When I first moved to China, the first thing I noticed was there are rarely set prices. From groceries, to clothes, to your apartment rent, to electronics, even to plane tickets, there is always an opportunity to get a better deal.
I’m not recommending that you take these methods back to the U.S. and bargain how much you want to pay for a Coke at Wal-Mart, as you will get nothing but strange looks. However, you should 100% learn about the techniques and the reasoning behind them that can cost or save you more than money. Negotiating is an art.
China has defined me, or better yet re-created me over the last 2 years. It has become a part of me and will remain with me for the rest of my days! Leaving is always great (fresh air) but returning always feels like home.
Having said that, I have frequently been taken for rides. The Chinese will bargain on everything, especially when the opportunity to prey on a white blonde kid arises.
By everything, I meant it. From a half dozen eggs at the local wet market, to penny pinching on factory production margins, and even debating the value of a hong-bao (Chinese word for bribe) after a heated fight ended in a couple punches being thrown.
Here’s 3 examples from China to show you how I have grown as not only a negotiator, but also in all things life, relationships, and business.
How can you bargain the price of something as measly as a half dozen eggs? Further, how can you learn from it?
Every morning Samantha and I grab our groceries for the day. The market is a 4-minute walk from our house and within there are approximately 30 different stalls. Each one sells the same thing. Each of the vendors even buy their meat/produce from the same distribution channel… I frequently see them unloading trucks together.
How do they differentiate themselves? How do they make any profit? How do they stand out?
They are master negotiators.
After shopping around we quickly realized the floor price. None of the sellers would go lower than 30 cents per half dozen (for all you at home that’s 5 cents an egg… talk about a cheap breakfast).
If there is a basement price that nobody could beat, how was negotiation still taking place?
It’s all about the angle.
Sometimes you will not be able to compete on price. Face the facts. There will always be certain aspects where you cannot beat your competition, maybe even overwhelmingly so. But there is always something.
Find YOUR angle.
All of a sudden we had these sly egg dealers giving us deals on 3 for the price of 2, throwing in some delicious Chinese herbs, or even complimenting our Chinese in an effort to draw us in.
Negotiating comes down to finding where you can be unique and playing your strengths.
2) Self Knock Out
One day we had some meetings with various factories setup for the whole weekend in Shenzhen (electronics manufacturing center of the world).
So we bought our train tickets and hopped down to the platform to catch our train. While looking at the car numbers to find our spot I heard a voice shout some very negative cuss words directed at lao-wai’s (foreigners) who were butting in a line.
I turned around and was surprised to see he was pointing at me. He continued with a gravy train of insults about my ancestors (Yo-Momma type stuff) to the point that I couldn’t ignore.
For the moment cooler heads (Samantha) prevailed by saying we shouldn’t be getting involved and so we turned to walk away. Two seconds later I hear my Sam yelp. I turned to see this little man pulling and pushing on her arm violently.
Now, I’m not one to start physical confrontations, especially with a 35+ year old Chinese guy that stood as high as my belly button, but he crossed the line. One instinct reaction and a knuckle sandwich later we found ourselves surrounded by cops. Next thing we knew, we were cozied up in a police station drinking tea as everyone mediated the events.
(Sidebar: Maybe I’m ignorant, but if I defended my lady in a similar situation stateside, I would imagine the cops would be giving the assailant a headbutt followed by a quick props to your boy – Let me know what you think in the comments section below)
The little guy and his ‘assistant’ (who we thought looked an awful lot like his little brother) kept telling everybody that they were busy and that we inconveniently broke up their need to visit several of their self-owned factories today.
(Sidebar #2: They were carrying a huge wooden cart of durian (the grossest fruit you can imagine) together. Putting two clues together would lead me to believe that they also worked at a similar type of market as the one mentioned in the eggs section above)
Naturally, I said, “Oh, us too. Let’s call it a day as we are booked up all day as well.”
To which they replied, “No, this is a legal matter and it must be solved as such.”
From that moment he had the cops hooked. He was the ‘busy’ boss man and I was a punk kid who interrupted his fully booked schedule. I was on the defense.
He continued to insist that he didn’t need or want money and that this was about principle. For some reason, at the end of the day I still parted ways with 1000 RMB ($200ish USD) to cover his ‘medical bills’.
I should almost end the story there because that made me sound like Tyson.
But there is a point.
This little fruit-seller and partner in crime that lied about being big spenders, and that truthfully attacked my fiance, broke the handle off of our luggage, and wasted half of our day ended up running away with prized loot.
How did he manage that?
He made the police believe that he was a big fish.
When you’re little, act big.
Whatever the situation may be people are drawn to confidence. If you aren’t confident, fake it until you make it.
Being big attracts others and helps people to have faith in our ideas, plans, and all aspects of life.
By doing so, negotiating becomes an afterthought. You’ve already won the battle.
3) Networking with Manufacturers
My current project (or my baby if you will), HeadCase Sound, was started with my desire to beat out Dr. Dre Beats with the advantage that by personally being here in China and cutting out all the middlemen I could cut costs and compete solely on our price point.
Not only was that an arrogant and immature idea but it also proved to be much harder than I thought. There are steps required to even reach a point where negotiating is worthwhile.
Let’s do a social experiment (here’s an idea for my friend Andrew Hales at LAHWF):
Go up to a random stranger on the street and ask him if you can have his hat, sandwich, watch, or for $5.
You think they’ll give it to you?
One, you sound like you have no idea what the book value of your demanded item is.
Two, you don’t sound very sincere.
Three, What? Who are you?
The list goes on.
When I first started visiting factories to source pieces for my headphones I did something not that different than the example above.
Many of the Chinese manufacturers weren’t thrilled to speak with me. I thought it was ridiculous that they would not do anything they could do work with a young and ambitious ‘business man’. It infuriated me. Why would they turn down such a golden opportunity? I would ask the factories to prepare quotes and ideas for my idea on a MOQ (minimum order quantity) type of order. Most didn’t even reply. Doing that grunt work takes up valuable time and without sincere interest and due diligence from my side, they figure the ROI of their time was probably not going to be worth the effort invested.
Make an effort to research and know the people you interact with. The cheesy, but well-put idiom goes; people don’t care about how much you know until they know how much you care.
If you do your due diligence on the things you are after with the people that you want to interact with, you will find your negotiations will be much more natural and agreeable.
People want to do business, but you must first build some trust. You must put in an investment of time and effort to show people that you know what you are talking about. As you do so, more people will be willing to speak and work with you. The larger and the tighter knit your network becomes the easier it becomes to negotiate the things you seek.
My buddy Jerome Jarre from Atendy hits the nail on the head when he said, “If you’re not networking you are not-working.”
As you network and build trust, negotiating will become conversation. There will be no stressed conversations or unfair pricing on demands because you will be dealing with friends. Samantha says, “the two most important things in business are building a network and then making sure you can trust them”.
You can save dollars and headaches through negotiation if you are willing to find your unique bargaining angle, by acting big and confident in all situations, and by building a trustworthy network.