Alpha Gering Systems Shanghai Co., Ltd Q1.

AlphaGering Systems Shanghai Co., Ltd


Inthe current world, international negotiation has become a significantelement in companies’ global strategies. However, this is easiersaid than done, especially for companies that have to navigatethrough cultural diversity. Indeed, there are significant differencesbetween the western and eastern approaches to negotiating asportrayed in the Alpha Gearing Systems Shanghai Co., Ltd case study.Firstly, in the western, the manufacturers are more concerned withthe customers satisfaction at all stages unlike in the eastern wheremanufacturers are concerned about customer satisfaction only afterproduction. For instance, during meeting between Alpha Shanghai andSan Yu, Nelson says that her employees are excited to levels ofproduction. In addition, she explains that she only entersnegotiations optimistically with an intention for a successful andmutually beneficial relationship. Nelson is confident that hercompany can be a world-class supplier of quality products (Everatt,1999).Indeed, Nelson defines Alpha Shanghai and San Yu negotiation as“setting the stage” for future negotiations. In China, there areno strict rules that business need contract prior their commercehence, Alpha Shanghai took advantage. On the other hand, Xiaobinenters negotiation with so much hope that any arising issues will beresolved with ease. Unfortunately, he is usually frustrated after thefirst round of negotiation, and unlikely to engage in othernegotiations in the future. Initially, Xiaobin was patient, diplomat,and tact. Nelson is happy with Xiaobin frustration, and she is sureher negotiations with San Yu will now succeed. Secondly, AlphaShanghai has a permanent negotiation team that comprises of threepeople, unlike Xiaobin. In addition, this team is vigilant incommunication hence, making negotiation very effective.


Severalunderlying dynamics contributed to the breakdown in negotiationbetween AGS and Sang Yu. The main objective of AGS was to become anexcellent supplier to San Yu, and it worked hard to achieve thisgoal. However, this goal diminished because the AGS sort to exploitSan Yu distinctive capabilities that took them decades to build.Secondly, there were high cultural differences between the westernculture and the eastern culture. China has a collectivistic culturewhile, on the other hand, United States has the individualisticculture. According to Everatt(1999),collectivists and individualists cultures differ on severaldimensions. For instance, collectivists focus on the process whileindividuals focus on goals. In addition, the communicative styles ofcollectivists are indirect while that of individualist is direct. Forthese reasons, the negotiation between AGS and San Yu was faced withcultural ambiguity and ineffective management. The AGS enhancedmanufacturing capabilities on the basis that they had a developingrelationship with San Yu. At this time, AGS and San Yu were signing acontract without negotiation on the price. Interestingly, the twopartners had different expectations.


Doingbusiness that deals with both eastern and western companies is verydemanding due to the cultural differences. Nelson, the managingdirector of Alpha Gering Systems (AGS), has a responsibility tostrengthen the company’s relationship with San Yu (Everatt,1999).For instance, when dealing with the western companies, Nelson wouldhave taken the first step to negotiating a contract. In addition, hewould negotiate on terms and conditions whereby if both parties cometo consensus then, that can start conducting the business.Therefore, Nelson would use contract-based negotiating strategy. Thisstrategy is effective intermediation between two parties engaging innegotiations.

AlphaGearing Systems Shanghai Co., Ltd (AGS) is a joint business betweenKai Li Machine Systems and AGS. AGS was founded back in 1995, and itwas based in Illinois, USA. The case study “Alpha Gering SystemsShanghai Co., Ltd” discusses the negotiation of AGS. Alpha Shanghaiexperienced problems after it had invested millions of dollars intheir production. Therefore, Nelson, the managing director of AGS,came up with negotiations procedure that would be significantlyadvanced (Everatt,1999).The case discusses the negotiations between the San Yu and AlphaShanghai with a client they were both targeting. In addition, thecase revolves Alpha’s management, their strategies, andassumptions, and how they affected negotiating process. Further, thecase elaborates on the Nelson’s influence on the communicationstrategies, and the extent of negotiation failure due toinsensitivity to local business and customs practises.


Everatt,D. (1999). Alpha Gearing Systems Shanghai CO. Ltd. Ontario, Canada:University of Western Ontario.