Chinese Negotiations: The Importance of Face

Most Westerners are aware of the importance of giving and receiving face (面子 or miànzi). With this blog I would like to point out some important aspects of during business negotiations in China.

In China, a person’s reputation and social standing relies on saving face. A Westerner who fails to do so, even unintentionally, can cause the Chinese embarrassment or loss of composure and can be disastrous for your business negotiation.

Miànzi can be likened with the Western concepts of dignity and prestige. The amount of miànzi a person has is the most important measure of the person’s social capital and defines the place in his or her social network. We Westerners often perceive dignity and prestige in absolute terms – either a person has it or not. Miànzi, however, is not an absolute term but can rather be measured in quantitative terms meaning it can be earned, lost, given or taken away. Sources of miànzi can be a persons wealth, education, work position and titles, intelligence, attractiveness, the display physical objects such as flashy watches or cars and of course the amount of good relations available (关系 or guānxì).

A few years back, I partook in the negotiations with one of China’s top-four banks to supply them with equipment for their new headquarters. We were in the third round of negotiations and we were not willing to further reduce our price. Our counterpart let us know that if we couldn’t reduce our price further he would lose face meaning that the business deal was jeopardized. We responded that, instead of further reducing the price, we would provide an attractive all-included two-week overseas ‘equipment inspection and training’ trip for four of their staff. After a short deliberation, they gladly accepted our offer and contracts were duly signed.

Evidently, it was important for the bank’s negotiator to have something to show to his superiors. While we had conceded price cuts several times up to that point, we were not willing to go further. At this point in the negotiation, we instead offered an inspection and training trip which we assessed would generate more miànzi for him than a further price reduction. This deal also allowed us to build stronger guānxì with other employees of the bank for the coming phases of the project. It was a win-win deal.

Other aspects of mutual loss of face include break of promises, display of anger, frustration or aggression at the negotiation table. Also, don’t use try using any type of mock tantrums as it will most certainly backfire. Causing your negotiation counterpart to lose face is not only a blunder, it’s a disaster.

Instead, explore ways to enhance your counterpart’s social capital. Important to keep in mind is also that negotiations may involve both direct and indirect face acts as well as verbal and nonverbal face acts and very often it is the indirect and nonverbal face acts that speak louder. If you can provide intrinsic values such as commenting their skills, intelligence or introducing other guānxì to their network that will enhance their social worth then it will not cost you anything and you will not be caught in an ethical or legal dilemma.

This blog has focused on the miànzi aspect of negotiation. There are other important aspects such as guānxì (关系), intermediaries (中间人 or zhōngjiānrén), social status (社会等级 or shèhuìděngjí). I might cover some of these issues in a future blog entry.

Please feel free to share your comments and experiences in the box below.