Be a mouse, not a lion: How to negotiate with China

November 30, 2023 08:06
Photo: Reuters

When Western leaders or companies negotiate with China, they should be a mouse, not a lion. “Remember the Chinese proverb – two ears, one mouth – talk less and listen more. Endure silence.”

This is the advice of Joerg Wuttke, China chief of BASF, the world’s biggest chemical company, since 1997 and advisor to many European leaders who have gone to Beijing. He has been President of the European Union Chamber of Commerce in China three times. Next year he plans to leave Beijing for a new post in the United States.

During his time as Chief Representative, BASF has invested more than nine billion euros in Greater China – with partners, the figure rose to more than 13 billion euros. In 2022, BASF sold 11.6 billion euros worth of goods to customers in Greater China. In 2018, BASF won approval for a wholly owned complex in Zhanjiang, Guangdong province, with an investment of up to 10 billion euros.

“The most authentic politician I ever came across was Angela Merkel,” he said. “She exactly kept to her speaking points, did not let anyone derail her agenda and was quiet when she left Berlin. She managed expectations very well, saying that she achieved A and B but not C and D and E. Avoid grandstanding before you go in and indicate to the Chinese that the crumbs that fell off the table were good enough.”

Merkel was Chancellor from 2005 to 2021. She visited China 12 times, bringing a large business delegation on each visit.

She is one reason why Germany ranks first in China in European investment and why China has been Germany’s most important trading partner, in 2022 for the seventh consecutive year.

“China is a political economy. State-owned enterprises (SOEs) are constrained by political masters. They are always on thin ice in order not to be accused of giving away too much to foreigners.

“I tell visiting politicians: Avoid the ‘Lion Mouse’ syndrome. Do not get on the plane in Germany and roar like a lion in your public pronouncements and promise that you will achieve things. Here, when you enter the negotiation building, you enter not as lion, but as a mouse.”

BASF’s first giant project in China was a US$3-billion complex in Nanjing, a 50-50 joint venture with Sinopec. It took four years, with 175 rounds of negotiations and a team of 45 from BASF, mostly from Germany.

He said the Chinese side negotiated in their own social context, their own language, their own experience. “We do ours in our cultural context. We were not trying to out-Chinese the Chinese but to be humble enough to understand that they are different. We stick to our lineal approach. You have to have all your lines back home (to head office) so that they understand what you are doing.

“Because of the size of the project, Sinopec had to report to the Ministry of Commerce, the State Planning Commission, the State Council and right up to the Prime Minister. They had to be very cautious in how to negotiate, but they also used this to their advantage, by putting up these people. ‘The Prime Minister thinks that, the Minister wants that.’ We did not have to ask our Chancellor for his opinion,” he said.

How about guanxi?”You try to have a relation with someone you trust. You have a nice dinner, then another dinner and some glasses of moutai, in order to gain friendship. Maybe alcohol loosens the tongue, but you have to be really careful whose tongue it loosens,” he said.

He said that, under Xi Jinping, China had changed. “Never have I experienced ideological decisions become more important than political decisions. This leadership is willing to sacrifice economic growth for the sake of ideology. In the past, China did anything to add economic growth because the Party believed it was necessary to stay in office. Now what keeps the party in office is utter, 110 per cent control.”

To those who want to learn how to deal with China, Wuttke recommends “The Long Game – How the Chinese Negotiate with India” by Vijay Gokhale, who spent nearly 40 years in the Indian Foreign Service before retiring as Foreign Secretary in January 2020. He dealt extensively with China during his career.

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A Hong Kong-based writer, teacher and speaker.