Breaking into the Chinese construction development market
Mark Unger, MD, Woodhead Int., Shanghai
What does it take for an Australian business to successfully break into the Chinese construction development market? Mark Unger, the Managing Director of Woodhead International’s Shanghai office, has a clear message: the competition is fierce and the stakes are sky-high, but success can be immensely rewarding.
For Australian architects and designers, the prospect of entering the booming Chinese market is an exciting yet overwhelming one. However, awardwinning Australian design firm Woodhead International is a testament to the fact that for those who do their homework, China presents an exciting array of opportunities for Australian businesses.
A decade after setting up its Chinese operations, the company is enjoying huge success, even in the face of the economic downturn. With numerous major projects under its belt – including Qingdao Airport, Taiping Lake Resort, Shaoxing CBD, and Xuyi Eco Agri City – Woodhead has secured its position at the forefront of the Chinese design sector. More recently, the company has been commissioned to design the state-of-the art Shanghai Pavilion for the 2010 World Expo.
Night view: an artist’s impression of Woodhead’s Menglun Resort, proposed for Yunnan province
China Australia Business (CAB): How and when did Woodhead enter the Chinese market?
Mark Unger (MU): Woodhead started doing projects in China from Australia in the early 1990s. We set up a permanent office here 10 years ago, and after four years established a ‘wholly-owned foreign enterprise’.
CAB: What have been your experiences with the Chinese construction industry? Have you had to adjust the way you do business to meet the different needs of Chinese clients?
MU: Our work is more with the development industry than with the construction industry. Our service is primarily architecture, interiors and urban design, then typically we associate or pass on the project to a local design institute to document the project and administer the construction period. Our experience with developers has been positive, which accounts for our ongoing presence in the market. Relationships are more based on reputation and negotiation than they are in Australia, where commissions in the larger commercial work are usually decided through a request for proposal (RFP) process. In China, a personal commitment is a lot more important than a legal one.
CAB: Can you comment on the current state of the industry at the moment in terms of demand?
Menglun Resort by day
MU: Press coverage in both China and Australia seems to be very upbeat about the Chinese economy, at least in terms of activity and stimulus. We have experienced a minor reduction in workload, but current projects seem to be commercially better considered rather than the heady ‘pre-correction’ style of project. Certainly our workload is significantly greater than we were expecting at the peak of pessimism last October/ November.
CAB: What do you think Australian companies have to offer to the Chinese architecture and design sector?
MU: Australian companies are trained in a far more competitive development marketplace than China. The demand for new construction in China is high and the feasibility process is less rigorous. We are far more attuned to cost control, design efficiency, whole-of-life cost, environmental responsibility and, indeed, quality design.
Local firms have lower fee structures and are more focused on reducing their costs than providing good design. Of course, the Chinese business culture doesn’t have the same history or respect for design as the Australian one so it’s great that we can have an obvious design advantage. Local practices represent better value to developers in terms of documentation and construction services, except perhaps for very high-end projects.
CAB: What advice would you give to Australian companies looking to break into the industry?
Woodhead was commissioned to design the Shanghai Pavilion for World Expo 2010
MU: I would advise extreme caution unless they have a watertight local patron. Every country in the world is in China trying to work in this large market and many fail to survive. The environment is a lot tougher than we are accustomed to in Australia. My advice would be cautionary in terms of staffing, business culture, business systems, legislation, lifestyle, language and cultural differences generally. The energy is seductive to some but endurance is achievable by fewer.
CAB: Can you tell us about the work you’re currently doing for the Shanghai Pavilion for the 2010 World Expo?
MU: The World Expo projects have been put together in an amazingly short timeframe – one that is really only do-able in China. In Australia we would have spent many years going through the procurement processes. Here, on the other hand, we did some schemes for the interiors of the Shanghai pavilion only about a year ago, they went straight into documentation and construction has now started. It’s remarkable. The quality of construction does suffer from both the short timeline and skills available, but the attitude of getting things done is invigorating.
Website: www.woodhead.com.au
