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Powerful Lessons From Trade Tensions And Negotiations With China, with Allan Tsang, Ep #121

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The 2020 negotiations with China, prompted by tariffs levied by the United States, is a public demonstration from which all of us can learn. Both parties have distinct approaches to negotiation that inform how they have positioned themselves and neither party wants to lose face on the world stage. It’s not only a clash of world powers who have very different goals, in many ways, it is a clash of cultures as well.

My guest on this episode is Allan Tsang, a man who is uniquely qualified to comment on what’s happening in this International trade negotiation. Allan is a Chinese-American who was born in China, raised in Ghana (Africa), and moved to the U.S. around 1990. His career path took him from design, to instructional technology, to conflict analysis and resolution. He’s been doing high-level consulting for large organizations, entrepreneurs, and startups in the areas of strategy and negotiation since the mid-90s. Join us for this fascinating conversation that reveals the importance of a long-view strategy in negotiations and hones in on specific negotiation tactics being used by both sides.

Outline of This Episode

  • [1:01] The unique and valuable perspective Allan brings to the China situation
  • [3:58] What’s going on between the United States and China?
  • [4:49] The impact of the tension on average people in both countries
  • [7:23] The strong points in the U.S. side of the negotiation
  • [9:48] Missed opportunities by the United States
  • [15:25] What the U.S. must change to compete with China’s long-term goals
  • [18:54] Allan’s one piece of advice for President Trump
  • [20:47] One piece of advice for President Xi of China
  • [21:45] Lessons for the average negotiator from this standoff

Cultural background shapes the way you communicate and negotiate

Because of Allan’s rich cultural heritage and experiences he serves as an excellent source of insight regarding the ongoing U.S. negotiations with China. He’s quick to point out that he’s no economist or political analyst, but his skill as a negotiator and strategist enables him to look at what’s happening and make powerful observations from negotiation and cultural standpoints.

When speaking of how he developed his strengths as a negotiator, Allan said, “When you’re always the minority, you always have to find the best way to fit in and to work with the ‘locals.’” In the current trade negotiations, it’s clear that both the U.S. and China want to assert their position as the dominant economic power in the world–but are their strategies working? Allan shares what each is doing, what they’re really after, and whether or not he thinks they are approaching things as they should.

The little guy is being hurt by the U.S. negotiations with China

Negotiations, like we see happening on the world stage, are begun because each country is trying to gain or maintain an advantage for its citizens and economy. But those goals are not always realized. Because of the American tariffs at the heart of the negotiations with China, many U.S. companies have chosen to source their products—formerly purchased from small to mid-sized Chinese companies—from other places, such as India, Korea, or Vietnam. That forces those Chinese companies to lay off workers, hurting the Chinese economy in the short term.

Naturally, the tariffs were put in place by the U.S. to give American companies the ability to compete with the low cost of labor in China, and in the short-term, the U.S. may benefit. But long-term, U.S. companies may not be able to find enough employees to do the work of production now possible because of the tariffs. This is because of a decreased emphasis on training for manufacturing careers in the U.S. over the past few decades, and because of the low-tech nature of the goods being produced. This results in overtime pay for those who do the work, increased stress and overwork, and increased employment costs. Eventually, all of that will trickle down to the consumer through increased prices on products.

How each side doing in the negotiations?

When it comes to the U.S. strategy, Allan believes the U.S. is only focused on the short-term, bringing back manufacturing jobs to the United States. The problem is that these are low-tech manufacturing jobs that will not be possible to sustain due to the low wages such jobs would pay. The weakness that’s being revealed is a cultural one. The U.S. way of thinking is not aimed at 25, 50, or 100 years from now, it’s a much shorter game. This is partly because of the transitional nature of the U.S. government and the infighting that is inherent in U.S. politics.

One of the strengths of China’s approach to the negotiations is reflected in its culture, in direct opposition to the American approach. In China, parents are committed to the long-term health and strength of their descendants. The government’s approach to its economic future is based on that same kind of thinking. Because of this, China is willing to sacrifice its small and mid-sized companies temporarily for the sake of long-term economic growth and eventual dominance on the world stage.

But that fact is also a point of weakness for China. Their system of government doesn’t provide the same checks and balances accountability for its leaders—President Xi, in this instance—as the U.S. political structure does. President Xi is able to do whatever he wants and is President for a longer duration, so his policies have the opportunity to have a more dramatic and long-lasting impact on the country overall.

Allan’s advice for Presidents Trump and Xi

Given Allan’s unique position as a negotiation coach, he was asked to share one piece of advice for each of the Presidents involved in the tariff negotiations. Allan advises President Trump to be aware of the pluses and minuses of the extreme anchoring tactics he often uses. It can be a very strong bargaining chip, but only if the parties on the other side are intimidated by the anchor he presents. In President Trump’s case, China was not intimidated and the stalled negotiations are the result.

Allan advises President Xi to temper the ambitions of China. Whether they admit to it or not, Allan believes that China wants to take over the world economically. In doing so, there is an exponential speed that’s happening that is outside even President Xi’s control. This has led to resentment of China’s influence in many countries where it is economically dominant. So Allan’s advice is that President Xi takes a position that is mutually beneficial to all parties.

Join us for this episode. It’s a fascinating consideration of how the negotiations with China mirror similar conflicts in businesses around the globe.

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