Chinese resource companies — particularly state-owned or...

Chinese resource companies — particularly state-owned or state-influenced ones — often do make initial takeover offers that are lower than the target might expect, with the intention to sweeten the deal later if necessary. This is not just a business tactic but also reflects broader Chinese cultural and strategic negotiation styles. Let’s break down the factors:

Cultural Norms in Chinese Negotiation

1. Opening Low as a Strategic Norm:
   In Chinese business culture, negotiation is expected and iterative. Offering a lower price initially is not necessarily seen as insulting, but rather a starting point in a longer process. Western companies might interpret this as undervaluing or unseriousness, but in the Chinese context, it’s normal to begin with a lower offer to test the waters.

2. Face (面子, miànzi) and Relationship Building (关系, guānxi):
   Chinese negotiators may deliberately start low to leave room for mutual concessions, which helps both parties "save face" and maintain good long-term relations. They may view negotiations as a relationship-building exercise, not just a one-off transaction.

3. Long-Term Planning Orientation:
   Chinese firms often have longer investment horizons, especially state-owned enterprises. They may be willing to play the long game — start low, wait, then improve the offer after gauging reactions or regulatory sentiment.

Industry and Strategic Behavior

1. Precedent:
   There have been multiple cases where Chinese firms (like CNOOC, Chinalco, or Minmetals) have made modest first bids that were later improved after resistance or counterbids. This strategy allows them to enter negotiations without showing all their cards.

2. Regulatory and Political Sensitivity:
   Because Chinese takeovers (especially in resources) often raise political and national security concerns, starting with a smaller offer can avoid immediate alarm, then gradually build toward acceptance with sweeteners or assurances (e.g., job guarantees, local investment, infrastructure spending).

In Summary:

• Yes, it’s common for Chinese companies to open with low takeover bids.

• This reflects cultural negotiation norms and strategic patience, not necessarily undervaluation or bad faith.

• They expect a multi-round negotiation where each side moves incrementally.

• Western targets should see a low bid as a first move, not a final one — and respond strategically, not emotionally.