Around the World

American A/Es venturing beyond the Atlantic and Pacific shores are finding plenty to do these days, with an overseas market that is generally up, particularly in Asia and the Middle East. "The big news, which isn't necessarily new news, is that China is very hot," says Gene Schnair, AIA, a managing partner with Skidmore, Owings & Merrill's San Francisco office.

By Barbara Horwitz-Bennett, Contributing Editor March 1, 2005

American A/Es venturing beyond the Atlantic and Pacific shores are finding plenty to do these days, with an overseas market that is generally up, particularly in Asia and the Middle East.

“The big news, which isn’t necessarily new news, is that China is very hot,” says Gene Schnair, AIA, a managing partner with Skidmore, Owings & Merrill’s San Francisco office.

Amidst an economic boom, construction there is growing at a rate of 5% to 6% per year and is expected to continue, according to Nick Billotti, president, Turner Construction International, New York.

Spotting this opportunity a few years ago, Chicago-based consultant RJA Group is firmly entrenched in China and has just opened an office in Shanghai, where it’s working on the new 45,000-sq.-ft. Shanghai International Exhibition Center. So is A. Epstein Sons International, another Chicago firm, who opened an additional operation in Beijing to complement it’s existing presence in southerly Shenzhen. HOK is similarly fortifying its Hong Kong office.

“Everyone wants to be there [in China],” says Randolph W. Tucker, P.E., executive vice president with RJA’s Houston office, “and I don’t think it’s short-term.”

What’s driving the China boom?

“The cultural and economic environment is moving from an agricultural state to an industrial giant,” explains Schnair. “There’s an increase in jobs and a demand for space.”

As a result, the Asian giant is reaching out to Western designers, soliciting their design and technological expertise. “There’s a huge knowledge transfer that’s taking place as they [China] are looking for consultants who can offer the best in terms of creativity and knowledge,” he adds.

Consequently, SOM is designing a district-wide, mixed-use community in Beijing expected to be larger than London’s Canary Wharf. Also on SOM’s plate is the design of a 1.4 million sq.-ft. campus technology park outside Beijing for the Chinese company, Lenovo, which recently bought out the PC division of IBM.

J. Scott Kilbourn, AIA, a vice president with Baltimore-based RTKL, who runs the firm’s Shanghai office, identifies China’s position as the world’s preeminent manufacturer, combined with low wages and increasing quality, as another factor driving the growth. Consequently, with a strong focus on developing a stronger, commercially competitive built environment, there is quite a market for foreign designers to come in and offer their expertise.

In addition, says Riccardo Mascia, senior vice president, HOK, San Francisco, a number of upcoming major international events are adding to the mix, such as the 2008 Beijing Olympics and the 2010 Shanghai World Expo.

And although demand has been mostly within the cities, the fact that the government is building highways to more remote areas of the country, explains Tucker, has even spurred the hospitality market in smaller, rural areas.

Elsewhere in Asia, RTKL is involved with the development of New Songdo City on the western coast of South Korea, to be built on reclaimed land. The masterplan includes a convention center, offices, schools, cultural facilities, a hospital and a government complex.

Middle East migration

Construction cranes are also on the move at the other end of Asia, punctuating skylines in the United Arab Emirates.

“There is a great deal of development happening in Dubai as the country is re-creating itself from a center of oil and energy to a center of tourism in the Middle East,” explains Ashok Raiji, P.E., principal, Arup, New York. Probably the most notable project under construction is the Burj Dubai Tower (at left), rumored to become the world’s tallest skyscraper at about 2,000 ft.

Another factor, says Turner’s Billotti—the GC on the Burj project—is the fact that the oil-wealthy Gulf states have preferred, of late, to keep their investment dollars at home. As a result, there is a strong demand for projects across the board in all market sectors.

Be it resorts, airports or skyscrapers, these countries are “looking for big international firms that have done the same thing before,” says Ken Christian, AIA, director of RTKL’s London office. “They want the expertise from the people who have done the latest and greatest thing somewhere else.”

“They don’t want to hire an engineer who is going to learn on their money,” adds David Stillman, P.E., managing director for Flack + Kurtz’s U.K. office, whose firm is currently involved with the design of two new airports in Cyprus.

Eye on Europe

North of the Mediterranean, however, the focus is turning toward Russia and neighboring markets including Bulgaria and Romania. This, according to Billotti, is the result of pent-up market demand from years under communism. That, plus the fact that Russia’s economy has stabilized, according to RTKL’s Christian, means North America and Western Europe are “more willing” to invest there. In both Eastern and Central Europe, stability and opportunities are increasing, particularly as more countries join the European Union, adds Michal Gilzenrat, vice president, international operations, with the Atlanta office of Lockwood Greene.

“Poland, especially Warsaw, has experienced strong growth in more western-style commercial and mixed-use structures,” says John Patelski, president, A. Epstein and Sons International, Chicago. “Strong examples include the Warsaw Financial Center—one of the city’s most modern office buildings—and the Zlota Center, a large, mixed-use facility containing office, retail, hospitality and parking, slated for 2006 completion.”

As for Western Europe, interesting developments are happening in the U.K. Take, for example, the private finance initiative, which Christian says enables developers to build institutional facilities on a lease-back basis. Another item changing the design horizon in London is legislation restricting construction outside urban areas. This, he says, has spurred growth in the city centers.

For example, Flack + Kurtz is now in the midst of designing a half-million-sq.-ft. headquarters in London for IBC Media, home to AOL/Time Warner. It also recently completed a new home in Westminster for the Ministry of Interior (see “New Home for the Home Office,” p. 40).

Portugal and Greece are looking at adopting similar legislation, Christian adds.

In southern and western Europe, the focus has shifted toward quality, consumer-oriented retail centers, primarily because the market has become competitive. This trend, combined with a shift in politics, has made Italy a more lo-gistically friendly place to work, claims Christian.

Closer to home, Mexico, particularly in manufacturing, is fairly strong, but Tucker characterizes the rest of the Latin America as “up, down and sideways—spotty, at best.”

Not for faint of heart

While overseas opportunities can be lucrative and prestigious, the challenges are numerous, say designers. “Overseas work is gener-ally not for the faint of heart,” says Schnair. “You have to be bold in your approach when working in foreign cultures.”

“Everything is challenging about overseas work,” adds Bilotti. “First and foremost, security for our staffs is on many people’s minds.”

For instance, Turner has made a corporate decision to take a pass on working in Iraq due to the shaky security situation. Similarly, RJA exercises caution when it comes to Middle Eastern opportunities, and in general, will only send staff abroad who volunteer. That’s essential, concurs Scott Butler, P.E., president, CUH2A, Princeton, N.J. “Our staff takes risks every time they go overseas. We find that people are willing to take risks because they are excited about the opportunities and projects in which they are involved,” he says. “But when our staff’s safety cannot be assured, we draw a line.”

Beyond security, Raiji emphasizes the need for designers to not only understand, but also respect the local culture. “Arguably, this is the most important component of a successful project overseas. This is particularly true in Asia where the way things are done is almost as important as what is being done.”

“There’s nothing worse than the difficult Westerner coming in and telling everyone what to do,” adds Christian.

Maintaining a level of humility, regardless of the experience base that your company may hold, adds Billotti, is critical, especially because every country has its own rules of business.

For example, Christian notes, “Client relationships, particularly in Europe and the Middle East, are incredibly personal. You need to spend a lot of time socially with your clients.”

This being the case, Tucker makes a real effort to familiarize himself with the social and business etiquette before going into a new country. A handy tool he recommends is a series of books entitled Culture Shock .

Taking it a step further, Lockwood Greene’s Gilzenrat, who’s firm is currently engaged in designing a 1 million-sq.-ft. appliance park for Bosch Siemens in Nanjing, claims that it’s no longer possible to put 20 engineers on a plane and send them overseas. “To best serve our customers abroad, we have to have a significant local presence and be a true, local engineering company,” says Gilzenrat.

Design challenges

Whether a firm has a local office or not, when it comes to the actual design work, HOK’s Mascia gives a whole list of challenges, including:

  • “Design only” commissions which leave final control to local architects.

  • Aggressive schedules.

  • Inexperienced clients.

  • A prevalence of unpaid or low-paying competitions for bids.

  • Low fees, particularly in Asia.

“It always seems to cost more because of the learning curve, new language, new culture, increased travel, communications cost and frequent redesign cost not reimbursed by the client,” says Mascia.

One way to circumvent these pitfalls, says Marilyn Taylor, partner, SOM, New York, is to try not to be involved in too many competitions. “We choose our projects pretty carefully and look for clients who are serious about building a quality project,” she says.

In any case, Butler contends that there is no easy way around many international hurdles other than accepting them.

“There is no way a firm can take on international work without making a significant investment of both money and time from key resources within your company,” he states. “There are tremendous hurdles—like banking relationships and really understanding cultural differences on both personal and industry levels. The cultural divide is significant, and the competition is pretty severe.”

Looking for locals

But short of opening a new branch, successfully partnering with local firms is critical when working overseas. However, it’s a real art to find just the right firm.

“You have to do a lot of interviewing,” explains Stillman. “Then you try them out, giving them something little to do. Over time you eventually build up a relationship with the goal of having one ‘guy’ in each city.”

According to Billotti, it’s important to look for a firm with a similar set of ethics, but what takes time is determining if there’s chemistry between the two firms.

“In a lot of ways, partnering is like taking on a spouse; you have to make sure you can live together and have fun together,” he explains.

Technically speaking, SOM makes sure that potential partners possess a certain skill base, in addition to technological capabilities, such as the production and transferring of documents.

Ultimately, says Christian, finding the right match is no small undertaking. “If you find a good partnering firm, hold on to them!”

Get Smart

While foreign clients are willing to pay top dollar for Western designs, owners are now taking those conceptual designs, which will cost them 15% to 20% of the total project, and having the locals take over for half the price.

“They [foreign clients] are looking for a world-class look—the best of the best—for the schematic phase, but then they’ll build it locally,” explains Randolph W. Tucker, P.E., executive vice president, RJA Group, Houston.

A firm’s involvement will be limited, but such an approach has been agreeable to some firms who see it as an opportunity to educate the international design and construction community.

“We go in and do only what we have to to try and get them [local professionals] to build up their own infrastructure,” explains Nick Billotti, president, Turner Construction International, New York. “We bring in a core of professionals and match them up with local talent. In the end, we leave behind designers and contractors who are more capable than they were before.”

Other firms, however, aren’t satisfied with this restrictive arrangement, fearing that the quality of the final product will suffer.

“We reject that idea—to be told, ‘thank you very much,’ after we hand over a schematic design,” states Gene Schnair, AIA, a managing partner with Skidmore, Owings & Merrill’s San Francisco office. “We insist on taking our services through design development and performing reviews of final documentation. If the client isn’t interested in our participation to that extent, we’re not willing to go forward.”

Similarly, Schnair sees fee negotiations as a common point of tension with overseas clients.