Advice from the Rhine for Chinese Bosses

German consultants are in demand worldwide. Because they are considered cost-conscious and reliable

Axel Gloger

At BMW and Porsche, one global market success follows another in fast succession. But exports by German consultancies are also quite respectable: One fourth of the consultants' sales is meanwhile coming from foreign markets, according to a survey by the analyst Lünendonk among the top ten in the industry. As recently as five years ago, only every fifth euro in sales came from abroad.

Two companies are particularly strong in exports. At Roland Berger, € 272 million come from international business – more than for any other consultancy domiciled in Germany. But even small and medium-sized consultancies show what's possible: Simon-Kucher has long been a worldwide enterprise – 19 foreign branch establishments contribute 40 percent to total sales. "In the coming year, we will open up three additional establishments abroad", describes CEO Georg Tacke the expansion plans: "Sao Paulo, Dubai and Istanbul."

Kerkhoff Consulting also shows how globalized the business of German consultants really is: 40 percent of the business is coming from abroad. The establishment in Shanghai opened up in 2004, for instance. "Meanwhile, it's the largest outside of Europe", says Gerald Boess who is responsible for the eight international branch establishments. In the China business alone, he manages a staff of 20 persons. The development shows the usual sequence of fruition: After starting the operation, consultants abroad are initially working for clients at home. As a so-called "sourcing office", they will establish contacts to new suppliers which promise lower costs.

But it doesn't end there. Three years after the start of the Shanghai office, the first client from the region called. "Chinese companies also want to do something about the cost pressure in procurement. Expenditures for wages and suppliers are increasing", says Managing Director Boess. Meanwhile, the Chinese Kerkhoff establishment is realizing 80 percent of sales with clients coming from the country itself.

Why don't Chinese companies get advice from compatriots three street corners away – instead of from a procurement consultant from faraway Rhineland? "German companies are considered to be especially cost-conscious in purchasing. Clients want to share that knowledge", says the Kerkhoff consultant.

Moreover, there are the same reasons as to why the Chinese like to buy BMWs, Mercedes or Audi cars and other German industrial products: The label "made in Germany" is considered good and reliable – in the service business as well. "Punctual, thorough, honest, straight", the consultant lists the clients' positive prejudices which are pushing international business forward like in a wind blowing from behind.

Yet, the service is not an entirely German product. "In Europe, clients understand the statement: 'Your procurement is too expensive'", says the international expert, "but for a Chinese entrepreneur, that would be an insult."

That's why the promise is adjusted to the need of the local market. Consultants at the Shanghai office are Chinese who were trained with know-how from Düsseldorf headquarters. Only the project manager comes from Europe. "This mix goes down well with clients", says Gerald Boess, "as an entirely German firm, we wouldn't stand a chance."