Twice in the last week, Chinese companies have sought to subject clients of my firm to one of the classic international business tricks: changing the deal right before an in-person overseas signing.
This trick typically goes like this:
- You [the foreign company] agree to the general terms of a deal with your Chinese counterpart.
- You schedule your China flight to sign the deal and celebrate your new relationship.
- You arrive in China for the signing and only upon arrival do you learn that the contract you are to sign is very different from the contract to which you previously agreed.
There was a slight variation from the above with our two clients because we had insisted on receiving the contract in sufficient time to review it before anyone was to get on any jet plane. We had made very clear we would need to get the contract back at least two weeks before our clients’ scheduled departures or there would be no departures at all. In both cases, we got the contract (which was nothing like that which had been tentatively agreed upon) only 2-3 days before departure. In both cases, our clients chose to remain at home while re-negotiations proceed apace.
I think this trick is tried on Americans more than on those from other countries. I think the Chinese (somewhat rightly) view Americans as “impatient.” We Americans love thinking of ourselves in the following terms:
Heck. I like to think of myself in this way and my own law firm’s philosophy, reflects this:
We have done this by developing close relationships with a worldwide network of key personnel, including government officials, consultants, expert witnesses, local legal counsel, critical to getting the job done for our clients.
We operate in the fast-paced international business world where we promise and deliver dynamic, results-oriented advice. Our solutions will put you ahead of your competitors. We are practical lawyers and problem solvers who take a “hands-on, get out from behind the desk” approach to solving client problems.
And do not think the world does not know this about we Americans. And do not think that this is not incorporated into just about every instance of American companies doing business in China.
The thinking in China seems to be that once the American comes to China “to do the deal,” he or she will be unwilling to return home empty handed and, instead, will end up signing something less favorable than previously discussed and tentatively agreed upon.
There will be times when you need to go to China to negotiate a contract and there will also be times when your Chinese counterpart will falsely entice you to China by promising to sign. Nonetheless, in most instances your strategy should be not to get on the plane unless and until it is clear the right contract will be there for you when you land.