Tips for Negotiating with the Chinese for Power Plants

Projections show that China’s share of world’s Coal Fired Thermal power capacity is to grow from 14 % in 2006 to greater than 40 % by 2011. Imagine, China will have coal-fired thermal power capacity almost equal to the rest of the world. Mega-projects like the Three Gorges Hydroelectric power plant have established China’s supremacy in power generation technology. No wonder the world is making a bee line to China to shop for power plant equipment.

The large domestic market has helped China in developing enormous manufacturing capacities and engineering and construction skills. This, together with aggressive marketing by Chinese power and trading companies, has enabled them to offer power projects to the third world at a considerably lower unit cost per kW. For developing countries this is good news.

Negotiating with suppliers require certain key issues to be considered.

Overcome the Language barrier

Language is definitely an issue, and don’t ever think of mastering Mandarin in ten days. Your best oratorical skills or B school presentation skills can be of naught when the other side does not understand it. Talk in the language of the engineer- drawings. Use drawings, sketches, or use the board as much as possible. Even physical demonstrations using objects available on the table, be it a pen, pencil, mobile phone or glass of water is very helpful for understanding the issues. Use overhead projectors to project data so all the participants can see.

Don’t get lost in Translation

All technical and contractual documentation is generally in Mandarin, but most of the time the translation will be available side by side. Normally translation is by done by software. Mandarin words can have many different meanings as per the tone. Translations sometimes end up being hilarious or absurd. Understanding translations is a must. Translation by interpreters is good only if the interpreter understands the meaning and has a technical knowledge. In non-English speaking countries like Indonesia, a threefold translation is required making matters more complex. Talk in short sentences with a pause to give interpreters time.

Patience is the Key

Be prepared for long meetings. Response to your query or point will be only after an internal discussion among the Chinese participants. The greater the number of participants, the more the time required. Be patient till the opposite side responds. Throwing tantrums, or showing anger or irritation only increases your blood pressure and does no good to the issue on hand.

These are not only true for power projects, but also for other industrial projects.

This post is part of the series: Zen and the Art of Constructing A Chinese Power Plant.

Developing countries are looking more and more for Chinese made Equipment and EPC companies to build Coal Fired Thermal Power Plants. They have their own project implementation methods proven in the Chinese context. Can this work outside of China? How to get the best out of both the worlds?
  1. Negotiating for the Construction of Chinese Power Plants – Communication Issues
  2. Tips For Negotiating For The Construction Of A Chinese Power Plants.-Technical Issues