“We hope the new casinos will put an end to this feeling of panic”

Local companies have proven their quality and as such the government should award them with public tenders to promote economic diversity. This is the view of Miguel Falé and Sandra Vasques – the owners of 3D studio Zorg – in an interview with Business Daily Business Daily: Gross Domestic Product declined 26.4 per cent during the second quarter of this year. Do you feel the economic slowdown is having an effect on business here, and mainly on the construction sector? Miguel Falé: The situation, especially in the construction sector, is related to different phases. Now, the Light Rail Transit (LRT) is already being built and so the work it involves in our area is done. Notwithstanding that there are still some public works ongoing and tenders being launched by the government… Sandra Vasques: Still, we feel open tenders from the government are fewer than in the past. In relation to the gaming sector, we used to have many projects for the renovation of VIP rooms but because this segment is really slowing down now the casinos are more focused on the mass market areas. The problem is that the mass market areas in casinos are fewer and the renovations in these spaces are also less frequent. In this way, we’re feeling the slowdown of the gaming industry. Bearing in mind that the projects Zorg works on are indirectly linked to the casino and hotel industry – which is booming in terms of new properties being developed on Cotai – and the new reclaimations will create many public works, are your prospects for the future optimistic? MF: The most important thing is that these public works are given to Macau architects rather than American, Mainland or Hong Kong [companies]. These non-local architects already have their 3D studio partners; if they have all the public works, then we’ll not have access to this market. If the government’s talking so much about economic diversification they should protect the Macau companies in an effort to promote it. Local companies have proved themselves and their quality with previous works. Do you expect new hotels to increase the number of project related to the renovation of gaming rooms? MF: We hope so. We hope the new casinos will put an end to this feeling of panic created by the decline in the number of VIP clients coming to Macau. It’s very clear that the casinos are not losing money at this moment but until the concessions are renewed this panic may always be present. Once the licences are renewed, then everything will be great again and we can get back to business as usual. I hope that, as in the past, operators will request the services of local people rather than the American companies. Because people here have a better understanding of the local market. It’s important to understand local aspects of the players and this is something that the local companies can do better. Do you consider the government adequately protects local companies? MF: It depends upon the people deciding the public tenders. Sometimes, the people deciding the results only look at the price of bids and always choose the lowest. To be honest, often the lowest price in a bid is a lie told by companies that the government decides to believe. As a consequence, we see projects costing much more than the original budget and causing huge construction [overrun] problems. The delayed LRT depot [the construction should have been finished to receive the trains but the works are stalled in dialogue to terminate the contract with the contractor] is only one example. There are many cases like this and usually they happen with non-local companies. Maybe it’s time to consider more than the price of the bids in public tenders. As a Small and Medium Enterprise (SME) do you feel the support of the government in Macau? MF: The support I expect from the government is to develop the public facilities and inject capital into the economy by renovating roads, viaducts, parks and other public and social equipment that is required. Concerning the rest, I don’t want the government to support us directly, unless they really need our work. It happened with the LRT because at that time they needed 3D images to explain the project to the population. This was great for us but it only makes sense to work together if they need our work. In terms of conditions to start a company here, I really can’t complain because taxes are very close to zero. Probably some assistance could be provided for rentals and telecommunications because for SME’s the prices of these two factors are very high. As a company involved in 3D modelling and rendering what are your main operating costs? MF: Salaries and rental are the main costs. Sometimes, we also need to buy new computers. The hardware needs to be changed every two years because it gets outdated. Concerning rental, the law is a problem because in Macau people always know that everything is temporary, and you know that after some time you will have to move out. That’s a challenge for companies that need stability. Companies need to have five-year plans to consider costs in the long term but rents force local SME’s to change their location too frequently. SV: Rental is really a problem and the duration of the contract is also a problem because after a two-year contract the landlord may increase your rental by 50 per cent to renew the contract. There’s no protection against this. Why did you decide to create Zorg in Macau and why does the company have a Portuguese domain? MF: Zorg was created in Portugal in 2007 by the two of us. We had been working with 3D images since 2000 and at that time I was working for a company named Sopa de Imagens. In that company, I was already working with architects based in and developing projects in Macau. The first project in the territory I was involved in was the garden of the Areia Preta urban park. Finally, in 2007 there was a new market emerging in Portugal, the Angolan market with opportunities and we – Sandra and I – decided to create a new company for that market. We named the company Zorg and since then it has retained the same logotype and structure. While working as Zorg, the first project for Macau involved the modelling in Low Poly [Technic to make 3D models with polygonal resolution] of all the buildings in the territory. This was a project for a local company. When did the company move to Macau and why? MF: After Lehman Brothers went bankrupt credit access became more difficult and expensive. In 2008, with all the sorts of negative influences this brought to the housing market it caused a crisis in the property market, even before the financial crisis and the bailout. We felt that impact a lot because we worked directly with the promotion of the property market. During one year, we managed to be involved in one or two projects, but then we started to feel that people were willing to ask for our work but not to pay for it. Because of this we moved the company to Macau, around 2010, where we had the opportunity to work with the atelier of local architect Carlos Couto. Later, we started to diversify our clients, initially with Portuguese architects working here, then with design offices working for casinos. We also reactivated the relationship with the government and we were involved in the renders for the LRT and images studies for the north phase of that project. Do you still have projects running in Portugal or is all focused in Macau now? MF: Our projects are in Macau. This is where we are based and focused. The only project we have outside Macau is in the United Kingdom. However, that happened because one of our former designers went to live there and recommended our services to a local company. She suggested our services because there was a project she was involved in that needed 3D images on a very tight deadline. As in Macau, the deadlines for our area asked by the local casinos are always so short, and way shorter than you would expect; she recommended our services since she knew we had experience in short deadlines. In the end, we finished that project on time and hope we have opened a new ‘front’ for more opportunities there. In terms of your activities, how do you perceive the development of Zorg in the coming years? SV: In terms of the company we don’t have the capacity to expand at this moment because we don’t want to be known for not being able to meet deadlines or providing services without quality. We aren’t concerned with expansion until we feel we have the capacity to do it. MF: In terms of the 3D images, we’re starting to focus on interactivity. We want to use the potential of games, as you see in first person shooters. However, instead of using it to shoot enemies, he will use it to show the areas being projected. We believe that this is the future for our industry. For example, a Chinese investor wants to buy a property in London. Before he actually considers going there to see the house, he may decide to view it through the game. This can be used for projects being built already on sale before the works are completed. What is the profile of the clients that more often require the services of Zorg? MF: Architects and designer companies and the government for public works comprise the main core of our clients. Sometimes, we’re also involved with other types of clients but not so often. We work a lot with the Portuguese-speaking architects in Macau because communication is very important in this area. Who are your main competitors? MF: Our competitors are Mainland Chinese companies around Macau, who are very hard to compete with. In terms of costs for our company, the rental costs in Macau are enough to pay the costs related to human resources in Mainland China. Their operating costs are much lower than ours. These companies have a larger market due to the language and network, which is not open to us. How do you compete with the Mainland companies? MF: On the one hand, we have the advantage of being in Macau. On the other, we have clients that tried these cheaper companies and after trying them realise they ended up paying more than they had initially predicted. The problems originated in communication issues, deadlines that were not met and budgets that turned out to be pre-budgets. We’re very close to our clients to make sure they have the product they want. To the point that if needed we take our computers and we go for a week to our clients’ office to work directly with them. Chinese companies do not offer this service and this is an advantage for us; as for the rest, we cannot compete with their prices. As an SME, how do you manage to promote your company? MF: It’s difficult for us because we cannot hire a person to take care of the commercial area. At the same time, it’s difficult for us to promote it ourselves because we have to work to make the 3D images. So, at this moment it’s not really a question, but in the future if we consider expanding then we may hire someone for this position.