Who’s got the bargaining power?

As part of my preparation to return to work early next year, I have recently started the search for someone to look after my son full-time during the day. Being in Beijing, I don’t have the same network of family I would otherwise depend on, and nurseries tend to only admit children from 18 months onwards. In China, such carers are known as “Ayi’s” – which means Aunt in Chinese.

To kick off my search, I began by asking friends for recommendations, contacted an agency, and conducted interviews. I was very pleased to find that one of the interviewees was excellent – she had a great, playful nature but also years of experience with kids from various countries, so I felt I could trust her.

But then came the hard bit – negotiation over her pay. Even though I again asked my friends for advice, it was still difficult to work out where to start – a low offer, or just give her my bottom line? As this article explains, Ayi’s are becoming ever more expensive and sought out in China.

What I had to take into account in my decision was that she had exactly the same conundrum. If she asked for too high a salary,I might say no, and find another Ayi.

The fact is, while a very good Ayi is hard to find, it is also hard for Ayi’s to find great families that will make them feel at home, trusted and stay around for a long time. Both parties have an interest in making sure the negotiation works.
These kinds of negotiations – where there is underlying mutual interest in making a deal – are commonplace. But sometimes it can seem like they are one-sided – that only one party needs the other more.

Negotiations between China and African countries are often interpreted as one-sided initially. For instance, it is very clear that African countries – most of whom are poorer than China – need China’s support for building infrastructure, investment in manufacturing, and much more. This is, indeed, why many commentators think that the Forum on China Africa Cooperation has been in place since 2000, and China has been providing certain types of foreign aid to African countries since the 1950’s. 

However, China also needs African countries too, especially at this specific juncture. 

Why? China’s leaders believe China’s economy needs to make a transition out of being the world’s manufacturing powerhouse, to being a more innovation, consumption and services-driven economy. This is the key premise behind China’s 13th 5 year plan. But it is and will be no easy transition. One of the key challenges is ensuring Chinese people can continue to consume at relatively low prices – as they did before. This in turn requires that at the same time as manufacturing reduces within China, some other countries pick up the manufacturing and can then transport the cheap goods back to China.

African countries are – on paper – ideal partners for this transition, compared to anywhere else. As this WEF article discusses, they have the youngest and largest populations in the world, who are ready to do fairly manual work for lower wages. Many countries also have access to the Indian Ocean and are therefore relatively proximate to China. The only barriers are internal roads or trains to bring the goods to ports, as well as safety of people and the goods as they move across the continent – given that some African countries are in varying states of civil war

Hence, it makes sense that China’s priority in cooperating with African countries is building internal and port infrastructure and manufacturing capacity – for example via the Belt and Road Initiative (BRI), and peacekeeping. Like my Ayi who gets a good family if she negotiates well, China gets a good partner from Africa if it negotiates well. 

This knowledge – that they have something to offer to China – is critical for African countries in negotiating successfully with China. They should certainly welcome initiatives like “Made in Africa“, or the BRI, but make sure they focus on their own development plans and priorities – not necessarily accept the first offer. Organisations like the UNDP are now saying they will help to support this focus.

Sharing information with eachother about the terms and conditions of what they are negotiating is also crucial – just like I asked my friends for advice about Ayi’s and prices. Of course, there is a temptation not to ask – in order not to seem like a poor negotiator or reveal a mistake to others, but on the other hand, in my experience, the more sharing is done, the more open everyone becomes, without judgement. It would be great to see the African Union or other international organisations starting to help support this kind of information exchange.

Like me and my Ayi, who both needed eachother and realised this in order to negotiate fairly, China and African countries both need each other. In the long run, fair negotiations that take this mutual interest into account will be best for everyone. They were best for me and my Ayi, and even more importantly, my son!

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One Comment Add yours

  1. iok says:

    Brilliant analysis.

    Like

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