Negotiating with foreign partners

Foreign negotiations are complicated by factors such as geography, culture, language, background, weather and laws. Follow these tips to reduce the risks and costs associated with negotiations and prepare yourself for constructive talks with a foreign partner.

Negotiations are critical for your business, so you need to negotiate with credible, qualified partners with whom you can reach a mutually beneficial agreement in a reasonable amount of time. Foreign negotiations are complicated by factors such as geography (distance, time zones), culture, language, background, weather and laws.

Follow these tips to reduce the risks and costs associated with negotiations and prepare yourself for constructive talks with a foreign partner.

What to do prior to foreign negotiations

You should never rush to reach an agreement with the first party you meet in a foreign market. Before you begin talks with a qualified partner, make sure to do the following:

• Do your homework (know your costs, profit margins, objectives, limitations, concessions, etc.).
• Research your foreign partner (business, decision making power, objectives, limitations, etc.).
• Do what it takes to find the right partner.
• Learn about the local customs and how they play into negotiations (e.g., eye contact, formal embrace, colours, punctuality, use of titles, personal space, symbols, body language, polite language, etc.).
• Put together a solid negotiating team.
• Be fully prepared with a keen understanding of the local market so you are on equal footing with your partner (laws, regulations, culture, competitive structure, etc.).
• Know your partner (credit scores, reputation, etc.).
• Find experienced local professionals who can help you navigate the negotiation process and cultural differences.
• Prepare a detailed sales argument outlining what you would bring that the competition doesn't, and be ready to back up or defend your claims.
• Establish a timetable for negotiations so you can be patient and realistic and not have to rush things.
• Have a long-term vision for your partnership and be prepared to share it to demonstrate your openness and transparency.
• Make a list of straightforward negotiation items that would be easy to carry out if an agreement is reached.

What to do during foreign negotiations

• Arrive in the country a day or 2 beforehand. Give yourself time to get the lay of the land and immerse yourself in the culture.
• Bring along an interpreter to bridge any language or cultural divides.
• Hire an attorney specializing in international law to review critical points, draw up contracts or give a legal opinion.
• Propose a memorandum of understanding.
• Step away from the negotiating table when talks break down.
• Strike the right balance between sharing information and making concessions.
• Look your best to show that you are trustworthy and credible, even if doing so is difficult given the weather.
• Follow the rules of ethics and etiquette.
• Set or help set the terms of negotiation (time, place, length, agenda, participants, etc.).
• If you are making a presentation, be brief, clearly outline your points and arguments and present yourself in the most favourable light possible. Listen and don't show all your cards in the first 5 minutes.
• Be unassuming and use a “fact-finding” approach with your foreign partner. Take the time to fully understand his or her concerns so you can address them adequately.
• Bring as much documentation with you as you can to show how prepared and serious you are. This will also minimize your vulnerability if you forget something.
• Never give too many details about your itinerary and explain that you are prepared to come back regularly (even if that doesn't always happen) to show that you are really interested.

What to do following foreign negotiations

After negotiating and signing an agreement, it may take a while for the ball to get rolling. Here a few things to do in the meantime:

• Keep the lines of communication open and reach out to those who will be carrying out the main items in the agreement.
• Mark or celebrate the occasion by issuing press releases or posting links on your website to welcome your partner to your network.
• Determine what could be done to help your partner in the interim and get him or her involved.
• Plan a visit, even if it may not happen.
• Maintain the relationship you've built with your partner.
• Schedule an agreement kick-off meeting and plan it out.

Main items for negotiation

There are countless things you can negotiate. Some basic items are always negotiated, while others may not be so obvious. Here are some of the main items for foreign negotiations:

• Offer (products or services), features, specifications, changes or adaptations
• Quality and performance
• Warranty
• Quantity (sales targets)
• Price
• Discounts and volume discounts
• Samples
• Replacement parts
• Compensation
• Promotion and sales support
• Cost sharing (marketing, registration, licensing, studies, etc.)
• Rights, privileges and exclusivities (products, brands, territories, etc.)
• Training
• Currency of payment
• Terms of payment
• Financing terms
• Delivery and shipping terms
• Incoterms (terms spelling out importer and exporter responsibilities)
• After-sales service
• Applicable law in the event of a dispute

Desjardins can help you do business internationally, maintain good relations with your foreign customers and suppliers and manage your business risks. Contact Desjardins International Services