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Selected Readings in Business (Shulman) Chapter 12 China: The Case for Negotiations

Case Study: Chapter 12, p.1

After a year of market research, the United States asset management company Investese has decided to enter the Chinese market, a lucrative market with great growth potential. Therefore, it has begun to investigate the possibility of forming a joint venture with the Chinese fund-management firm Chan Ching, one of the largest such firms in China. Investese President Dan Brighton hopes to convince Chan Ching President Wang Jiao Hai to offer the country’s first “foreign” mutual funds. Paul Wendt and Carolyn Goodwin, from Investese, have been given the assignment of traveling to Shanghai to meet with the high-level management of Chan Ching. Their task is to lay the groundwork for a joint venture that would go into effect in about three months if things go smoothly. Paul and Carolyn are experienced and tough contract negotiators who have handled a variety of business agreements for Investese, but this is their first international negotiation. In preparation, they read a book on cross-border negotiations, and they both are confident that they will succeed in their overseas assignment. On Sunday, Paul and Carolyn checked into their hotel, the Grand Hyatt Shanghai, in the heart of Shanghai’s business and financial district, and spent the rest of the day resting up for their first negotiating session with Chan Ching executives on Monday. They met for dinner and discussed the talking points that they would present at 8 am the next morning. Paul and Carolyn were unsure about who would be representing Chan Ching, as the short memo they had received from President Wang had referred to “several company representatives” without giving specific names or titles. The president had also mentioned that the representatives spoke English fluently, so no translators would be required at the meetings. “I am curious to see who the company sends to this meeting and whether Mr. Wang might attend,” said Paul. “Don’t count on seeing Wang. That would not be likely, considering the hierarchy that exists here. Maybe a vice-president but nothing higher. And look who Investese sent to China—we’re not even upper management yet,” laughed Carolyn. “Well, I’m just worried about not having the real decision makers at the table. Remember how we got fooled in the Leland affair? We spent six difficult weeks before we realized that not one of the negotiators from Leland had the power to close the deal.” “At least we did ok at the end. It just took more time than it should have. And we know Dan wants us back in New York one week from today. That puts a lot of pressure on us. Maybe we should start tomorrow by simply asking who has final say on the agreement. That should give us the information we need to proceed quickly.” Monday morning, Paul and Carolyn walked into the lobby at Chan Ching half an hour early. They had decided to take no chances about being late to the first meeting. The

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Selected Readings in Business (Shulman)

Case Study: Chapter 12, p.2

receptionist escorted them to the conference room on the top floor and brought them tea and cookies. One hour later, no one from Chan Ching had yet appeared, and Paul went to the door to look for the receptionist. At that moment, four people came striding down the hall toward Paul and entered the room. “Good morning. We are so sorry to keep you waiting. I am Han Su, this is Wu Mai, Chen Qing and Zeng Li. Please excuse our lateness, but the president called us into a meeting at the last minute.” “No problem,” answered Paul politely, as he introduced himself. He shook everyone’s hand and introduced the employees of Chan Ching to Carolyn, who stood up to shake hands with the negotiators. Then all six negotiators took their seats at the table. “We are very pleased to be here in Shanghai,” began Carolyn, smiling at the four people sitting across from her....
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