Local firms challenging international giants

Lyu Shujie says Chinese managements consultants are ready to take on the big international firms.

The 28-year-old project manger of Alliance PKU Management Consultants, one of the largest Chinese firms with around 1,000 consultants, says the local firms are making top advice more accessible.

"Ten years ago business people in China were unfamiliar with consultancy and it was regarded as a posh product that was expensive and probably not for them," she says.

"Now it is the local firms that are making it more accessible."

Lyu, who was speaking in her company's offices in Shanghai Central Plaza, says local Chinese consulting firms can also compete hard on price.

"The international consultancies often charge a minimum of 3 million yuan (350,000 euros, $470,000) for a particular project. We might be able to do the same project with the same quality or even better for 1 million yuan," she adds.

"You might even find a small consultancy with just two people charging 50,000 yuan for the same piece of work. The prices might diverge but the models and methodologies would be similar."

Over in Beijing, at the headquarters in Beiyuan Road of another leading Chinese consultancy Hejun, its vice-president Xu Dichang, says Chinese companies have the advantage of being closer to the market.

"We understand the market more but we still face many challenges. The international consultancies are still ahead in terms of their database and brand recognition. They remain stronger in the high end sector of the market."

Xu, whose firm was founded in 2000 and has 1,200 consultants, says the growth of the new technology sector to some extent provides opportunities for Chinese firms.

"Both Chinese and foreign firms need to adapt to this new era and to a certain extent we stand on the same starting line. It gives us a chance to catch up with the foreign ones."

Liu Di, 44, a partner with Alliance PKU Management Consultants, insists, however, it is not all about competing head on with the international consultancies.

"Sometimes we cooperate with the bigger firms and share each other's expertise," she says.

Xu at Hejun believes that China will one day produce a major international consultancy to rival McKinsey or Bain. His company aims to have 2,000 consultants by 2015 and to operate internationally by 2020.

"Japan might not have been able to do this but I think it is different with China. Japan's economy was quite connected with the global economy from the beginning and foreign management consultancies penetrated the market very fast," he says.

"China has not been open for so long and this has given Chinese consultancies the opportunity to develop their own strengths. The Chinese market is so big anyway, there are many opportunities."

Lyu at Alliance PKU, which was formed in 1996 under the auspices of Peking University, believes one of the strengths of the Chinese firms is being able to interpret and predict government policy.

"I have been working with a company in Guangzhou recently and its sales revenue was adversely affected by 50 percent as a result of a policy change. We have been able to help it adapt its product offer so it won't be hit by future policy changes and might even benefit from them."

The Shanghai- born consultant, who has a masters' degree in engineering from Cambridge University, says that increasingly the company's clients are foreign companies.

"One recent client was a major cruise holiday company and they came to us because of our knowledge of the Chinese market. They felt international firms might just give them standard advice they would have been able to get in their home market," she says.

(China Daily Africa Weekly 06/06/2014 page7)