Note from Shlomo: This is interview #5 of the Dim Sum project! We get traction!
And this time here is your lesson about building a design firm in Beijing.
If you want to join in the project, email directly to Kevin!
Thanks to Joshua A. Raff for conducting the interview!
Andreas is the Co-founder and Managing Partner of anySCALE, an exclusive design firm focusing on interior design, and architecture.
Startupnoodle.com: Let’s talk a little about the history of AnySCALE. When did you open for business?
AnySCALE: We opened first in Hong Kong in 2011 and then in China early 2012, a year and a half ago now.
Would you describe for our readers what an Interior Design firm does?
I want to say first one thing, it is part of our company name, that for me any design whether graphic, architecture, interior, landscape and no matter what scale you have to develop a kind of method. Your personal method or the method of your teachers at university but you must have a method of thinking.
Interior design is about the inside of these buildings in Beijing. For us it is a lot of office space, corporate and automotive showrooms, but very few private homes. This happens inside the building shell. There are concrete walls and slabs and windows and inside we do everything else.
[pullquote]As a foreign designer you cannot go into the construction business, it’s impossible for many reasons. Legally you are not allowed to do it, not to mention risk issues, communication difficulties, among many other things.[/pullquote]
Pretend we were outside of China and I had asked you the same question. Did you modify your previous answer in any way because we are in China?
No, I think it is just the market that is different. My answer remains the same because for me the methodology of how to design, how to think does not change. The first part of my answer would have been the same no matter where.
The second part, well, there is a difference between China and central Europe where I come from. I think in Asia, not just China, the interior design plays a much more important role. Asians still like to decorate. For us in Germany, if we have good architecture then we think we don’t have to decorate anything anymore. The workmanship is perfect, the material is special and we think “Enough!”. This is not the case in Eastern culture. They like to play, create stories [within the decoration], so the interior design has an important role. This is a big difference and before I came to China I had no clue about this.
You worked in China previously, is that right?
At the end of 2006 friend asked us to do some design work for him. We had to make a pitch [to the client]. We won the [project] but had no Chinese partners. They told us very clearly that if you want to really do the project you need to team up with someone.
Why was a Chinese partner so important?
Because in Interior Design, especially office space, clients do not want to separate design and build teams. They want to have a happy package, talk to one person, and know that they pay this amount of money and then on this date they can move in. Our client was this way. He wanted to know the price, know the time schedule, liked the design and “just please do it”.
As a foreign designer you cannot go into the construction business, it’s impossible for many reasons. Legally you are not allowed to do it, not to mention risk issues, communication difficulties, among many other things. So we said we need to find someone who can build our idea.
Let’s talk about the operational requirements you need to fulfill to get by day to day. What kind of business license(s) does the city require?
We are a Wholly Foreign Owned Enterprise which is officially a foreign company with legal status here in Chaoyang district and can do any kind of consultancy work. The key word is “consultancy”. We are not allowed to build or do structural calculations, at least not for projects in China.
The first step is that you have to prove you have done business outside of China then you also must prove the qualifications of the directors of this company, the three of us. That is education and work experience, I don’t remember exactly how much experience but in my case I was already 40 with 13 years work experience, taught at university, even had a post at Tsinghua. So no one questioned this. You need some registered capital but it is little, 500,000RMB, and you have 2 years to bring in the money. Chaoyang District recommended we bring more because Chaoyang is supposed to be the most complicated, expensive, whatever district in China. They are very proud of themselves. So we brought in more.
[pullquote]The most difficult thing, I personally think, in China is to find qualified staff…At the universities in China design professors sometimes exhibit an [unjustified] attitude about their own abilities when on a global scale their skills are not at the high level they believe them to be.[/pullquote]
So the fact that you are in Chaoyang District changed things compared to if you were in Dongcheng District?
Yes. Tax is less in Dongcheng, rent is lower, maybe it would have been easier I am not sure. But we had a Chinese agent doing this for us and we talked to different people and they all agreed that if you want to open your company in Beijing, do it in Chaoyang. It is more safe, stable, and the reputation is higher.
What about professional licensure? [Many countries require building design professionals to hold a particular license that can only be obtained after advanced education and an examination process.] You mentioned you are licensed in Germany. Do you need the same kind of license here in China?
No, I only need the license in Germany. However, a Chinese architect who is fully licensed in China, he has a stamp he can give to the drawings. This stamp is valuable in the sense that the city government accepts the drawing he has stamped as something that can be built. This is not the case with our drawings. We have a stamp as well but it is only a consultancy stamp. So we must partner with somebody who can give us the official stamp.
This is the LDI? [Local Design Institute, or LDI, is a generic term for a Chinese design and engineering firm with a license to practice in China.]
Yes, they have the [China] national license we don’t have and can never get.
We did not talk about my hesitations about opening a company in China. There were a lot of hesitations as well. It took me 2 years to make the decision. Part of this hesitation was that I knew we could never be fully licensed, we would be always a foreigner. I thought this would be a problem but we found out that many people want to work with us, no problem.
How do you go about finding qualified staff? Are you looking for foreign talent? Are you looking for Chinese talent?
The most difficult thing, I personally think, in China is to find qualified staff. This is key. So when we decided to go on our own we also decided that we would be very aggressive in that many the people that I trained in my previous company, I felt they were my team and I took them with me. Same for my partners. Now we are 13 [staff], around half I took from the previous company. I never felt guilty in doing it because I built each of these people. They started right after school and I trained them and taught them and they we were all happy to leave. Of course this was a big issue between us and my previous company. Let’s say, they were really shocked.
[pullquote]Tax is less in Dongcheng, rent is lower, maybe it would have been easier I am not sure. But we had a Chinese agent doing this for us and we talked to different people and they all agreed that if you want to open your company in Beijing, do it in Chaoyang. It is more safe, stable, and the reputation is higher.[/pullquote]
I saw a mix of people out there [in the AnySCALE office]. The stereotype is that a Chinese design education is inferior to a Western design education. Now that you have some experience selecting people from both worlds, do you find this to be true?
There is some truth in this. At the universities in China design professors sometimes exhibit an [unjustified] attitude about their own abilities when on a global scale their skills are not at the high level they believe them to be. Some students then take on this attitude also.
On the other hand, foreigners often come and want to give an idea but don’t understand that 90% of the job is just hard work, really hard work.
Do you see the quality of the Chinese design education changing?
I think the most important factor is that young Chinese people travel more these days. They are allowed to travel and they have the money. You can look on the internet and you can look in books, and let me say, they have all the same books here that you can find in the West. But to feel London, you have to be in London to truly understand.
Are you restricted by law to a limited number of foreigners in your employment?
Yes, there is some number but I cannot recall exactly. We are not looking to hire more foreigners at this time.
[pullquote]Somebody higher than you tells you what to do and you do it. It’s easy. Thinking about the future steps and consequences is more complicated. So it’s not faster overall it’s just that the daily process is unorganized and it somehow seems to be faster…The decision making process is not well-organized in China. This is something you cannot solve within days, it’s a long process.[/pullquote]
How do you find clients? Competitions, RFPs, general Business Development and Reputation…is there any method you don’t use to find clientele?
Often clients invite 3-6 designers to make a pitch and if they like our pitch we win the project. This is very often how we obtain work.
We do not do Business Development in the way of a specialized marketing person. We felt at the beginning we could not bear this cost. A good Business Development person must be fully bilingual and this can very expensive, and I see many business development specialists seeing themselves to be very important, which I don’t quite agree with.
In our case, reputation and word of mouth serves us well. Also, when our work appears in publications this does very well for us as well.
Do you find that your Chinese clients are open to your ideas and influence or do they come with pre-conceived ideas they would like you to enact?
More they are willing to listen to our idea but most also give us feedback that often include cultural issues such as special rooms set up for VIP which is not something we do in Europe. However, I think they choose us because they want to have an international style, and more importantly, international knowledge. If somebody wants a very local, Chinese design they will not choose us. They look at our website, they see another project of ours and they like it or they don’t. If they like it they might call us. In this way we can maintain a consistency of approach to design because our clients are interested in our ideas.
Your clients may be interested in your ideas but do you find that your foreign training, experience and ideas sometimes still clash with Chinese culture? The influence of feng shui is a common example among designers but do you have other examples?
I am always in conflict with the speed in China. I believe thinking requires a bit more time. I think it is great that China wants to move so fast but it is a conflict I admit. I very much focus on quality but sometimes I recognize that speed and how to make a lot of money in a short time is more important. But this is not a conflict that cannot be solved.
Speaking of the speed issue, have you had success asking a client, “Can we slow this process down just a bit so we can give you better product in the end?”
Sometimes it’s possible. However it’s not that China is always faster than European or the American way. The difference is that our Western education has trained us to anticipate the future. We think what is the case if we do A or B, how this changes C or D, we make a schedule so we know more or less what will happen for the next 6 months within this project. This is something for which the Chinese have no culture [reference] and it is very hard for them, nearly impossible.
The typical scenario is “Please give me, I will look and then decide what I want to do.” Then they come back and say “It’s nice but I want something different” so we do it again. This means we must be very fast in giving, giving, giving but in the end the whole project schedule is not faster. The decision making process is not well-organized in China. This is something you cannot solve within days, it’s a long process.
I think Chinese history is a law and order history. Somebody higher than you tells you what to do and you do it. It’s easy. Thinking about the future steps and consequences is more complicated. So it’s not faster overall it’s just that the daily process is unorganized and it somehow seems to be faster. That’s the challenge.
In the West we have some minimum standards such as an employee’s work space should be at least “this” big. Do you find that the standards you know sometimes exceed the Chinese standard or perhaps the reverse?
American office chairs are definitely larger than Chinese office chairs, that’s for sure. More to your question, at least in Beijing, local companies like to play big. This means CEO [office], lobbies, public areas, meeting rooms are all quite spacious. You spend space on important rooms while for less skilled staff we limit the space. So the gap between the important space and the less important space is bigger than in Europe. In Europe we are more equal.
I have to say Shanghai is already different than Beijing and Hong Kong different than Shanghai. Space in Shanghai is more limited and Hong Kong even more so office space there is not so spacious as Beijing. It is real estate defining this.
Any other examples?
No, this is not something we must constantly confront. The biggest difference is which kind of function you value most. That could mean a chairman of a company who only comes to the office one day a year might get the most space but his office is never in use. In China the size of the room reflects your ranking, no doubt.
But this is under change, becoming more international. “Open office,” for instance, is a very interesting thing. International brands opening offices in China have an open office policy which means only a CEO or HR gets an enclosed office while other managers get a little bigger desk, maybe a better chair and another cabinet but not an enclosed office. Companies like Nokia, Jaguar, Land Rover, companies we work with, have trouble implementing this policy in China because Chinese managers feel totally uncomfortable about this.
How do you solve this? A middle manager wants his office but company policy says no, what to do?
We work together with the furniture companies to make some adjustments to give them privacy without giving them an enclosed room.
China has a poor reputation when it comes to the quality of construction. Is there truth in this? Then how do you ensure your design is fully implemented?
For sure there is truth in it. Quality standards are not very high. But I have to say Beijing, Shanghai, Guangzhou, Hong Kong are much better than 2nd and 3rd tier cities. There is a gradation of quality in China. It is also getting better every year, we find better and better companies to execute the job. If you have a very good team the final result is not worse than anywhere else, not to take away from the high end craftsmanship in Austria, Germany Switzerland, Germany. That level of craftsmanship is out of range in China. Let’s say under normal circumstances there are companies in China who can meet international standards.
Everything is about control, you need to control the workers, you need to teach a lot, which means you need to know a lot. You cannot be only a creative designer, you need to know how to build and why you have to do this or that. I find Chinese building teams very willing to learn and interested in improving. It is great fun, I have to say!
[pullquote]…you need to teach a lot [when getting teams to implement your designs], which means you need to know a lot. You cannot be only a creative designer, you need to know how to build and why you have to do this or that.[/pullquote]
How can a shop owner or entrepreneur wanting to renovate [their location] ensure they get a quality product from the contractor?
It is about trust. You have to find a key person on the other side you can trust, and vice versa. We have to trust our client, our worker teams, and the client has to trust us.
In the US, for example, a city [government] sends inspectors to [enforce standards], especially when it comes to life-safety standards. Is the same thing happening here in Beijing?
Yes, everything. It is very rigid, you have to follow the rules.
You know, I think everything is about fair communication. I’m not saying there is something special. The only person who really cheated, who cut corners in any situation was an American, who was the only difficult client so far.
I am here more than 8 years and I like living in China. Many years ago I stopped doing this typical China talk [such as] “Everything is corrupt, quality is always low, everybody spitting on the floor” these kinds of things. Even if it would be true, it doesn’t help at all. Sometimes we joke around, “Germans are all punctual, French are all…”. It is ok for joking around but it doesn’t help. So I don’t want to generalize.
One reason I ask you these questions is to get real information and get past the stories we hear from abroad.
Yes, too many stories. Another story is that you are a [foreign] architect going to China because you cannot find a job in your home country, you are too stupid, or not good enough. So go to China and you can find a job and do whatever you want. This is in the same way stupid. Anyway, it is not the truth. There are other challenges, each country has different challenges, pros and cons. I don’t play this card.
What about your fees? Do you charge a premium over local interior design firms?
The market is like this: there are companies like us, they have international leaders who build international knowledge among their local staff. These companies have their own price range. LDIs, the local companies, often without English speakers, have a different price range. There is a big gap. If a client chooses companies from both buckets to make a pitch [for a project] then we have no chance, because the price difference can be enormous.
But among our group we are not on the high end, we are small and young so we cannot be the most expensive. I also don’t want to be the most expensive, I think it is the wrong approach. We are above the average but never the most expensive.
How do you convince a client you are worth the extra money?
Price is one difference but it’s also what you get is totally different. There are good LDIs like those from Tongji University in Shanghai or some teams from BIAD in Beijing whose leaders studied at Harvard and so on. More often than not, a local company never develops their own idea. They only follow what the client tells them and want to get rid of the job as fast as possible. They do not care about you as a client. They execute the minimum necessary to get paid.
While we have a commitment. We owe it to the client and the project. We make the client believe in us and then we prove it to him during the project.