argument, a disagreement, or litigation over one of these “Chinese contracts.” In every case, we have remained open, friendly, and focused on maximizing the benefit to each party in the process of our working together.