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The International Negotiator:  Apple in China

Posted by Andrew Hupert on Aug 4, 2017 7:30:00 PM

Nothing stays off the table forever.

Apple recently removed access to VPN services on its  China App Store in compliance with government wishes. VPNs, or Virtual Private Networks, are the chief method for 

Apple negotiates well in China -- but is that enough?circumventing China’s “Great Firewall” and getting access to websites like Google, Facebook, and Twitter.

Apple Removes Apps From China Store That Help Internet Users Evade Censorship - NY Tmes, 7-29-2017

Background:

Apple has been one of the most successful brands in China, largely due to its adroit negotiating with PRC authorities. Market access, however, has come at a cost. Apple, like many other MNC brands in China, has consistently given ground on its core values – particularly in terms of privacy safeguards and data protection. Apple has routinely put its China user information under the control of Chinese government agencies and submitted to Chinese authorities, even as the company was mounting sophisticated legal challenges to government policies in the US and Europe.

Last week’s announcement that Apple would be removing 3rd party VPN providers from it’s Apps Store came as a surprise to many, but Beijing had been hinting that they planned to curtail the use of VPNs. Amazon has made a similar announcement, and it seems clear that this is the latest “new normal” in the world of Chinese internet. 

Apple doubles down on China as rivals pull ahead - Reuters 8-1-2017

Sign up for the  Managing Millennials Newsletter from FlashMBA.com Takeaway for international negotiators.

  1. Time is a strategic variable for Chinesenegotiators, who never take their time is a strategic variable for some negotiators eyes off the prize. Access to user data was always a key demand for Beijing, but a Chinese negotiator thinks nothing of waiting years to maneuver into position.  In the end, they will force you to make concessions, if only to preserve that hard won relationship.

  2. Post-deal negotiation. Westerners feel that a deal is done when both parties sign on the dotted line. After that, all terms are sealed and everyone has to live with the deal they signed. Chinese negotiators think this is just nuts. A deal is never done while the relationship is still intact. That contract you just signed is valuable, but only as a record of one agreement between a 2 or more individuals at a specific time - under specific circumstances. Contracts don’t compel performance when it’s the government or any other powerful counterparty. Westerners put way too much faith in contracts overseas.

  3. Watch the agenda. Apple didn’t have a political or social agenda. Beijing did. China ultimately recast Apple’s deal to include the deal points that the Chinese government cared about most. While this issue may have been a deal-killer in 2008 (when Apple first entered China), the market is simply too important for the company now.

Millennial Negotiators Beware

Younger negotiators have a tendency to over-estimate their “no-deal option”.   They tend to believe that they have more alternatives than they actually do, and that their downside is limited. They also overestimate the power and attractiveness of their resources.

Negotiators that apply their own valuations, methods, and priorities in international situations do poorly.

Apple defends complying with China over VPNs – BBC.com 

Your International Negotiating Checklist

The Millenial Negotiators guide to international negotiation

A) Who are you really negotiating with?   Who is really calling the shots?  How closely alligned are they with the government?

B) What is their agenda?  What do they care about? It’s not mysterious. They are telling you. Other westerners are telling you.  People tend to hear what they want to, and disregard the rest.  Cross-cultural negotiators have to figure out the other side's perspective.  

C) What are the balances of power – pre-investment and post-investment? Everyone will love you until the money transfers or the technology is shared. After that you’re just in the way. What’s the new balance of power when your money is in his bank?   Agenda setting is part technique and part power. When you are negotiating with a foreign government, the power part is quite noticeable.

D) What’s your new ask? Once the deal is signed, the negotiation continues. Are you going to dig in your heels and futilely try to resist, or are you going to show up at the renegotiation with your own list of demands/requests?

E) What’s your new bottom line?  Some negotiating cultures take a very long view, and it's likely that your agenda has changed over time.  Make sure your strategic goals haven't evolved beyond your original negotiating agenda.

Final World:

International negotiators — especially those of the millennial persuasion — have to prepare responses to issues they consider “off the table”.   Redline limits tend to melt away pretty fast in international negotiation. 

Strategic Planning for Negotiators:  Mind the Gap

Strategic Planning for Negotiators:  Mind the Gap

Topics: millennial professionals, international negotiation, international business, Doing business in China

Written by Andrew Hupert

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