Ericsson There Were a Number of Things

Ericsson

There were a number of things that Ericsson did that were effective in this situation. One was that Ericsson was keen to establish relationships with the Chinese delegation, for example bringing the delegation to Sweden and playing host.to the delegation. This helps to build trust with the Chinese delegation, something that is important in the negotiation.

Something else that Ericsson got right was understanding the nature of the relationship with the Chinese. The Chinese view business relationships as long-term endeavours, which is why they want to do business with "big mountains." As such, the Ericsson managers behaved well when they reminded themselves that the negotiations were long-term and for the good of the company. This approach is in line with how the Chinese viewed the relationship, so taking this approach avoided needless conflict or miscommunication.

One thing that might not have been as effective is treating the Chinese like a singular, monolithic entity. It is foolish to think that, for example, they have all read and swear by The Art of War. While in vogue in the West, this book is just one of many books in China, most of which do not have exposure to Western audiences. By not recognizing the diversity of Chinese culture, and by not understanding that they might have influences we don't know about, the Ericsson managers lost opportunities to forge a negotiating system capable of maximizing outcomes. Soderberg and Holden (2002) make a forceful argument that treating international negotiations as encounters with well-defined and homogenous entities is foolish, especially when negotiations are about dealing with individual people.

There were moments in the post-negotiation phase that demonstrated certain miscommunication and misunderstanding of Chinese culture. The incident with the Swedish managing director's housing comes to mind. The Chinese accepted the terms when the contract was written, only to backtrack later. They cited the high cost of the residence, but that was not the real problem. The problem, of course, is that if the Swedish MD had a much better residence than the local Chinese managers of equivalent status, causing them to lose face, as they would appear inferior to somebody who was supposed to be their equal. By not clarifying this position either during the negotiation or post-negotiation period, the Chinese were guilty of poor communication. The Swedes, however, were culpable in terms of not taking the time to consider the effects of their request through a Chinese cultural lens. The incident was blown out of proportion and was barely salvaged. Indeed, given that the Chinese would have been reluctant to see the deal disintegrate (Leung et al., 2011), Ericsson could have done better for itself here, recognizing that while the face thing is important the entire issue was a post-negotiation negotiation tactic.

Dong and Liu (2010) studied both the effects of foreigners negotiating with Chinese, and vice versa. Their study noted that there was a two-way exchange, not only of ideas but also of negotiating styles -- the Chinese learn about Swedish negotiating culture from such experiences. Ericsson could have done well to understand this, instead of taking a typically self-centric view that only the Western party is responsible for cross-culture interaction. By recognizing cross-cultural communication and negotiation as the complex, nuanced, two-way dynamic that it is, Ericsson could have worked to make sure its priorities were realized more than they were in the negotiation, instead of being frustrated by things like the Chinese tactic of giving away small things in exchange for big things. That tactic is a response to the Western willingness to accept it in a ping-pong style negotiation, but Ericsson failed to recognize early enough what was going on and became frustrated.