Jan Lorenc spent the first eight years of his life in a Polish village. When his family visited the big city on their way to America, he remembers experiencing running water and television for the first time.
Needless to say, he’s not a fan of Communism, which kept his country poor and his extended family separated for decades.
But he has always had a sort of fascination with the forces that created the system, and now as a designer, he collects items depicting the bold styles that dictators use to convey authority.
In his office, a house near a restored mill in Roswell‘s refurbished downtown, blue wooden shelves filled with design books line conference-room walls. A whole section is devoted to the totalitarian motif. Scattered throughout an eclectic mix of memorabilia are a few figurines and posters of Mao Zedong, the father of the communist People’s Republic of China.
Mr. Lorenc never knew the design firm he founded, Lorenc+Yoo, would one day largely depend on the country Mao helped create for its continued growth.
The firm is small – about 10 people in all – and wants to stay that way, but like many architects and designers, Mr. Lorenc said China has enabled his firm to weather the downturn in the U.S. and to reach its full potential.
“In 1986, I dreamed about the level of work that we’re doing today, and it’s China that’s allowed us to do that,” he said.
Lorenc+Yoo isn’t a traditional design firm. It combines a variety of disciplines – graphic design, industrial design and architecture – to create branding elements for buildings and improve their ease of use. One of its main offerings is “architectural jewelry,” subtle embellishments that unify a building’s theme and make it memorable.
Stumbling Upon China
The company’s successful overseas business started in 1995. It has grown organically, with fits and starts, following clients rather than a set global expansion strategy.
It entered Korea in 1996 through principal Chung-youl Yoo‘s contacts. A few years later, the firm partnered with a Brit in Dubai who made initial contact after seeing their work in Florida. After the emirate’s 2008 crisis, it took them three years to get paid.
Dubai led to more work with Korean firms in the Middle East, including one project in Libya, the status of which is uncertain as the country goes through a revolution.
China also came about by chance, mostly through relationships with contacts in the design world. Mr. Lorenc and Mr. Yoo had worked on some projects with Atlanta’s Niles Bolton Associates and stayed in touch with the firm’s China managers.
After two years, and without any intention of doing business in China, they won some referrals.
“It’s friends of friends of friends of friends that are going to get you the jobs,” Mr. Lorenc said.
China now accounts for about 60 percent of the firm’s work, a fact the principals see as both exciting and nerve-wracking. They love how fast things move in China, but they realize that the country could eventually be in for a crash landing from its 30-year high.
Mr. Lorenc considers his first “real” Chinese project the design of the hospitality suite for United Parcel Service Inc. at the 2008 Olympics in Beijing.
Unlike some firms that flocked to China for their salvation during the recession, Lorenc+Yoo was on solid footing in the U.S. at the time. In other words, it could’ve turned down the opportunities that came along, Mr. Lorenc said.
That ability to avoid unsuitable projects has been key to their success. Mr. Lorenc has learned that potential business partners can smell desperation a long way off and will exploit it in negotiations, he said.
“If you look like you’re in desperate need of the next fee to survive for the next three months, you’re going to end up battered,” Mr. Lorenc said. “If you show any of that face to them, that that’s you’re reason, then you’re totally screwed.”
Taking the Risk
Still, the firm had to take risks and trust partners it didn’t know well. Getting paid is always tough for service providers in global business, but it’s especially difficult in China.
Gauging a developer’s professionalism before committing to work with them tends to be based more on gut feeling than careful calculation, Mr. Lorenc said. On one project in the city of Chengdu, the developer asked for a complete design as part of the bid, then revealed their competitor’s ideas. That threw up too many red flags for Lorenc+Yoo to get involved, even though the promised returns were astronomical.
But Mr. Lorenc was clear that you can’t always be too picky, expecting everything to be just like it is in the U.S. Waiting for formalized contracts to materialize and risks to dissipate can sometimes cost a firm lucrative business.
That’s one reason Mr. Lorenc is now focusing on the “top 1 percent” of Chinese developers, those who balance China’s appetite for breakneck growth with an appreciation for good design. He noted that many smaller, less sophisticated construction firms are unwilling to pay for a product they see as too abstract to make a difference.
“This is an intangible. We’re not selling iPods. That’d be a lot easier,” Mr. Lorenc said.
Dealing with Shenzhen-based Vanke, one of China’s largest residential real-estate developers, has been helpful. Still, there have been times when Lorenc+Yoo had to do a lot of work up front, hoping that payment would eventually come and having little recourse if it didn’t.
Thankfully, the relationship has been solid. For Vanke, Lorenc+Yoo is designing architectural jewelry for an art-deco building complex in Shenzhen and has produced signage for a mixed-use development called Fish in the Garden in Guangzhou. Mr. Lorenc met with prospects in Shanghai and Nanjing in October.
The Indispensable Asset
In order to manage this expansion, the firm had to take another risk – hiring a full-time person to oversee its Chinese relationships before it had a lot of cash flowing in from Chinese contracts.
Before signing a deal, Vanke demanded that Lorenc+Yoo have a Chinese speaker on its side that could ensure both firms got what they wanted out of their agreement.
Mac Liu, the China liaison who has become indispensable to the Lorenc+Yoo’s business, said that some Chinese firms would’ve tried to exploit their communication advantage but that this precondition made sense for a firm like Vanke.
“If you want to pay some money for what you really want to get, does the designer understand what you really want to get? That’s the problem,” Mr. Liu said.
Mr. Liu is much more than a translator. In addition to helping meetings, emails and conference calls run smoothly, his architectural background allows him to explain complex concepts with the precision and passion that the firm wants to convey, abilities a hired linguist wouldn’t possess.
“It was a major expenditure for our firm … but we could not operate in China at the level we’re operating without Mac,” Mr. Lorenc said.
China vs. Other Markets
Lorenc+Yoo has been diligent to cover its bases, but it has found more trustworthy businesspeople than swindlers in China, Mr. Yoo said.
China also has other advantages. It’s less hierarchical than Korea and Japan, where the back-and-forth between superiors and subordinates costs clients time and money.
In Korea, “even though the design is all refined, if the top guy says, ‘I don’t like it,’ then everything comes back and we’ve got to do it all over again,” Mr. Yoo said. And for the designers, it’s frustrating to have a low-level employee from another company control the way your idea is presented to the person in charge.
In China, it’s much easier to speak directly to decision-makers, Mr. Lorenc said. Though the negotiating process can be cumbersome, little will impede a project once it receives the go-ahead.
“Once you make that connection with the top guy, then it’s smooth sailing ahead,” he said.
For now, the firm is focused on Asia, but Mr. Lorenc is looking to eventually explore another emerging market, this one motivated more by his heritage than a cold business case: Poland.
Visit www.lorencyoodesign.com for more information on the company.