In mid-2015, I successfully represented a team of Israeli technology developers in a negotiation to establish a Sino-Israeli joint venture. The negotiations were kicked off in the early part of that year in face-to-face meetings in Jiangsu Province, China. Our team consisted of the Israeli CEO, some of his tech guys and me as legal counsel. On the other side of the table were the representatives of two Chinese companies who were to become investors in the JV. For a period of three months after those meetings, the negotiations continued through telephone calls and emails mainly between me and the Chinese parties’ representatives. Ultimately, at the end of May 2015, I returned to China for several long days and nights of intensive discussions. The negotiations culminated with the signing of a document that seemed to wrap up in a tidy package all of the deal points that defined the parties’ relationship. In the nearly three years that followed, however, I came to deal with an axiom of Chinese negotiations that signing an agreement is not a defining moment but, instead, only the next step in the negotiations.

Having signed an agreement with the Chinese partners, I found myself in the position of a liaison between the Israelis and the Chinese, which proved to be a rather challenging task. Each of the Chinese and the Israelis had very well defined and contrasted business agenda, cultures, and management styles. Each side, moreover, were suspicious of the other side’s intentions, which often lead to flare ups between the parties. My job was to smooth over the bumps and ensure that the parties’ cooperation worked. Over the three-year period between 2015 and 2017, I was in constant contact with our Chinese partners, and nearly once every two months met with them mostly in China and on several occasions hosted them in Israel. At the end of 2017, the JV underwent a restructuring, and with that change there remain only periodic interactions between the parties.

One of the interesting realizations that I took from this experience was the negotiation concept that is summarized by the Chinese term “tanpan”. The Chinese word for negotiation — tanpan — combines the characters meaning “to discuss” and “to judge.” From a Chinese perspective, negotiation exists primarily as a mechanism for building trust so that two parties can work together for the benefit of both. Trust is built through dialogue that lets each party judge or evaluate the partner and the partner’s capabilities and assess each other’s relative status. The negotiation process also enables parties to reach an understanding on a specific issue, condition, or transaction, in a way that lets each side feel that “a good deal” was brokered. But the concept of negotiation hinges on creating a framework for long-term cooperation and problem-solving much more than on drafting a one-time agreement.

Negotiation in China, therefore, is viewed as an ongoing, dynamic process that takes into account practical considerations and frameworks. Chinese prefer this approach over creating contract-based absolutes, which many Chinese perceive, perhaps rightfully so, as the primary purpose of Western-style negotiations. Significant differences in negotiation style and culture can be accompanied by mutually unfavorable perceptions. Westerners, for example, may see Chinese negotiators as inefficient, vague, and perhaps even dishonest, while Chinese perceive Western negotiators as impulsive, impersonal, and overly focused on immediate gains.

In many respects, Israelis are “Westerners” at least in their business culture and thinking so that these considerations are quite relevant. It is interesting how little the Middle East has influenced the Israeli perspectives towards negotiations and doing business. Although there are those who still sometimes apply the ways of the so-called ‘Turkish bazaar’, but for the most part the Israeli style of negotiations is similar to the negotiating styles of the traditional West. Personally, having come from an Eastern background myself – both sides of my family are Bucharian Jews who had a strong business background and years of trading experience – I found understanding the so-called Chinese ‘mentality’ less challenging since it was remarkably similar to the culture that pervaded by family particularly in my younger years. Ultimately, I came to understand that what I understood to be a ‘way of negotiation’ was akin to the ‘tanpan’ perspective, and that in and of itself made the discussions easier, but never flawless.

If you would like to hear more about negotiating with China, please give me a call. Jeff Lahav, +972-(0)52-444-2343.