An Overview of the Management Consulting Industry in China

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February 25, 2013 by yanzeng2012

By Yan Zeng, MSc in Management Consulting 3 student

The concept of management consulting was introduced from western countries to China in the 1980s. The management consulting industry in China is still in the growth stage with around 15 years of development. Since China became a member of the World Trade Organization, the demand for management consulting services in China has been increasing rapidly. [1]Over the last five years, it is estimated that the revenue for the management consulting industry in China has been growing at an annualized rate of 10.1% to total $14.7 billion.

As China has become one of the world’s most profitable markets with low barriers to entry in the  management consulting industry, China has attracted a flood of management consulting companies, led by the top global consulting firms, including McKinsey & Company, The Boston Consulting Group, Bain & Company, etc. Most major global consulting firms have expanded into China, and they mainly provide consulting services to their former global customers instead of local Chinese firms, in the fields of strategy, operations, human resources and marketing. Top local consulting companies, which are increasingly competing with foreign consulting companies for the international clients, mainly provide services for local large and medium sized companies. Excluding the international consulting companies and the top local consulting companies, there are a large number of medium and small sized consulting companies that mainly focus on providing services in a specific field, which are called boutiques.

With China’s relationship-oriented culture, the local consulting companies have more strength in the local market. Of those small-scale consulting companies, many only serve several fixed clients with whom they have close personal connections. Because of the local policies and protection of information, only local consulting firms can serve for the government and state-owned enterprises, especially in some protected industries.

At present, consulting companies are mainly in the four big cities including Beijing, Shanghai, Guangzhou and Shenzhen, as most large companies and manufacturers are located around these four economic centers. As China’s medium-sized cities develop quickly, the management consulting industry is set to experience significant expansion into the inland regions.

1 Management Consulting in China. Available from: http://www.prweb.com/releases/chinaindustry/managementconsulting/prweb9302228.htm

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