Will the talent challenge hold China back?

By Zoë Stumpf.

There’s no doubt that the China consulting market is going great guns. Despite concerns about economic stability and transparency in the Western press, the market continues to grow at a pace that would be the envy of many a European market. And there’s no sign of growth slowing any time soon: Government initiatives focused on strengthening the economy, the growth of state and privately owned enterprises, and a need to serve an expanding middle class are all generating a good deal of demand.

This is also a market in which the talent challenge is particularly acute. Of course finding and keeping the right kind of talent is a problem for consulting firms the world over—very often the number one “what keeps you awake at night?” issue for senior consultants. But when we interviewed senior consultants in China for our recent report on the market, we were left with a strong sense that this issue is starting to hold back firms’ growth. Of course, in common with the GCC and Africa, for example, this is a tricky consulting market because its relative immaturity means that, particularly when it comes to senior hires, there’s a pretty small pool to fish in. But the situation is made even more difficult in China, thanks not just to the generally high levels of growth that the market is seeing, but to a sharp increase in demand from domestic Chinese companies, both in established markets and in second- and third-tier cities—companies that have an especially intense requirement for Chinese consultants with deep knowledge of local markets.

The result is hot demand for a very small number of experienced Chinese talent—and a salary bill that is higher than it should be, given the level of experience many senior hires have. It’s also leading to a head-hunter culture in which consultants, even at senior levels, simply don't stay very long in one firm, which is resulting in frustrated clients and damaged relationships.

Consulting firms are of course very much on the case when it comes to trying to resolve this issue. While there’s no quick fix, perhaps technology will ultimately provide the answer, as asset-based solutions and technology-driven products increasingly do things that consultants used to do. Whatever the solution, this is an area in which firms need to invest, and bring to bear some of the innovative mind-set that they would normally focus on client’s problems.