Part 6 – Working with Global Service Firms

You are probably aware that the giant global service firms are already in China , or have plans to be here. The management consultants, advertising, large HR firms, and accounting firms are already well established in the big cities. Brokerages, banks, and law offices are coming as soon as the laws governing their industries allow, which should be within the next year or so. If you are determined to stick with the big names, you can always access their China services through HK where they have offices and facilities comparable to their US and European HQs.

Is it necessary to perform due diligence on the large firms? Yes and no. If you are a major account at one of these global giants, then you probably don't need to be particularly concerned. They will give you same treatment that you are already accustomed to. Sure, their Shanghai or Beijing associates will be a little rougher around the edges than they're NY counterparts – but you can count on being able to find plenty of middle and senior managers who have been sent over from western offices. These organizations pride themselves on their ability to deliver consistent services anywhere in the world. The local personnel you will meet at these places are comparable to Ivy League graduates in the US .

So is it worthwhile paying western rates for this kind of firepower? That depends.

The Good News:

The good news is, you will get international standards – or as close to international as anyone can get with a large-scale service firm in an emerging market. They tend to have great connections with the government and other large multinationals. They are USUALLY up on the latest developments and regulations, and have a pretty good handle on major industry trends.

The bad news?

Their operations tend to be very systematic and “cookie-cutter”. If it's not written down on a stamped document, then it doesn't really exist. The upshot is that the global firms have been known to be led down the garden path when valuing assets or doing diligence. These guys like filling out forms or looking at forms that other people have filled out.

The second drawback is on the staff ing side. Because they stress the excellence of their human resources, global accounting and management consulting firms tend to put a lot of effort into training promising young graduates. The problem with that is that YOU might very well end up as a training exercise. While the same situation occurs in the west, recent Chinese graduates with no experience simply don't have the savvy that young US or Europeans have. A newly minted Wharton MBA, odious as he or she might be, probably has solid work experience and a professional background. You cannot make the same assumptions about their Chinese counterparts.

You also have to be aware that these global giants have own agendas, which often includes the government and giant corporations. If your interests don't align, you might find out just how small a fish you are in the China seas.

Finally, you should remember that working at a management consulting firm is not considered an end unto itself in China , the way it would be in the US . The Chinese Yuppie's dream is to IPO his own business. Do you need me to spell this out? You IP is not necessarily safer with a big firm as anywhere else.

At the end of the day, the decision to use a global giant or some other option depends on your needs. If you have the financial resources and you want to push the envelope on Chinese law or buy something large & government owned, then you might want to have a sit-down with a global firm in HK, Shanghai or Beijing to test the waters.

If you are looking for someone to help you execute a more run-of-the-mill business plan that has already been tried by other expats, then you might find the big boys can't offer you the level of support you were hoping for. China business tends to be more granular than back home. In NY you can rely on your IT department to make things happen. In China you might very well end up carrying on protracted negotiations with the Cable Guy. Accenture or KPMG aren't really going to be too much help with that sort of thing.

And then there's the cost factor. Every deal is different, but if part of you China business plan depends on low costs, the global service companies are going to advertise your ability and willingness to shell out big bucks. That might not be the message you want to send at the very beginning of your China business story.

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