After five years of hard work, China Meishen Essential Oil

After five years of hard work, China Meishen Essential Oil Cosmetics Co., Ltd. has opened a sales market in Greece, enjoying a certain popularity and becoming a well-known Chinese brand in Greece. The international brand “Meishen” of China Meishen Essential Oil Company originated from Greek mythology. The use of olive essential oil flowers originating in Greece is a major selling point of the essential oil products of Chinese essential oil companies. In order to obtain a fixed source of raw materials, we have a long-term supply partner for raw materials in Greece, and at the same time take the opportunity to further open up the sales market in Greece and radiate to Europe. China Meishen Essential Oil Cosmetics Co., Ltd. hopes to cooperate with the Greek Crown Flower Company and jointly establish a joint establishment in Greece. A Sino-Greek joint venture, engaged in the planting and sales of flowers in Greece by China Meishen Essential Oil Cosmetics Company. In the past two years, the domestic economic situation in Greece has generally been sluggish, and the uncertainty of economic development has increased. The Greek Crown Flowers Company also hopes to obtain sustainable profitability and healthy development of the company through overseas support through cooperation with Chinese companies. For the Chinese company, Manager Wu of the Overseas Sales Department is responsible for the negotiation, and for the Greek company, the financial director Thales is responsible for the negotiation.
Manager Wu has led the negotiation team of the Chinese company to Greece for two negotiations, both at the Greek Crown Flowers Company. The first time was the official visit and investigation of the Chinese company to the Greek flower company, and brought Meishen essential oil products and gifts with Chinese characteristics to the other party. After negotiation, the company initially understood the cooperation intention and requirements of the other party. The second is an ad hoc negotiation. Manager Wu was temporarily invited by Thales when he led the members of the overseas sales department of the Chinese company to Greece for activities and vacations. Due to the rush of time, the negotiators of the Chinese company led by Manager Wu did not have time to wear formal attire. This negotiation was mainly to understand the negotiation demands of the other party and did not respond much. The members of the negotiating team led by Thales all dressed in formal attire to negotiate and were fully prepared. The negotiation room of the Greek company was arranged with Chinese elements and was personally received by the CEO of the Greek company, in order to show the Chinese company the sincerity of the Greek company’s cooperation.

2. Issues that need to be resolved in the negotiation

After two negotiations, the main points of disagreement between the two sides were as follows:
1. The proportion of shares in the joint venture company. Both sides want to control the joint venture. For Chinese companies, controlling the joint venture gives control of the supply chain. If there is no supply chain control, it will face the review of “supply chain risk” when the brand “Eros” is sold in the later stage, which is a major hidden danger for future listings. Moreover, the Chinese pay attention to “the name is right and the word is right”. The Chinese company’s existing brand “Meishen” and later brand “Eros” are both derived from Greek stories. Greek companies set up joint ventures mainly because they need to take advantage of Chinese companies’ economic development in Greece to “free ride” and consolidate and increase the supply of raw materials to Chinese companies.
2. Funding method and investment time. The Sino-Greek joint venture needs about 5 million euros. The Chinese company hopes that both parties will immediately pay the capital contribution in proportion to their equity. The recent cash flow of Greek companies is not very good, and they are unwilling to take out a large amount of cash, hoping to postpone the payment or subscribe for flower planting land (in-kind investment). The Chinese company said that it can consider the other party’s investment in kind, which is also the raw material that the Chinese company needs for a long time.
3. The future sales guarantee of the joint venture company. The Greek company hopes that the Chinese company can guarantee the annual import amount and determine the import unit price, so as to ensure the continuous profit of the joint venture company. The Greek company believes that if there is no purchase from the Chinese parent company, the purpose of jointly establishing a joint venture between the two parties is not valid. The Chinese company hopes that the joint venture company can use its own advantages to operate independently, rather than the Chinese company guaranteeing the purchase volume. Chinese companies cannot sign clear and large guarantees, otherwise they will face a heavy burden, and the joint venture company itself will have no profit motivation. However, the purpose of establishing the joint venture company is to supply flower materials to Chinese companies, and the Chinese companies themselves have the willingness to purchase.

3. Negotiation simulation

You are Manager Wu, the negotiator of China Meishen Essential Oil Cosmetics Co., Ltd. / Thales, the negotiator of the Greek Crown Flowers Company. The above two negotiations are only the preliminary communication, inquiry and offer stage of the negotiation. The two parties have not entered the substantive bargaining stage, nor have there been obvious concessions and compromises. Half a year later, the Greek company invited the Chinese company to Greece for the last negotiation. This is the third negotiation and also a substantive negotiation. Before the negotiation, Manager Wu/Thales analyzed the negotiation situation and realized that both parties had a strong intention to cooperate, and both parties recognized the industry status of both parties, and neither of them planned to change the cooperation partner. Manager Wu/Tales made a priority analysis of the three differences in the negotiation between the two parties and realized that because the two parties have different understandings of the priorities of the above three issues, there is room for win-win negotiation. Next, the Chinese company and the Greek company will conduct further and final negotiations on three divergent issues.

Explanation :

 1. A task list needs to be filled out before negotiation:
(1) Determine each party’s understanding of the importance of the issue based on the task list. A weight value (Weight, represented by W) is assigned according to the importance of each problem item. The sum of the weight values of both sides is 1.
(2) Score assignments (Value, denoted by V) for the following different options for each question item. The assigned score for each choice is on a scale of 0-100. The sum of the assignments of both parties should preferably be greater than 100.
(3) Setting the bottom line for all parties in the absence of BATNA.
2. Start negotiations with reference to the completed to-do list. Don’t show your to-do list to the other party during the negotiation process, and keep your information safe.
3. When negotiating an agreement or deadlocked, re-examine the joint benefits in the to-do list to review your agreement or final bid. After the negotiation, a class debrief on the agreement reached or the impasse that has been reached, including:
(1) Whether the agreement or the final bid falls within the negotiating range.
(2) Is there any potential integration or win-win space;
(3) Are you aware of the possibility of integration or win-win;
(4) How you assert or create value or both during the negotiation process.