Chinese are world class bargainers and will drive the price down at all costs. Foreigners often just do not care about a slightly expensive price if it saves the trouble of beating the last bit out of the seller.
The past few days, I have been working through the last few negotiations before signing a contract to rent a property for a cafe here in Sanjiang County. I thought I had it figured out, and then a Chinese friend jumped in to "help". My friend wants to make sure we have a great deal, but I have begun to wonder what the real "cost" will be of this great deal.
The cafe is in the town's development zone, and right now, all the rent prices are cheap, because so few people and businesses are in the area. In another year, businesses will be in, construction over, and people flocking the area. Rent will most definitely go up.
In the contract, I was thinking of setting the rent at the current price for the next two years (which the landlord is fine doing), but my Chinese friend jumped in and "helped" me get it for the next three years. Sure, that is a great deal, and far beyond what I could have expected.
The problem is this: in three years, when my neighbors are all paying much more per month and my landlord cannot ask for more because of a contract, will that cause other problems? Just having an angry landlord on your hands could be bad enough. What I see happening, though, is a nasty jump in rent the fourth year, to make up for the last two or three years.
My friend is truly trying to help, but by doing business the Chinese way. If he irritates the landlord, I am the one who pays the price. I would much rather do things my way: paying a little more per month is better than having a landlord that wants me out of my good location and makes things difficult.
In the end, if the cafe is making the money it should be, we are really talking about peanuts. If we go with the flow, we may not get the best deal possible, but the landlord will be much more willing to just go with the market price. All I have to do is ask my neighbors and keep a pulse of what is going on. He will feel things are fair, and I will not have one more headache to balance along with the business in the cafe.
Hi, I'm glad to see I made it into your blog!! Interesting to read about the rental negotiations and the dynamics created by them! I guess you can always go back to the landlord in the third year and offer to pay a higher rent in exchange for some other benefit. That way, you might ingratiate yourself to him, and still get some good out of the deal. Press on!!
Posted by: Arend | 29 Jan 2007 at 16:10
I have spent all day doing that very thing: trying to find the balance between ingratiating myself to him and throwing money at issues. There are some very small things that can be done to help him know I am not trying to scalp him for every penny, but rather to clearly show him I am perfectly happy with a mutually beneficial agreement.
Posted by: Cooper Strange | 29 Jan 2007 at 18:52