China is an emerging market on steroids.
It's got all of the needs of a rapidly growing marketplace: from fundamentals like infrastructure and energy, to more complicated government and private sector strategic needs. The kicker is that it's trying to build from a base that already ranks as the third largest economy in the world, based on a GDP of almost $10 trillion.
The magnitude of the challenges is enormous. The country has more than four-times the population of the U.S. and almost double the number of cities with more than 3 million people (9 vs. 17). And unlike the U.S., where culture and consumer buying habits are relatively similar across the country, each region in China has its own economic, cultural and political nuances.
At a macro level, one of the biggest consulting needs throughout the country is helping to expand the economy by encouraging the country's 1.3 billion domestic consumers to spend, instead of relying on the country's legacy focus on exports.
"Many industries throughout China need help building consumer demand," says Karen Nickel Anhalt, a Senior Analyst with Kennedy Consulting Research & Advisory and lead author of research profiling in-country practices and forecasting consulting demand in China and the rest of the Asia Pacific region.
At first glance, China would seem to be an ideal location for the West's large retail companies, but a closer examination reveals some big challenges.
New entrants into the market have to compete against cutthroat pricing wars with online shopping sites, local retailers and the ubiquitous street markets. The Chinese consumer is extremely price sensitive and approaches shopping in a different way—he comparison shops aggressively and still expects to bargain, even at the mall. In addition, tastes vary greatly across the vast country, so there is no single China strategy for retail, Anhalt says.
On the business-to-business side, consultants are being hired to provide help with logistics. Each region's infrastructure is in a different state of development. "Consultants are needed to figure out how you get products from one end of the country to the other. They also are being asked if it's even worth trying," she says.
The key is to focus on the one thing you're best at, rather than try to tackle all of the myriad issues. The consulting market is potentially enormous and firms have barely scratched the surface of what is possible. Major global firms are trying to find the right strategy to be relevant to clients without overextending themselves.
Roland Berger Strategy Consultants, for instance, has carved out a niche advising the local governments.
"It may not sound sexy and headline-grabbing, but these regional governments are responsible for populations of 20 to 50 million people," Anhalt says. "Demand potential is enormous."
—Jess Scheer
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