In 2001, Frank Gallo, Country Head of Watson Wyatt, was at times surprised by the bargaining he experienced in project negotiations with Chinese counterparts.
When a colleague gave him perspective on why that have been, he was able to adjust his approach and deliver results.
He recounts the story in this short video.
Put Off With Hard Bargaining At First
I would like to share a story with you about something I encountered when I first came to China. I was not here very long and finding that, when we were making offers to clients as to what we would do and what the cost would be, we were getting a lot of push back and bargaining.
The reality is that we always did it very fairly, we had spreadsheets and models by which we could price our projects very professionally. But sometimes I was made to feel like I was in a department store bargaining for a new tie. It was somewhat offensive to me and I did not quite understand it.
How I Learned What Was Really Happening
One night I was out with my team, and one of the younger female Chinese employees came to me and spoke very directly. She said ‘you know, you are going to have a difficult time here.
I asked ‘What do you mean?’. She replied ‘you are too nice.’
Frank found out from her that many Chinese managers are incentivized by their bosses to demonstrate that they bargained hard and got the service provider to come down on pricing plus offer more value.
I was really taken aback by that.
Adapting To Local Practices
The learning for me was that we had to modify the way we priced our projects and the way we approached them. I am very happy to say today, now that I have a lot more know-how in China and guanxi, it never happens anymore.
But in 2001 it was more the rule than the exception.