McKinsey Set for Expansion, Opens Third Office in China
McKinsey & Company is opening its 3rd office in Shenzhen in order to meet the needs of its growing clients. This branch will focus more on private firms. McKinsey currently has an office in Shanghai and Beijing.
The prestigious firm first opened its services in the 1926 by founder, James McKinsey. Since then, the management consulting firm has expanded globally, across key cities in Europe and Asia. McKinsey is known to be a foundation for some of the most successful CEOs in the world today including Vittorio Colao (Vodaphone), Ian Narev (Commonwealth Bank of Australia), James P. Gorman (Morgan Stanley) and Frank Appel (Deutsche Post- DHL)
Why Shenzhen?
It’s no surprise that McKinsey is opening an office in Shenzhen. The region currently has one of the largest GDP in the country, coming in at 4th overall. Shenzhen’s economy currently supplements 12% of China’s GDP. That is quite impressive due to the fact that its neighbors (Beijing and Shanghai) had a head start in the development of their economy. Needless to say, Shenzhen is closing the gap at a consistent pace.
Global Rankings and Growth
How does Shenzhen’s economic status rank globally? When it comes to emerging markets, they currently rank 17 out of 370. McKinsey will have their work cut out for them, as most of the businesses in Shenzhen are service oriented (59%).
Over 33% of McKinsey’s clients who are based in China are private enterprises. Shenzhen is home to 27 companies that have reported over 1 billion US dollars in yearly earnings. Furthermore, the firm’s average growth per annum in the China market is currently at 7-10%, making the move very “low-risk”.
McKinsey & Company isn’t the only one expanding its services in the Greater China area. Ernst & Young announced last week that it has opened another office in Shenyang, making it the 16th branch in China alone. With over 40 years of experience, Ernst & Young’s focus is spreading its services to reach out to fast growing companies.
To conclude, China’s market shows no sign of slowing down, which can have a direct effect on how high caliber firms such as McKinsey & Company chooses to cater to the demands of their clients. It is clear that emerging markets are in need of new and effective strategies to sustain growth, which is exactly why we have seen other firms expand further into Mainland China.