Consulting services (including management consulting, human resources, 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.
In the past two decades, multinational consulting companies including McKinsey, Boston Consulting Group, Booz Allen & Hamilton, Price Waterhouse Coopers, Roland & Berger, Accenture, etc. have entered the China market and expanded operations here. The top consulting firms are expected to contribute to about a quarter of the industry revenue in 2013. It is also common that foreign consulting firms only do business with foreign invested companies. However, as these consulting firms gain local knowledge and expertise, 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 IbisWorld, the consulting industry generates $17 billion in revenue and an annual growth rate of 9.6%. Currently there are approximately 30,000 consulting firms in China due to the low barrier to entry and low concentration level. Since the industry is still young in China and enjoying the growth stage of the life cycle, there are very limited regulations and high profit margins.
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. With the current economic situation, consulting firms in China are trying to determine the best business model and approach to providing better services to their clients.
The U.S. Commercial Service offers a broad array of market entry services to U.S. companies in the consulting services industry. Please refer to the following relevant contacts for additional information on how we can help you expand your business in China.
Tel: (86-10) 8531-3000
Fax: (86-10) 8531-3701
Tel: (86-21) 6279-7630
Fax: (86-21) 6279-7639
Tel: (86-24) 2321-1198
Fax: (86-24) 2321-2206
Tel: (86-28) 8558-3992
Fax: (86-28) 8558-3991