Trade Leads

Re: [spiers] Trade Leads

John's recent email is the dead-on spot-accurate interpretation of my
statement "know your supplier." In addition, I'd like to expand a little on
John's
assertion about doing business with people you know. Not only can that drive a
business toward being resource (e.g., supplier) driven vs. customer driven,
it can also cause people to have a sense of security about a transaction that
otherwise would not be there. We may ignore details because we trust the other
party. We may not mention certain topics than might be considered crass
(money), inappropriate (production capability), or imply that we don't trust the
other party (asking for performance bond) or we don't [insert your favorite
verb] them. And this can happen in multimillion dollar deals as easily as in
smaller deals.

Case in point, when I was the "seller": 10+ years ago, as a member of
negotiating team, I went to far Northeast China (PRC), to a city that one
guidebook
referred to as "the end of the line." Despite it being in the middle of
nowhere, it was the richest city in China. The largest and most financially
successful corporation in China was headquartered there, and that corporation
AND the
city government were going to purchase my employer's systems for use by both
entities. It was a very big deal in $$, and in prestige, and in penetrating
the Chinese market, blah blah blah. The Vice President of Asian Operations for
my employer had a cousin who was in tight with the mayor of aforementioned
city. So we were "in." No competition at all. Met at the airport by an army
unit and police to escort our motorcade (I'm not making this up) through the
provincial capital and then on to "the end of the line." The police car in
front
would run its sirens and then an officer would announce on the car's
loudspeaker system (names changed for privacy): "Get out of the way, these are
very
important people. Get out of the way, these are guests of the great Mayor Chin
of City X"

We had banquet after banquet for lunch and dinner, with the corporation and
the government vying for who could give us a better time. A television crew
from the provincial capital came to film us; I was the first white woman to set
foot in the city. One weekend we were driven to the provincial capital where
we were entertained by the Governor of the province (who wanted to marry me,
but that's another story). The mayor took us a to a Communist Party retreat
where a chef that had cooked for Nixon prepared our meals. Negotiations were
held in the City Hall -- 7 of us facing a negotiating team of about 40. About a
week later, the TV crew came back to film the "contract signing ceremony." We
were not at that point yet in negotiations, but we made up little contract
binders, and the Government had a huge painting made to announce the purchase.
It
was hung behind the dais, at which the mayor and our VP suits signed the
binders and switched pens and smiled and shook hands. As soon as the crew left,
the Chinese tore the signed pages out of the contract binders before I could
blink my eyes. That was a subtle clue.

We were scheduled to be there for only 10 days. Negotiations went on for
about 18 (those 18 days were the longest year of my life - no English
newspapers,
the Chinese newspapers were weeks to months old, no TV, and the only
telephone line between the City and the provincial capital was down --
physically!),
and at about 4:00 a.m. on the day we were really going to leave, after
negotiating all night long, the customer said "We don't have the money to buy
your
products." They actually had money, but they did not have any appropriated for
this purchase.

How did we get so far for nothing? The VP of Asian Operations never asked
his cousin whether the purchase was approved (for a purchase this large,
Communist Party approval would have been required) or whether money was
available.
He did not want to embarrass his cousin by asking, and he assumed the cousin
wouldn't say "Come on down" if there wasn't a deal to be made.

Imagine the cost of 7 round trip business class tickets DC to Beijing,
in-country transportation, hotel rooms, meals, obligatory gifts (legal per the
Foreign Corrupt Practices Act), AS WELL AS the cost of man-hours for preparing a
full blown proposal and accompanying presentations and the man-hours invested in
the trip itself. Imagine a Vice President of Asian Operations not getting a
bonus that year, or raise, or promotion, or bigger office, or larger
budget.....

Moral of Story: Listen to John.

Have a great weekend --

Celeste

PS. This and other wonderful stories will be set forth in International
Transactions to be published by MICPEL in Q1 2004.

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