Strategy offices victim of US-China cyber spying

27 May 2014 2 min. read

Upcoming months Chinese public companies are not appealing to big American strategy offices anymore. At least, that is what the Chinese government is aiming for. The ongoing conflict on cyber spying between China and the United States is what led up to this.

Cyber spying

By the end of last week it became apparent that the US filed a complaint against five Chinese army officials. They are being accused of hacking American companies’ computers, including an American union and aluminuim manufacturer Alcoa. The American intelligence service suspects the Chinese of secretly transferring American confidential trade information to their government.

In response to this matter the Chinese government has proclaimed its countermeasures. Public companies have been commanded to break all ties with American advisory firms. Many public companies have close ties with large American strategic advisory companies like McKinsey, Boston Consulting Group, Bain & Company, Strategy& and A.T. Kearney.

According to the British Financial Times, nearly all American strategy offices have one or more public companies in their customer database. They provide organizations with advice at a strategic level, including topics such as strategic development, merges & acquisitions, restructurings and innovation. Because of this, consultants have large quantities of non-public information at their this disposal, i.e. turnover data, FTE’s, profitability, and internal efficiency, but also the strategic goals and information about sectors carrying national importance.

The government fears that – under US’ pressure – these kind of state secrets and sensitive information they possess will be shared with the American government. Large strategy offices have (as usual) declined to provide commentary on the case. They state that they never provide details about relationships with customers. Strategy& is the exception – Margaret Kashmir, a spokesperson at the former Booz & Company, tells us that their office has not received any messages from the Chinese government or public companies yet.

Chances for European strategy offices

The ban on the services from American strategy offices may be good news for their European rivals. Roland Berger is prominently active in China with offices in Beijing, Shanghai and Hong Kong, while also OC&C Strategy Consultants serves the Chinese market through an office in Hong Kong.

If public companies actually loosen their ties with the American strategy consultants and based on the fact that they will need to rely on external experts for complex matters, they may eventually turn their focus to the originally German and British founded advisory firms.