- What can African states do to strike better deals?
Introduction
We understand how these deals came to be and their nature. We understand more about our negotiating counterparty and their negotiation style. The question becomes, what do we do about it?
1. What can African states do
Due to the current economic climate, African states have less bargaining power in these negotiations. This negotiation landscape does impact the options available. It is useful, however, to understand the tactics that the ‘lamb’ can employ against the ‘lion’ in a negotiation[1].
1.1. Building alliances
Building alliances with similar or more powerful parties will increase power in a negotiation. The narrowest application of the principle exists in the building of a large, multidisciplinary negotiation team. There is value to be found in information being shared by different state departments about projects. Broad governmental involvement, as well as private sector and public cooperation will always surpass the capabilities of a small uni-disciplinary team[2].
On a broader scale, It is crucial that African states not only have strong relations with other superpowers to influence negotiations[3]; African states also need to build stronger alliances among themselves to share knowledge on China relations[4].
This will allow African states with large reserves of the same natural resources to join forces and, assuming they form a majority stake of world supply (Or Chinese supply), exert control over the supply of a commodity. This is sure to change the power dynamic within the negotiation but collaboration and trust are necessary.
It is important to form stronger ties, not only within regional economic communities like the Southern African Development Community or the Economic Community of West African States but to further form stronger ties between these economic communities. China’s ability offload its steel overcapacity on a continent-wide scale will then be in the hands of African nations collectively, this should shift the power dynamic even more.
The African Continental Free Trade Area Agreement[5] that entered into force in May 2019, is a step in the right direction. This agreement is set to not only boost trade but also attract long-term investment by expanding and stabilizing the market. Although not all African states have ratified the instrument, its influence will strengthen the position of African states in international negotiations.
1.2. Taking initiative at the negotiation table and away from it
Often the weaker party in the negotiation does not take meaningful control of a negotiation, sometimes because they actually cannot but other times because they do not try. African states must endeavor to control the pace and structure of negotiations, employ large human resources, and influence the course of negotiations by making first proposals[6].
African states can also benefit from clarifying ‘deal breakers’ and then specifically outlining them in model contracts or local laws. Placing minimum requirements for local content or environmental practices within the legal system makes them difficult to derogate from and thus, ensures a minimum standard for any deal.
One of the most effective ways to increase the power of a party in a negotiation is by having them develop alternatives to the current deal. It is beneficial for African states to keep open channels of communication with other potential financiers and buyers of their commodities; if not to take the best deal then simply to be used as leverage.
1.3. Building relationships
African states can endeavor to build strong relationships with their Chinese counterparts and find commonalities[7].
1.3.1. Successful strategies for relationship building
When it comes to building a successful negotiation environment, it is advised to get to know one's counterpart (using a translator to bridge the language barrier) through dinner meetings or invitations to ones home country. Learning basic Chinese phrases is also a welcomed gesture[8].
When unsure of topics for conversation, one can always find safety in discussing China's rising role in the global economy as opposed to the allegations of human rights violations within their borders. One can express respect for historical achievements or Chinese cuisine. Showing pictures of the family and telling stories in private life is another way of developing relationships[9].
1.3.2. Unsuccessful strategies for relationship building
There are a few pitfalls to look out for in negotiating with the Chinese. The refusal of business dinners and private invitations is a wasted opportunity to build Guanxi. A strong focus on technical issues and/or an overall rush to receive a final decision during the negotiation phase are not successful strategies for a final agreement.
Another pitfall would be directly contradicting one's counterpart in the middle of the negotiation, which would lead to them losing face in front of everyone in attendance. A smarter alternative would be to approach them privately and correct them; a grateful counterpart is much easier to negotiate with[10].
Concluding remarks for this series
There is massive value in China-Africa relations and infrastructure-for-resource loans are one facet of that. However, regardless of which way this value is unlocked, if an African state is going to strike better deals with Chinese counterparts then an understanding of the cultural forces at play is necessary.
A socio-economic understanding will allow for African states to understand that the natural resources in their land are important to the function of the modern Chinese economy and that these commodities are solving a crucial problem for China.
Equipped with this understanding, African states must take initiative. Initiative in enticing the Confucian Gentleman in their counterpart and in preparing defenses against, and effective use of, stratagems. Initiative in building internal and external alliances that allow for knowledge sharing and leveraging relationships. And initiative in building strong relationships with the Chinese, relationships that will survive the imposition of minimum foreign direct investment requirements by African states.
This foundational understanding of China should help in bridging the gap in negotiations and should assist in creating better prepared African negotiators. Which in turn, should result in the crafting of deals that will survive changes in governance and be widely accepted by key local stakeholders.
It is still unclear whether a misunderstanding of China is the only issue plaguing negotiators, or whether the negotiating circumstances provide other impossible obstacles. The one thing that is clear, is that the job of the negotiator under these circumstances is not an easy one and several stakeholders will need to provide assistance to alleviate the burden.
Further research will be needed to develop a more comprehensive toolkit for more effective negotiations.
END.
About the Author
Zach Kauraisa obtained his LLB from the University of Namibia and is currently a 2019/2020 Candidate for an LLM in International Oil and Gas Law and Policy at the Centre for Energy, Petroleum, Mineral Law and Policy. For inquiries, email: kauraisaz@gmail.com
References
[1] Salacuse. J, W. 1999. How should the lamb negotiate with the lion, in Negotiation Eclectics: Essays in Memory of Jeffrey Z. Rubin 87, 87-99. As cited in Bradlow, D. D. Finkelstein, J. 2018. Negotiating Business Transactions: An extended simulation course. Wolters Kluwer. New York, United States of America. ISBN 978-1-4548-8845-1. Pg120-127.
[2] Soule, F. 2019. How to negotiate infrastructure deals with China: four things African governments need to get right. The Conversation. Available at https://theconversation.com/how-to-negotiate-infrastructure-deals-with-china-four-things-african-governments-need-to-get-right-109116 (last accessed 09/05/2020).
[3] Supra Note 36, at 125.
[4] Ibid.
[5]African Continental Free Trade Area (AfCFTA) Legal Texts and Policy Documents. Available at https://www.tralac.org/resources/our-resources/6730-continental-free-trade-area-cfta.html (last accessed 08/05/2020).
[6] Supra Note 36, at 126.
[7] Ibid.
[8] Helmold, M., Dathe, T. and Chan, A., 2020. Negotiations in Japan, China and Asia-Pacific. In Successful International Negotiations (pp. 297-314). Springer, Cham. Pg 301. Available at https://link.springer.com/chapter/10.1007/978-3-030-33483-3_20 (last accessed 07/05/2020).
[9] Ibid.