Chinese Tiger Barrels in the California Wine Industry
Department. Later Yu explained that this person was the government PRC party representative. Upon being questioned, Lynn discovered that the man knew little of foreign affairs. This kind of circumstance usually happens in China when people do business involving government. Because Tiger barrels belongs to Kweilin Forestry Bereau which is controlled by local government. So having “Guanxi” with the person working in government and inviting the person to attend the meeting are important to a successful business, which will contribute the contract to be approved by the government effectively and quickly, and also can get some benefits from it, such as reimbursement in some aspects.
4. What’s the difference of attitude toward law between Chinese and Americans in the Tiger barrels case?
Americans rely heavily on the rule of law, especially in businesses where they must comply with federal, state, and municipal regulations as well as state contract law. The Chinese businessmen, however, don’t regard the contract as an important part to bind each other’s duty and right. Like in the case, when Yu wanted Lynn to sign the contract, Lynn was informed that the contract would not hold him accountable to buy the barrel quantity stated but that it was simply a formality needed by Wang to show his superiors that the project had true potential. Contract in china are a reference point to continue further discussion and are not intended to be binding the way Americans understand them and to later show them their mistakes in planning.
5 How to identify the Chinese negotiation style in the Tiger barrels case based on Tricks of the China trade?
First, in the pre-negotiation preparation, the Chinese assessed the trustworthiness of the foreigner partner (Lynn) by arranging schedule of entertainment, sightseeing, and dining.
Second, in the initial stages of the negotiation, the Chinese team tends to focus first on explaining general principles and establishing agreement on common goals before moving on to more specific and possibly contentious issues. Like Lynn found that although numerous meetings were hold with many managers and officials of the state to discuss points of the business deal, the meetings seemed only to be formalities as topics and principles were discussed in a very general nature.
Third, throughout the course of the negotiation, the bargain began to extend beyond the actual negotiating room. Lynn was taken to the barrel-making factory during work hours and social activities such banquets are still used to cultivate the business relationship.
Forth, when the Chinese decide to push for a project, they often express a strong sense of urgency. That was manifested by Lynn’s feeling of a very forceful, aggressive stance was displayed during Wang’s office with hordes of managers and staff before his departure. And it was the first time that the three important Directors were at same meeting to discuss the business.
And the last final stage concludes the signing of the contract and specific issues like price and sales amount (Lynn made more [next page]