Searching for opportunities in the international market.

The Shanghai skyline is in the process of changing rapidly. Construction cranes are visible from every office window. Buildings appear to be rising from every street corner in the City; reminiscent (but on a larger scale) of New York City in the late 1980's.

U.S. development, construction and design firms are participating in projects in Shanghai, Kuala Lumpur, Singapore, India, Argentina, the Philippines and elsewhere throughout the world. They have seen opportunities dwindle locally and have turned their sites to foreign horizons for growth. As we look to the future, we will see with increasing frequency aggressive firms venturing overseas for projects.

Directing attention to foreign lands, however, is not for those unwilling to accept certain challenges. Political risks, unique customs, and tax issues can be extremely intimidating. With some savvy and prudence, as explained below, these challenges can be overcome and rewards reaped in the international marketplace.

Before venturing overseas, a well thought-out educated strategy should be developed. Firms that have found themselves in precarious predicaments on foreign projects often have relied on faith and hope in pursuing a project. Those that are successful are willing to commit the time and resources to anticipate and protect against the many risks that lurk in unfamiliar territory.

It is important, for example, to identify markets that are appropriate for your firm to pursue. Considerations come into play, such as locating countries with strong growth trends. South Asia, the Pacific Rim and Latin America are prime examples of countries with such trends. Your firm should consider issues such as the political and financial climate of the country and obstacles presented by way of legislation and competitors.

Once you have identified the market, you need to learn about the territory. Through your own investigation and with the assistance of those knowledgeable of practices overseas, you should familiarize yourself with development opportunities, industry standards and local laws. It is imperative for most developers and those involved in construction to find a reputable, trustworthy joint venture partner. We have seen that joint venture partners, through knowledge of local practices and personal relationships, steer a project through to successful completion. Often, the partner can protect against arbitrary government action. Without that partner, your firm may feel like its wandering alone in the wilderness when a problem arises.

The relationship with a long-distance joint venture partner will be a new experience for many. Time and thought, therefore, need to be devoted to ensure that a harmonious relationship is developed. Before combining forces, consider how the decision-making process is controlled. In the event of disputes, what mechanisms are in place for a suitable resolution. Dispute resolutions forums can differ drastically overseas. A local judge may be subjected to social and political influences that would be deemed improper in the United States. Certainly, in a country that has ratified the 1958 United Nations Convention Recognition of Enforcement of Foreign Arbitrator Awards, arbitration before the International Chamber of Commerce should be considered as an option.

These are just some of the issues that arise when your firm decides to pursue projects globally. U.S. development firms and construction firms have a tremendous opportunity to use their level of experience and sophistication overseas. This year, and in the future, we will see firms continue to shift emphasis to international work. Now is the time to start exploring that marketplace.

Michael S. Zetlin is a partner in the law firm of Zetlin & De Chiara, based in New York and New Jersey. His firm provides a full-range of legal and business counseling services to real estate and construction-related firms.