UCC has not only conducted various specialized consulting projects for our clients tailored to their specific requirements and needs, but also has invested heavily in conducting profound research and studies on the hottest debated topics about consulting industry with far-reaching significance in the world and China. The academic research project UCC conducts on the frontier issues of public concerns in today's consulting service world demonstrates UCC's great knowledge strength and professional mastery expertise in the sector gained and accumulated during past decades. Here are two excellent examples of the academic research works UCC has accomplished.

Second Thoughts on McKinsey's Series of Failures in China: overseas consulting services or local consulting services?
Star, the first IT enterprise in China to have invited consulting giant McKinsey, a world-famous consultant to help with the restructuring of the company in late 1998 was aborted within six months after it made great losses in 2000-2001. McKinsey's plan suggested Star to transform its various branches to different departments relatively centralized under the Star headquarter. The 3-million-yuan (US$361,000) project included an overthrow of 1,000 managerial staff and a massive staff training programme. The project aimed at sharing information and sales channels. More puzzling is the media disclosure that the McKinsey reshuffle plan has not worked out as proclaimed and expected.

More reserved in commenting on the issue, McKinsey repeatedly stressed that it is home to many great Chinese brains too. Jia Hongbing, vice-president of Star admitted in a TV programme that McKinsey's plan helped save resources and increase its operation efficiency, but Star itself could not meet the centralized information management standard required by the plan, and later had to give it up. The massive restructuring plan received protests from inside Star and a resultant sales decline forced it to be postponed in May 1999. "Some of the consultants were not familiar with the practical conditions of Chinese IT companies," said Ye. But Mackinsey said that things could turn around if the project was carried through. However, a lack of follow-up communication also pushed the two sides apart.

No matter whatever the various reasons both McKinsey and Star have explained to the news media about the abortion, there is certainly no denying that nevertheless, the Start project was generally regarded as a failure. Behind the debate, one of the critical issues for overseas consulting service providers to be addressed about their challenges in China was how to make their overseas scientific management plans work under the conditions of Chinese enterprises on the Chinese soil. The adaptability challenge became an extremely hot-debated topic in the Chinese media and consulting industry circle after the failure was released to the public in mid-2001.

Some analysts even saw it as one of the major reasons behind Start's fall from grace. The postponing of the reform plan and clashes between the new and old systems triggered a chain reaction and caused nearly 100 million yuan (US$12 million) in direct and indirect losses. "Western medicine may not help Chinese patients," analysts concluded. The McKinsey-related failure in Star project posed as a great but unexpected earthquake to overseas consulting service providers in China. The negative influence resulting from the failure has surfaced since then. For example, Roland Berger, one of its competitors gave up four consulting projects under negotiation within one month, resulting in as great as 10-million Yuan worth loss.

This heated debate derive from McKinsey's failures in its series of consulting projects in China has given rise to a series of sub-topic debates among Chinese media and consulting circle. For example, whether oversees managers (Chinese returned from abroad, or overseas paratroopers from aboard) or local managers (Chinese manager locally grown or educated) more competent in running businesses in China, whether overseas MBA degree holders or local MBA holders more adaptable to the Chinese reality, all these sub-topic debates emerge and prevail in the Chinese media

UCC has followed the McKinsey crisis news development in China since its sensitive outbreak in 2001. On second thoughts, UCC had conducted a great study about the subject with a result that it has formulated its own positioning with objective comments and workable suggestions expressed in this homepage. If you want to know more details about the heated debates with authoritative comments by various sides and consulting experts, please send your inquires and comments to our email boxes. We will reply to you with invaluable information we gathered and our independent positions and proposals.

Changes in Forms of FDIs in China: JVs or WFOEs?

During the past years, many of our overseas clients keep on consulting UCC and asking us whether it is better for them to invest in the form of JVs or WFOEs when they decide to invest in China. In other words, what are the most feasible or best forms of FDIs do we recommend for them to increase their profit-making ability and high performance in investing in China? Judging by our rich experiences and intuition, we would like to say that these questions are of good quality and to the point with typical concerns every investor is faced with in investing in China, no matter whether they are newcomers to China or first-comers (or so-called "old China-hands") already in China.

Possibly, our general answer is that feasible solutions depend on many factors such as what is needed in China, what kind of investors they are categorized, what kind of forms of FDIs is more popular, more suitable to them and whether profitable for them, etc. For example, if you are newcomers or latecomers, medium-sized small business and / or limited knowledge of the Chinese market, we would generally suggest that it is better for you to invest in China in the form of JVs or compensation trade, processing for export in the first stage so as to gain knowledge of the market and partner and cultivate confidence.

The form of M & A and other forms of WFOEs are not recommended until you are mature enough to get adapted to the Chinese business environment and take control of business culture in the second stage. Of course, if you are financially strong and audacious enough with rich human resources strength in the beginning, we can recommend you to take M & A practice or other forms of WFOEs. Any way, it depends on actual situations and change variables.

General speaking, to set up JVs is as to set up international marriages which has to operate with different cultural backgrounds and habits. At least two partners are involved in having power and rights to be shared. Compromise is common. Many mutual benefits from these trans-cultural marriages such as getting over entry barriers, utilization of local resources, etc. are available. However, many by-products of forming JVs such as cultural conflicts, power struggle among partners, slow decision-making process, and low management efficiency are unavoidable. Many international JVs established first in China result in shakeup of JVs in a certain period of time, then either into divorces or leading to WFOEs finally.

We have summarized our extensive experiences in various case studies and / or consulting projects in combination with conducting academic research on the issues of our concerns, we have derived various definite answers and formulated feasible solutions recommended to our clients regarding the above questions from profound discussion and examinations. We are sure you will find the right and proper answers to your questions you want to ask if you establish business contact with us.