Negotiating Across Wide Cultural Divide

By Morey Stettner

Investor’s Business Daily
June 28th, 2004

While vacationing in China in 1996, Jeremy Shepherd bought a strand of pearls for his girlfriend. When he returned to America , a jeweler told him they were worth 20 times what he paid for them.

Soon after, he launched Santa Monica, Calif.-based to sell pearls online. Shepherd has returned to Asia more than 200 times to research pearl farming and make deals for farmers’ crops.
Shepherd, who has traveled around the world 12 times and lived in Japan, Micronesia and Mexico , says a key to his success is his ability to negotiate with Chinese pearl farmers.

“Because I’ve lived in many countries, I have experience with different cultured, ” he said.

When negotiating with the Chinese, Shepherd takes the cultural differences in stride. For example, he’s used to facing a team of six or more negotiators.
“I’m always alone and they’re always in groups,” he said. “There’s one main negotiator, be he doesn’t make the big decisions. They confer constantly.”
Shepherd expects some theater during negotiations.

After he makes his first offer, the group often erupts in laughter and packs up the pearl to signal they’re too far apart to continue.
Yet the same people who haggle with him all day take him to a karaoke bar at night.
“Suddenly we’re best friends doing shots,” he said. “The next day, it’s all business again.”

Shepherd shows patience. He might spend six hours examining a single strand of pearls and sparring over its value.

He finds the Chinese “don’t take kind” to yelling, he said, so he maintains a “surface friendliness” at all times.
When anger flares up, he’ll excuse himself to take a break or he asks for a beverage.

He also controls his positive emotions. He has trained himself to say “That’s acceptable at this point” in a monotone when he finalizes a favorable deal.

Shepherd enrolled in a Berlitz course to learn Mandarin Chinese, and he role-played with his instructor to simulate the give-and-take of real negotiation.
He practiced his favorite dealmaking phrases until he felt totally comfortable speaking the pearl farmers’ language.

He confronts cheaters in a firm but polite manner.

One farmer, who repeatedly called Shepherd his “dear friend,” switched the product just before shipment and sent inferior pearls. Shepherd responded, “The only reason I’ll ever buy pearls from you again is because I like you. But if this ever happens again, I’ll stop doing business with you.”

The farmer apologized and gave Shepherd a 25% discount on a new purchase. Today, Shepherd spends $500,000 a year with this farmer.