- Blog Posts
- Foreign design offices in China are shrinking.
Foreign design offices in China are shrinking.
- Posted in Default
- By admin
- Date September 6th, 2012 08:18
Every week I lecture on green design in 2-3 design offices, both foreign and local. Over the past six months I have been hearing the same news at an increasing frequency: foreign offices are shrinking. Recently, this topic has also appeared in online forums as well as professional gatherings.
Although many attribute this to the general market slow-down, particularly due to the upcoming change in Government, a growing number of foreign firms are attributing the losses to local firms, in particular to local Design Institutes (DI). In short, foreign offices are loosing more and more work to local ones.
Bizarrely, I have also heard a number of firms blame 'guanxi', i.e. being undercut by the relationships of others. This is a strange argument seeing as guanxi is nothing new.
After visiting dozens of offices over the span of several months the real reason seems to be far more basic: foreign design offices are simply loosing their edge.
It used to be that foreign design offices were the only offices capable of providing innovative design, solid planning and proper detailing. This is obviously no longer true. Many Chinese architects are now internationally famous for producing innovative designs and design institutes are starting to produce work at an international level. The playing field is leveling out.
What we are seeing is the end of an era and the beginning of a new one. The gap between foreign and local design offices is on the verge of being eclipsed. Competition is fiercer and without the home ground advantage, many foreign firms will be left to coast on their portfolio of international clients. In short, this new era does not bode well for foreign firms. Or does it?
The strange reality is that although foreign firms still do have an edge, virtually none of them are capitalizing on it. In fact, most of them are completely out of the loop. Blame it on disillusionment, skepticism or lack of pulse on the nation, but the reality is that foreign offices are being extremely passive towards a new era that their local counterparts are taking extremely seriously.
On April 27th of 2012, the Government announced that by 2020, 30% of all new construction must be built green.
Think about it: when Coca-Cola loses 1% market share to Pepsi, that is big news. Now, imagine a 30% market shift with an estimated worth of 122 Trillion RMB.
We've all heard large blockbuster headlines like this before. We all know that what matters is the size of the implementation, not that of the headline. However as an observer, what has been interesting is how radically different the reactions have been. Whereas the foreign offices have barely taken note, the local offices are gearing up.
In conjunction with the 2020 targets, the Government also announced subsidies for 2 and 3 star certified projects: 40 RMB/sqm for the former and 80 RMB/sqm for the latter. Although the amounts seem insignificantly low, I have already watched a DI transform a normal project into a green one largely by leveraging these subsidies. Repositioned as a green project, the same DI was the only one suitable for the job. The math was simple and clever: in most of China these subsidies exceed the fees of local Design Institutes. This reduces the client's first barrier to entry - higher design fees for green design - and gets them invested in the process.
And it is just the beginning. On August 22nd, the Shanghai Government announced subsidies of 6 Million RMB ($944,286) for projects investing in energy efficiency, from solar panels to shading devices. Designed to offset the higher initial costs of certain green buildings, Shanghai's subsidy is aimed at helping the city meet its target for the 12th Five-Year Plan: 1 Billion square meters of green buildings by 2015.
When I started giving green design lectures 3 years ago, the reaction from foreign design firms was: 'This is brilliant, we do a lot of this in the US (or Canada, Australia, UK...)'. Today, the reaction is generally the same. By contrast, three years ago the local offices were more interested in lunch. Now, they are digging for solutions. They've moved ahead. The foreign offices haven't.
This article isn't written to help foreign design firms compete - that would be short-sighted. Rather, this article is written to help smooth a necessary transition. When it comes to experience in green design, foreign firms have a head start of several decades. However, when it comes to implementing this experience into China's new enviro-political landscape, local firms are unbeatable. On both sides, the firms that will do best are those that learn to work together asap.
Learning from nature, we know that organisms (and organizations) grow by competing and winning. However, they actually grow more by co-operating. There is still lots of room left to grow in but it will only happen by blending competition + co-operation. We're not only entering a new era of green driven design, but also one of co-opetition.