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Working for fifteen years in Australasia, I have found that countries in the region take a varying approach to the way they use consultants. I have chosen four countries to highlight these differences.
Australian companies, often lacking expertise, never hesitate to ask for outside help. Therefore consultants are often called upon to alleviate internal deficiencies and foreign experts are highly sought. Initially it was Europeans in the 1990s but more recently Americans are popular. The market is more mature today and consultancies battle for their share of a market that has little growth potential.
The Korean consulting market, which was extremely tight before the 1997 crisis, has recently exploded. Financial institutions and Chaebols (conglomerates that represent a large share of GNP), faced with bankruptcy have had to modernise very rapidly. As the number of local consultants was very low, Korea has had to look to foreign experts in order to restructure these groups. Today the economic fabric of the country is healthy and the majority of these experts have left. Thanks to the entrepreneurial character of the Koreans, a number of local strategy consultancies have been created. Today we see two types of players: international consultancies with a global network whose clients are the large Chaebols and who work on complex cases and the local consultancies who meet specific expert requirements.
The Japanese consulting market is very small compared to countries in the West. This difference is due to the complexity of the decision making processes in Japanese culture. In contrast to western customs, very few Japanese chairmen make the decision themselves to call in consultants. Instead, this decision involves all levels of the organisation in order to raise objections and build a consensus. This also explains why the restructuring of Japanese companies happens so slowly. However this behaviour is changing in the political classes (cf. Mr Koizumi, the "straight-shooting" Prime Minister) as much as in the large companies (cf Carlos Ghosn at Nissan). Helped by the increasing influence of private funds who are large users of consultants, the Japanese consulting market may experience renewed growth.
Finally, there are three distinct markets in China:
The multinational companies who wish to enter or develop within China who tend to work with the local representatives of the consultants they normally use.
Joint ventures between international companies and Asia companies who would like to be quoted abroad, who have a limited understanding of the use of consultants, often engaged for the wrong reasons (usually the company brand). The enormous disparity between the fees paid to the consultant and the wages earned by the client often leads to unrealistic expectations and difficult relationships.
The large local companies who do not use western consultants: the price they are willing to pay is so low that only the local consultancies can respond, often on the basis of success fees.
The Chinese market has enormous potential but it will take time to educate the Chinese companies to use consultants efficiently and to have a better appreciation of the costs / benefits of a project.
2004
GNP In US$ Mill
Population Million
GNP/Capita In US$ '000
Ave Size Consultancy #Consult'ts(3)
Intensity Measure In GNP(4)
Intensity Measure Population(5)
Japan(1)
4,932
127
38.9
160
3.2
1.3
China(2)
1,654
1,296
1.3
110
6.7
0.1
Korea(1)
613
49
12.5
75
12.2
1.5
Australia(1)
444
19
23.4
90
20.3
4.7
France(1)
1,415
60
23.6
165
11.7
2.8
(1) GNP and population source: OECD
(2) GNP and population source: World Bank
(3) CVA Analysis
(4) Average size of large consultancy / GNP (x100)
(5) Average size of large consultancy / capita
The degree of maturity with regards to consultancy is therefore very variable from one country to another in the Australasia region. Consultancies that want to service this whole region require an adaptable and flexible approach for each market.
Translation of An Article Published in the Centraliens- March 2006 No568 for the Alumni of Ecole Centrale
Australian companies, often lacking expertise, never hesitate to ask for outside help. Therefore consultants are often called upon to alleviate internal deficiencies and foreign experts are highly sought. Initially it was Europeans in the 1990s but more recently Americans are popular. The market is more mature today and consultancies battle for their share of a market that has little growth potential.
