Overview
Consulting services (including management consulting, HR, training services, legal consulting and investment services) is still a relatively new industry in China, and was unrecognized as a specialized industry in China until the late 1990s. The transition from a planned economy to a market economy has created many new challenges for both local and foreign firms. Former state-owned enterprises (SOEs) face mergers, acquisitions and reorganizations. Local companies must survive in a more competitive market, building sound corporate governance and accounting systems in the process. Foreign invested companies must localize to adapt products and services to the Chinese market. Additionally, multinationals often need advice from consulting firms on investing in the domestic market. In the past, most companies conducted strategic planning and problem solving internally, yet an increasing number of firms are choosing to outsource these services to independent, specialized agencies.
Since the 1990s, multinational consulting companies have entered the China market and expanded operations here, including McKinsey, Boston Consulting Group, Booz Allen & Hamilton, Price Waterhouse Coopers, Roland & Berger, etc. In recent years, there has been interest and an increasing trend from small-to-medium size consulting firms to tap into this vast market of opportunity. Generally, it is harder for small firms to compete with larger companies, but if they have a well-defined niche or unique position, there is still opportunity for the smaller companies to enter the China market. It is also common that foreign consulting firms only do business with foreign invested companies. But as these consulting firms gain local knowledge and expertise, however, they often expand to service domestic clients. International consulting firms in China face a variety of challenges, such as insufficient local talent, unsophisticated clients and a lack of professional standards. However, with comparatively long experience in the global market, and shared information centers in offices around the world, foreign consulting firms are poised to take the lead in the China market.
According to data provided by BearingPoint, the scale of China’s management consulting market grew at annual rates of 30 – 50 percent from 2002 to 2004. It has become the world’s fastest growing management consulting market in the world. A report issued by Shenzhen Commercial News at the end of 2003 stated that the number of clients in the consulting industry increased by 91% during 2003. Increasingly, companies are adopting external consulting services to improve company management and business plans, increase efficiency, and gain local knowledge that cannot always be provided as effectively in-house. Based on the research, the client satisfaction rate was 81%.
With the current economic situation, consulting firms in China, are trying to determine the best business model and approach to providing services to their clients. Many of these firms include services and advice related to downsizing, restructuring, and cost savings.
Useful Websites
Shanghai Information Services Association
Asia
Pacific Human Resource Research Association
American
Chamber of Commerce (Shanghai)
American
Chamber of Commerce (Beijing)
American Chamber of Commerce (South China)
The
China Business Network
