The importance of understanding the 36 Chinese Strategies

By Leonie McKeon

As China is now the world’s economic powerhouse, Westerners are faced with the challenge of understanding how to conduct business in the 'Chinese way'. Cities like Beijing, Shanghai and Guangzhou are popular destinations to do business as these locations are central business hubs. To visit these cities can be a truly mind blowing experience because you will see some of the most contemporary architecture, technology and fashion in the world. However what we need to remember is the core of the way Chinese people conduct business and negotiate originates from thousands of years of history. 

A photo taken on June 1, 2016 shows an international economic and trade meeting in Beijing. [Photo: dfic.cn]

The truth is most Westerners doing business in China need to acknowledge they have had little experience at negotiating. Their experience is generally limited to bargaining for a car, a house or maybe haggling at a market if they go on holidays to Asia. Therefore for many Western business people the whole practice of negotiating can be daunting. On the other hand, for most Chinese people, negotiating is a normal practice of everyday life. Chinese people may be simply bargaining for the price of vegetables and other essential daily items or something as large as a business or property. Consequently, Chinese people learn to negotiate from a very young age, and continue this practice throughout their lives in their daily interactions. So this is what Western business people are up against when dealing with Chinese business people. 

A crucial part of understanding Chinese negotiation tactics is to have some knowledge of the 36 Chinese Strategies which are derived from 'The Art of War'. The 36 Chinese Strategies have often been described as ‘gems’ that speak to the core of Chinese society. Most Chinese people know and unconsciously use these strategies to negotiate. They are widely understood and applied in the contemporary business world.  A way of thinking about the 36 Chinese Strategies is similar to understanding idioms such as ‘Don’t cry over spilt milk’. Just like these Western idioms the 36 Chinese Strategies are learnt through families, friends and to a lesser degree at school. 

An example of how one of the 36 Chinese Strategies is used is in Strategy three ‘Murder with a Borrowed Knife.   Strategy Three is applied is a situations where you meet with your Chinese contacts. In such a scenario this may be the fifth meeting and you are getting closer to discussing a deal. You are likely to discover that the head Chinese person will not be the one who asks the difficult questions such as “Can you reduce the price?” Rather these questions will be proposed by the person who is lower down the ladder in the company. Also it is rare to see the head person complaining, as complaints will be done by the person who is lower than the head person. Strategy Three - ‘Murder with a Borrowed Knife - enables the leader to preserve their strength while other issues are still being worked out. 

When dealing with China, knowledge of the 36 Chinese Strategies is crucial. If there is no understanding of how the 36 Chinese Strategies are played out, Western business people can often misinterpret situations. If there is no comprehension of the 36 Chinese Strategies, then the Western person may not understand the real purpose behind an action such as being invited out for a meal or taken site seeing. Without understanding the 36 Chinese Strategies it is difficult to work out what is really going on when Chinese people say ‘yes’ when they actually mean ‘no’. Understanding the 36 Chinese Strategies means you can play the game of negotiation with your Chinese contacts. This is similar to playing a sport whereby if you have no understanding of the rules of the sport you are likely to come away second best. 

To function successfully in China, and therefore maximise your business success it is crucial to know how to recognise and respond effectively to the 36 Chinese Strategies. Knowledge of the Chinese negotiating culture, which means how the 36 Chinese Strategies are used, is your greatest asset. For more information read ‘Tame the Tiger – Negotiating from a position of power’.  This book contains practical examples of ancient Chinese negotiation strategies (the 36 Chinese Strategies), known to be the essence of Chinese business practices. This book is a great read for people who want to improve their overall negotiation skills, as well as becoming better negotiators so they can play the game of negotiation with their Chinese contacts. 

(Leonie McKeon is a China-Educated Strategist based in Australia)