China’s consulting market achieves double digit growth as it hits US$4.5bn


China’s consulting market outpaced its economy in 2016, growing at over 10 per cent to reach a total market value of US$4.5billion.

The demand for consultants was driven by multinational corporations (MNCs) increasing their investments in the country, government initiatives transforming the landscape for domestic players, and clients across many industries reconsidering their business models in light of digital innovation and a slower-growing economy.

These findings are published in a new report today (4th December 2017) by Source Global Research, the leading research and strategy firm for the global management consulting industry. The report says that the growth and professionalisation ambitions of China’s state-owned enterprises (SOEs) and privately-owned enterprises (POEs) is also opening up new opportunities for management consultants, who previously found little work among these client groups.

Zoë Stumpf, Head Analyst at Source Global Research, said:

“As consulting opportunities expand in mainland China, the Hong Kong market has lost much of its appeal, now seeming very small in comparison. Meanwhile, a new market is opening up in China’s western provinces as MNCs and domestic companies alike seek expansion in first- and second-tier cities beyond the major cities in the east. But the need for a thoroughly local proposition—and the thoroughly local talent to support it— has left some firms doubting the value of establishing a western presence.”

The report found that all industry sectors performed well for consultants, but it was the smaller industries where consulting grew the fastest, with healthcare, pharma & biotech, and retail all experiencing strong growth from a relatively small base. Financial services, by far China’s biggest consulting market, turned in a solid performance, with digitisation, growth, and regulation all driving demand. The manufacturing consulting market also did well due to modernisation and efficiency initiatives.

With the productivity agenda driving good volumes of digitisation work, the technology service line grew the most in percentage terms. Customer-facing initiatives are also a hot area, as are data & analytics services aimed at monetising the consumer information collected. Advanced technologies, including robotics and AI, are also gaining ground, especially in the automotive sector.

The operational improvement service line, China’s largest by some distance, also grew at an impressive rate in 2016 as clients took on reforms aimed at ensuring their continued success as economic growth slows.

Accounting firms (a group that includes the Big Four) continue to control the largest market share in China, as their strong brands, global credentials, ability to leverage their audit base, and end-to-end solution set all play well to domestic and multinational clients alike.

Daniel DiFilippo, Market Leader for China and Hong Kong, at PwC, commented:

“People talk about ‘the China slowdown’, but it’s a story that needs to be put into perspective. It’s still a huge market that continues to grow. It might not be supersized like it once was, but it’s still growing very well.”

B.J. Richards, Senior Editor at Source Global Research concluded:

“2017 has so far been another good year for China’s consultants, with strong growth expected at least through the end of 2018. Despite a slower-growing economy and growing international political and economic instability, pressure for clients to grow, modernise, and digitise shows no sign of abating and is expected to keep consultants busy for some time to come.”

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