Playing by the rules in China
Raffles City Changning, designed by Australasian architecture firm The Buchan Group, has just been unveiled in Shanghai. What tips does director Phil Schoutrop have for other Australian companies looking to launch into Asia?
Raffles City Changning, with two retail podiums, three office towers and five restored heritage buildings, is the second Raffles City development in Shanghai for CapitaLand, one of Asia’s largest real estate companies.
The integrated development features a large shopping mall, gourmet supermarket, cinema, restaurants and entertainment experiences, and celebrates the heritage of a site which was once home to Shanghai’s first girls’ school.
Working collaboratively with Hong Kong’s P&T Architects, The Buchan Group was responsible for the architecture, interior design and environmental graphic treatments of the retail podiums.
The Buchan Group’s work in China, and more broadly Asia, began in 1997, when it entered the market as retail design specialists.
Early work on retail mall projects with AyalaLand in the Philippines and in China with Singaporean-based CapitaLand led to several awards and a growing reputation.
Today, The Buchan Group works for most of Asia’s leading developers, Schoutrop says.
“This work in China and Asia has allowed our Australian business to grow globally.
“We’ve establish offices in Shanghai, London, Auckland and Christchurch with a current staff of more than 400, ranking us at number three globally in the field of retail and lifestyle design.”
So what tips does Schoutrop (pictured right) have for other Australian companies looking to launch themselves into Asia?
“Approach the market slowly,” Schoutrop advises.
“Be sure that you are talking to the right people in your client organisations as this will be the key to efficient communication, direction and surety of payment for your services.”
“Each country in Asia is different and the validity of contracts can vary greatly so it is important that you have good personal relationships that you can rely on over a signed contract.
“If you get into trouble – the contract usually benefits the client in their country over the international consultant.”
According to the Australia China Business Council, one in 58 Australian workplaces are engaged directly in exports to China. Trade with China accounted for around a quarter of Australia’s two-way trade in 2015 – almost double that of our second-largest trading partner, Japan.
The ACBC predicts that China’s economic influence will drive significant job growth by 2026, including 111,000 new financial service jobs, 492,000 healthcare and social assistance jobs and 226,000 jobs in education and training.
While the opportunities are obvious, Schoutrop warns that there are several barriers to market entry specifically in China that “need to be approached with caution”.
“Communication is one of the biggest bridges to cross. Although there may be an understanding of the language, the thing that must be clear is the expectation of all parties. If this is understood, then it can be managed. If it is not, then communication can break down very quickly.”
He also advises that a good understanding of contracts, payments and taxation will help “manage your own expectation about how and when payments can be made”.
While regulation around money leaving China has “changed for the better over the last couple of years,” Schoutrop says “there is usually an extended period to allow for payments to be taxed”. Companies wanting to enter the market need to be prepared for cashflow delay, he adds.
The biggest piece of advice Schoutrop can give is to be “patient and understanding”.
“China is a wonderful market that is full of opportunity. But it is not Australia. It is another country with different laws, processes and culture. Those who attempt to barge through the system will have a frustrating and costly experience.
“Great rewards await those who stick at it and are willing to commit the time to making sure they are following local process and respecting the local people.”