Gateway to China

05/01/2006


The RJA Group has been building a presence in China for more than a decade, a success story that offers lessons for other design firms wishing to go international. The following is a Q&A session with three of RJA's major players in the China market. Martin "Mickey" Reiss, P.E., president and CEO of The RJA Group, parent company of Rolf Jensen & Associates, is based in Boston. Randolph Tucker, P.E., chief strategy officer for RJA, is based in Houston. James Antell, AIA, P.E., is RJA senior vice president of international operations and is based in Chicago.

Q: RJA has been developing its China business for many years. How exactly did you succeed in breaking into this market?

Reiss: We have been active for more than 12 years in China. I initially went to China in 1994 as part of a fire protection delegation and, together with George Miller, then-NFPA President, gave the keynote address at the biannual China Fire Conference and Exposition. We've been invited to do the same every other year since.

The conference is sponsored by the China Fire Protection Assn. (CFPA) and the Fire Dept. of the Ministry of Public Security. The Fire Dept., Police Dept. and CFPA are all under the Ministry of Public Security. The China Fire Dept. is a national military-style organization that's even headed by a general. In fact, when the general retires, he becomes president of CFPA, so a strong relationship continues between these agencies.

Q: So how did you go beyond speaking to actual work?

Reiss: Our success in developing a fire-protection clientele in China developed from building relationships and trust with the Fire Dept. and CFPA. In addition to participating in the China Fire conference, we have made numerous technical presentations on such issues as fire protection of historical structures, large area of assembly issues, high-rise challenges and performance-based design.

I'd say the three most important success factors in China are relationships, relationships and relationships.

Q: How is working in China different from working domestically?

Reiss: The challenge in working in any foreign country starts with recognizing cultural differences and being able to communicate in the local language.

In China, the local fire departments also expected us to be there when needed. We were able to leverage our relationships into being able to support our clients in China when we hired Ms. Fang Li five years ago. She previously worked for the China Fire Dept., and her technical skill, as the holder of a master's degree in fire protection from Worcester Polytechnic Institute, placed her in a unique position. She's a Chinese national who has fire engineering experience in China and the United States, as well as state-of-the-art knowledge from the U.S.

A second key step was to open a Shanghai office, with Fang Li relocating there at the start of 2004. At the end of last year, we established an International Operations group under the direction of Jim Antell with its own dedicated staff to work on international projects. This solved the issue of having staff available for these projects and not be diverted by the needs of domestic U.S. work loads. Jim has been the lead consultant for almost all of our projects in China.

Antell: RJA had the good fortune of being able to provide our services in conjunction with U.S. clients that were developing projects in China over 20 years ago. This project experience has helped us to develop long-term relationships with local designers and local fire service officials responsible for approving our designs. The Chinese are quick to embrace new technologies in building design and construction. As a result of our project experiences, we have been invited to speak at more than 35 fire safety conferences and seminars in China, further enhancing our name recognition locally.

But to Mickey's point about the importance of having a local office, there are important degrees of operation that one needs to keep in mind: Our current office, for example, is registered as a "representative office," which means, by law, we are not allowed to provide engineering or technical consulting services directly in China. As a result, we use our staff in China to focus on the relationship building side of the business to provide client contact and maintenance activities. Our technical consulting services are carried out by our staff in the U.S.

However, we are currently going through the legal process of registering our operations in China as a "Wholly Foreign Owned Enterprise" (WFOE). This will allow us to provide technical consulting services directly. Our staff in China currently consists of Chinese nationals with RJA experience in the U.S. When we convert to a WFOE, we expect to add more U.S.-trained staff, but will maintain a predominantly "Chinese" face for our operations there.

One of the greatest challenges for us, as for any company doing business in China, is to maintain our patience and focus in developing the long-term relationships needed to succeed. It is reasonably easy to get work in China. It takes a great deal of hard work and patience to learn to execute the work successfully and profitably.

Q: Are there any significant differences in how the Chinese approach technologies such as sprinkler systems, smoke control, fire control and detection, fire alarm systems, etc.?

Reiss: The Chinese codes are significantly different from U.S. codes in that they are restrictive in many areas and don't cover as many issues as the U.S. codes do. This requires additional effort in order to design a building and its systems when the building does not meet the code. This effort is usually done using engineering analyses by RJA and includes performance-based design in most situations.

But as far as the actual systems being used, many U.S. equipment suppliers have operations, including manufacturing, in China and can supply the same technologies used in the U.S.

Tucker: The Chinese are very anxious to learn new applications of technology. Each of their four fire research institutes has been assigned specific areas of focus: fire suppression, fire detection, fire-resistive materials, etc. The research institutes also have defined responsibilities for codes and standards development. As such, their approaches to fire safety are not too dissimilar to what is followed in other parts of the world.

The difference is in the nuances of their application. For instance, their high-rise codes have many of the same requirements of the U.S. codes, but they also include the requirement for refuge floors that is not found in the U.S. While their structural fire-resistance requirements are similar, they have significantly smaller area and volume limits on spaces between fire barriers, which can create significant architectural design issues.

Q: One often hears that east Asian countries are far ahead of the rest of the world in terms of state-of-the-art building automation systems. Does this penchant for BAS have an effect on your designs there?

Tucker: We haven't found a material effect on the fire-safety designs based on the building automation systems. The approach followed actually allows greater flexibility in control system logic for smoke management than is sometimes permitted in U.S. applications. However, there is a concern for long-term viability of some system designs based on whether the owner will provide the necessary system maintenance.

Q: Can you relate any issues that arose from "cultural differences" and explain how these issues were resolved?

Reiss: The cultural difference is that we need a Chinese person to be part of our team when dealing with the local fire departments and design teams in China. We have resolved this by using Fang Li and Jim Antell together to be our lead team on projects in China.

Antell: One of the biggest cultural differences that we had to adapt to as westerners working in China is that success is based as much on the relationships you develop as on your technical capabilities. We have been far more successful on projects where we do technically excellent work and also pay equal attention to building relationships with the design team and public officials. Either one alone is not enough to be successful in China.

Q: RJA has worked on quite a few Chinese projects. As for the future of work in China, are you working on projects for the 2008 Olympics in Beijing? Can you describe some of this work?

Reiss: The majority of our project work in China has been for U.S.-based clients, and these projects include high-rise buildings, shopping malls, convention centers, casinos, hotels, etc. The design teams for the 2008 Olympics do not include any U.S. designers—they are mostly European—and, as a result, we have not worked on any Olympic venues.

Tucker: Although we have spoken with several of the design teams and the fire officials, we are not currently working with any of the teams. However, we expect that we will have involvement in third-party testing and commissioning of fire safety systems for several of the larger venues.

Q: I know that the NFPA has been quite actively involved in working with the Chinese government to adopt NFPA codes. Do you know whether the ICC has been active in China?

Reiss: NFPA has been very successful in getting the Chinese government to recognize them as the leading international fire standards-development organization. Their codes have not been officially adopted but are the accepted reference by the fire service for use in China. The 1997 edition of the NFPA Life Safety Code was the first document translated into Chinese by the China Fire Dept. and then distributed by them to fire departments and academia around the country. We use them when we develop an equivalency to the prescriptive China code as part of our performance-based design approach. The ICC has been working with the Ministry of Construction—different from the Ministry from Public Security with whom we work—and has not yet achieved the same level of success as NFPA in mainland China.

Tucker: The ICC has also been active in developing relationships in the region. Macau, which reverted back to China in 1999, is allowing casino developers to follow the International Building Code in lieu of the Macau codes. In mainland China, the IBC is often allowed to be referred to as an "internationally recognized code" for purposes of design justification. Conversely, NFPA signed an agreement with China in 2004 to allow licensing of some 30 NFPA documents that the Chinese are currently translating.

Q: What about performance-based design? Does PBD figure much into your design work in China?

Reiss: Most of our work in China involves performance-based design, since this is now accepted by the Chinese fire authorities. We have given many presentations on PBD over the past five years to the authorities so that they both accept the process, and Fang Li as an expert. It is the normal process for large projects that is used to obtain an equivalency.

Tucker: Although the Chinese codes do not have provisions for equivalencies or variances, the Chinese have been quick to embrace the concept of PBD in the justification of fire safety design. The process typically includes the development of what aspects of the design will require fire modeling and how the information from the modeling exercise must be presented, and final approval is then based on a presentation to a special expert panel—made up of fire researchers and fire authorities from across the country—for their review and recommendation.

Based on the relationships built and the reputation we have developed with the fire service, we have been invited to be a part of the development of formal guidelines for PBD in China.



How "Local" are Codes in China?

Is fire code adoption in China ever local?

"The codes come down from the Ministry of Public Security for the entire country," explains Mickey Reiss, P.E., president and CEO of RJA Group. "In very limited situations, local fire departments can supplement them with additional coverage."

Reiss gives the example of the Shanghai Fire Dept., which added a code for smoke control systems, as this subject was not fully covered in the national codes. "They required Ministry of Public Security approval to do this," he adds.

"The Ministry of Public Security creates the codes and standards for fire safety through the fire research institutes," Randy Tucker, P.E., explains. "Municipalities may add requirements based on local need, and most projects are reviewed at the city level. Some of the larger and technically complex projects are handled at a provincial level for review. But the ultimate review authority would be the Ministry."

Deploying Staff Abroad

What are some of the issues involved in deploying U.S. staff in China? "They're similar to deployment strategies in any other part of the world," says Jim Antell, AIA, P.E., RJA senior vice president of international operations. "These include getting appropriate visas, preparing the staff for the cultural differences they will need to be aware of and establishing appropriate compensation differentials."

Antell should know. In December, the 25-year company veteran was chosen to organize and direct a technology-driven team for RJA's leading international projects. RJA boasts strategic alliances around the world and experience on projects in 60 countries.

With respect to staffing RJA's China offices, Antell observes, "It is an expensive proposition to relocate expats to China, and it only makes sense to do if you can leverage it to develop the skills of your local staff so that they can be self-sufficient in the future."

Currency Stability

One issue that can arise when working abroad is the stability of local money currency, but this doesn't appear to be a problem for U.S. firms in China.

"The local currency, the RMB, has been stable against the U.S. dollar since we have been operating in China," explains Mickey Reiss, P.E. "It was revalued about 2% for the first time last year. When we work for local Chinese clients, they pay in RMB and we think that there is no downside, only upside with another revaluation."

Jim Antell, P.E., concurs: "To date we have not had any problems with currency stability as the float on the RMB has been kept small by China's central bank. Based on the likely short term appreciation of the RMB against the dollar, we may seek to take more contracts in local currency or in split currency payments with a portion in RMB to cover local costs and a portion in dollars."



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