The China Venture

Knowledge about the own position in a bargaining situation, about own strengths and
weaknesses in negotiations and about the sources of bargaining power are a prerequisite to
use the available “assets” to their fullest benefit.
This section aims to help SMEs to understand their position in a “bargaining situation” in the
Chinese context. First, the importance of every bargaining constellation such as for example
SME – local banks in case of direct export or SME – Chinese Customer in case of a
service/maintenance joint venture is rated. Second, interesting bargaining relations, i.e.
situations where a SME is expected to have at least some bargaining power, are analysed.
The following chart gives an overview of possible relations between a SME and its bargaining
partners. Every intersection of rows and columns represents one possible bargaining situation.
Depending on the SME’s intention and the chosen entry vehicle, the bargaining arenas differ
widely in respect to bargaining partners and the relevance of the relation with them. While the
relation with Chinese customers, for example, are highly relevant if the product is targeting
the Chinese market, this relation does not exist in the case of “exploiting cost advantages” and
producing for export only. According to the importance of a relation, intersections of rows
and a columns are marked with X (low), XX (medium) or XXX (high). An intersection
marked with a 0 denotes that in this constelation no significant relation exists, i.e. the two
parties can act without influencing each other.
116