Q: How regulated is the Chinese market for design and construction?

A: Chinese regulatory issues are no more complex than in the United States, which depending on who you ask, can be seen very complex, or not. Building permits, zoning, land rights, etc. are all established government regulations, especially in more developed cities like Beijing and Shanghai. The real interesting question comes into play when you start to inquire about the standards and procedures that architect's, engineers and contractors follow in order to procure a project.

In a July 2005 newsletter, Jonathan Woetzel, Director of McKinsey & Company Inc.'s Shanghai office said,

Generalizations about China may be interesting conversation starters but are potentially dangerous distractions for companies considering investments there. The best advice is to focus on your own industry and operating issues. Performance in China varies greatly within industries, and the market operates on the winner-takes-all principle. The main concern is to become that winner by responding nimbly to fast-changing market dynamics and by relying as much as possible on skilled local managers, who are still rare in China. For companies operating in sectors that are not yet fully deregulated, the focus should be on creating a competitive advantage before the gloves come off. Merely transferring Western business approaches that fail to match China's reality won't work.

This means that within our industry, the Chinese have developed standards, like information categorization, that is similar to the North American standard CSI 16 Division format and digital files formats like Autodesk's DWG and are commonly used. The problem for some western AEC firms is that they see an enormous market like China and begin having grandiose dreams of creating a comprehensive standards exercise. They should focus on one project at a time. Let the Chinese market find its footing and learn from western efforts, as they create something that will work for them and is uniquely their own.

The lesson learned is to take bite sized chunks from every project in China and over time, your patience will be rewarded by seeing the seeds of standards and innovation come to life.

Thanks to Paul Doherty, AIA. He is the managing director of General Land Corp. a full-service, global real estate development firm with a focus on the Asia Pacific market. Paul is a thought leader, strategist and integrator of technology and business. He is an author, educator, analyst and consultant to Fortune 500 organizations, global government agencies and prominent institutions and is on the board of directors of the International Facility Management Association (IFMA). He can be contacted at pdoherty@general-land.com.

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