Buyer be aware!
Additional advice on negotiating with low-cost country suppliers
By Dave Hannon -- Purchasing, 2/15/2008 1:27:00 PM
As Julie Chen, head of low-cost country sourcing at Novartis Pharmaceuticals Corp. points out, buyers must be keenly aware of the business customs in the region they are working in if they want meetings and negotiations to go smoothly with low-cost country suppliers.
For example, Chen points out that in China, negotiations often take place at the dining table and provides a practical tip: Using your own chopsticks to pick up food from the shared dish is considered rude.
“In Japan, and some other Asian countries, the sitting arrangement is very important in business meetings, so understand what the seats mean or check first before sitting down,” Chen points out.
As most well-traveled businesspeople are aware, in Asia it is polite to give your business card to the other party with both hands and with the text facing them. But another good rule of thumb in Asia, Chen points out, is that an individual or the group should never be criticized in a large setting. “That message can be delivered privately and is considered rude and counter-productive.”
Language issues
Translator or no translator? That is the question. When negotiating in foreign countries, there may be no other option but to use a translator when dealing with suppliers not fluent in English. In some cases, translators are needed even when the suppliers can communicate in English, just to avoid miscommunications.
Chen says using a translator can work as an advantage: the added time for translation can provide a buffer in a heated negotiation—give each side time to think about their next sentence.
“A disadvantage to using a translator is that the content of the communication can be easily lost in translation, as most translators may not be familiar with the specific field or terminology,” Chen says. “And written contracts in dual languages usually don’t match completely and are often up for interpretation.”
Chen recommends having someone fluent in both languages who also possesses the content knowledge present for translation, whenever possible. “Even then, it’s advisable to translate the specific or technical terms beforehand,” she says. And in the case of a written contract, go over sentence by sentence in both languages between the two parties to ensure clarity and minimize potential disputes due to different interpretations.
Chen says the location and logistics strategy for a negotiation with an overseas supplier often depends on the scope of the business relationship and the stage in the process.
“Various negotiations take place along the sourcing process,” she points out. “For strategic relationships, there would be interactions along the process to ensure alignment of company culture, business interests, expectations and terms, etc. so negotiations take place at various stages in both locations. However, for the final negotiation, especially for contract negotiation, I generally conduct it at the supplier’s site to ensure the supplier’s decision-makers are present and the remaining issues/questions can be answered or resolved right there.”
For more information see: Low-cost country sourcing: Around the world in 5 (not so) easy steps
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