Sophie He.
annum, it ’s quite easy for them to succeed. But, when it slows down, it’s quite difficult, so you’ve to be very careful about what you’re doing. The demand (for consulting) services from the retail sector is very big, and that from those dealing in fast moving consumer goods is increasing.”
In Hong Kong, OC&C’s business is pretty much the same. It also works with private equity companies as many private enterprises have set up their regional headquarters in the city.
“We’re very excited about the Chinese mainland and Hong Kong although I do see the economy going through an adjustment period. Still, it’s a ver y exciting marketplace,” says Outram.
The number of staff at the company ’s Shanghai office will be raised from 12 to 50 as quickly as possible, and in Hong Kong, the number will go up from 10 to 30 within a short time.
Room for growth
In the longer term, OC&C would need up to 150 employees on the mainland as there’s plenty of room for growth there.
Compared to the US and Europe, the speed of e-commerce growing is massively higher on the mainland, and the number of consumers using mobile phones for e-commerce is also significantly greater. So, for anyone who wants to know about e-commerce, they would come to China, and many of OC&C’s clients are consulting the firm about e-commerce, Outram says.
“When the market is growi n g v e r y f a s t , i t ’s a l m o s t impossible to make a mistake, so you just invest and sales will grow. Now, as growth has slowed a little bit, people spend a lot more time worrying what consumers really want,” he explains.
OC&C talks to its clients about what consumers are doing, how the trend is changing , how its clients should keep up with consumer demand, and that’s where e-commerce comes in.
The second thing clients are usually concerned about is the cost to serve. If someone doesn’ t have a deep understanding of how business really works in China, and how costs build up, they can make some terrible mistakes, warns Outram.
Worries about costs
He stresses that it’s ver y expensive to do business in Shanghai although average labor costs on the mainland are lower than those in the US and Europe. But, in Shanghai, the costs are similar to those of developed countries, the space costs are the same, so companies are deeply worried about the costs.
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“We spend a lot of time disaggregating the costs, so our clients could understand how to arrange production and retail.”
As for the Chinese mainland’s overall economy, Outram notes that everyone now says the market there has slowed. Indeed it has, but the market is still growing much faster that of Europe and the US. He thinks the market is in the midst of adjustment and people should get used to a “slower” economy.
“If the long-term growth rate is 5 - 6 percent, while Nor th America is growing at 2.5 percent and Europe is growing at 1.5 percent, this is still a very exciting market. The middle class in China is growing , their income per capita is improving and that will continue in the next 10 to 20 years. This is a very exciting market and we don’t see any fundamental risks.”