Report on
Management Consultancy Sector in Hong Kong

Methodology

The findings, analysis and recommendations of this study are based on substantial primary and secondary data collection. Secondary data was used extensively in the preliminary phase of research. Secondary data sources included the Internet, published studies and research, and materials supplied by management consultancy firms, trade and professional associations, and the Hong Kong Coalition of Service Industries. These data are noted, referenced and appended as appropriate.

Qualitative data

Qualitative primary data were gathered through interviews and focus groups. Preliminary interviews were conducted with over 30 user and non-user companies - both Hong Kong and non-Hong Kong headquartered businesses - across a range of industry sectors. Preliminary interviews were also conducted with around 20 management consultants, including several members of the Hong Kong Coalition of Service Industries’ Management Consultancy Group. These interviews were undertaken to investigate issues raised in the initial brief and to establish and cross-check others. They were also used as the basis for constructing, and in some cases, testing separate quantitative survey instruments for administration to users/non-users and to consultancies. Additional interviews were undertaken during the course of research, and subsequent to obtaining survey results, in order to clarify and further investigate specific issues and findings. Interviews were also undertaken with public officials from the Management Services Agency, Hong Kong Productivity Council, Business Services Promotion Unit, Trade Development Council and Industry Department. A further 16 telephone interviews were done with managers located elsewhere in Asia to determine their interest in using Hong Kong based management consulting services

Table 1

Focus groups sessions were organised to further investigate and clarify issues arising from interview and survey findings. Two focus groups with users/non-users were undertaken, attended by a total of 17 participants. One of these was conducted in Cantonese. Two sessions were also organised with consultants, with eight participants in all.

Quantitative data

Most of the quantitative data presented in this report were gathered directly from Hong Kong based users/non-users and consultancies using research instruments designed to address issues coming out of preliminary interviews. These questionnaires were constructed to produce reasonably comparable data using either positive or negative statements to which recipients were asked to indicate their degree of agreement or disagreement using a five point scale: 1= strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, 5 = strongly agree. Respondents could also indicate inapplicability or not knowing by circling ‘Don’t know/Not applicable’. Categorical parameters were also included to enable data to be broken down by type of respondent, and open ended questions were also asked for a limited number of items.

Responses to scale items have been processed so as to obtain a mean for each both in total and by various groupings. Items with a mean of 3.00 are exactly neutral, hence, items with means above 3.00 can be said to record ‘agreement’, and below 3.00 ‘disagreement’. The higher or lower the mean, the greater the amount of agreement or disagreement. Due to the closeness of some results we have recorded them to two decimal points to establish differentiation.

However, caution is required when using this form of data analysis because its apparent objectivity is not absolute across different samples. So, while we asked both users/non-users of management consultancy many of the same questions as were asked of consultancy firms themselves, the results should be treated as broadly indicative rather than directly and exactly comparable. Moreover, even within the same sample, means are best compared only within the context of adjacent, related items because of the tendency of respondents to adopt the scaling as a form of ranking system using their first answer as an anchor reference score against which to score subsequent questions. Notwithstanding these provisos, using five point scales to gather data on a large number of questions is an established and robust methodology which proves generally reliable, particularly as the number of respondents increases.

User/non-user survey

Non-governmental users and non-users of management consultancy were surveyed with the same, pilot tested, four page instrument containing around 200 items. Recipient lists were drawn up for both Hong Kong and non-Hong Kong headquartered firms. We have throughout this study divided firms into these two categories rather than use ‘Hong Kong’ and ‘foreign’ firms. The reason being that all firms here are registered as Hong Kong firms on precisely the same basis and the only way to differentiate them, insofar as this serves significant purpose in an international business centre like Hong Kong, is by the location of their ultimate parents’ headquarters. As it was, we were not always a priori to be certain of many firms’ headquarters location.

Recipients were culled from a very broad range of business directories so as to obtain as balanced and representative a population as possible, taking into account size and sector. Instruments were administered in two waves. The first wave of around 500 was sent to Hong Kong and non-Hong Kong headquartered firms on a fifty/fifty basis to establish likely response rates, thereby allowing the population of recipients to be reframed in order to ensure a reasonably balanced final sample by firm characteristics. A total of 1,660 questionnaires was sent out, with 267 usable ones returned. Hence, a final response rate of 16% was achieved.

Table 2.

Data is broken down by the headquarters location of respondents. Data is also broken down on occasion by other parameters, including industry sector. For this latter, we have aggregated the nine specific sectors given on the questionnaire in to three broad ones; import/export wholesalers, service firms. Overall, 54 percent of respondents identified themselves as being from Hong Kong headquartered firms. Over 80 percent were multinationals, and a similar percentage had been established in Hong Kong for over five years. Around 35 percent of firms described themselves as manufacturers, roughly 25 percent as service firms, 20 percent as import/export wholesale firms, with the rest falling into construction, transport, and other sectors. In terms of size, around 25 percent of respondents had turnovers above HK$770 million per annum, about 35 percent had turnovers under HK$77 million, with the remainder in between.

Recipients were in nearly all cases managing directors, chief executives, senior partners and the like, and nearly all responses were from these very senior executives. Around 35 percent were under 40 years old, 45 percent were between 40 and 50, the remaining 30 percent being over 50 years old. About 60 percent of respondents described themselves as being Hong Kong Chinese.

Table 3.

Of all respondents, around 60 percent indicated that they had used some form of management consultancy services, whether from consultancies, the Productivity Council, business academics or other sources.

Has your firm/operation here in Hong Kong engaged management consultancy services from any of the following sources in the past seven years within Hong Kong, in China, or in the rest of the Asia-Pacific?

Number and percent of firms indicating use of management consultancy

Management consultancies’ survey

Quantitative data from management consultants were gathered using a ten page instrument with around 600 items, some of them identical to those in the user/non-user questionnaire. A list of firms derived from a range of directories and data bases was drawn up, totalling over 900 organisations. The sources ranged from the Yellow Pages, through various local and international chambers of commerce directories, to the data base held by a governmental body which wishes its kindness in freely indulging us with a substantial list of firms to remain anonymous. In putting together the list, all those firms listed under the headings of ‘management and/or business consultants’ were included. It is worth noting that many firms were not prepared to give us all their necessary contact details, despite our explaining the purpose of this project. This included over 10 percent of those firms listed in Yellow Pages but not elsewhere traceable.

All firms were sent a pilot tested questionnaire addressed to the most senior identifiable manager. The initial response to the questionnaire yielded only around 50 usable instruments, insufficient for our purposes. So, we sent all non- respondents a further questionnaire and reminder. Some 33 questionnaires in total were returned as undeliverable. All recipients were invited to tick a box on the covering letter indicating if they were definitely not management consultants. Exactly 130 firms sent back the covering letter with this box ticked. The final number of useable returns was 136, but nine of these arrived too late to be included in the data analysis.

Buried in the eighth page of the instrument was a question asking respondents ‘does your firm offer services that are generally regarded as management consultancy? Yes, Don’t know, No.’ Of the 127 questionnaires analysed, 95 ticked the ‘Yes’ box. Four ticked ‘Don’t know’, but these were eliminated along with the ‘Nos’ on the assumption that if you are uncertain that you are a management consultant, then you are probably not one. The firms ticking yes, by their self-descriptions, covered a relatively broad range of activities, some of them clearly very specialised, but it would be difficult to put the case that any were definitely not management consultants. All the data from management consultancies in this study are based on the responses of these 95 firms.

Response rate for management consultants questionnaire

The final sample was large enough for meaningful data analysis, but it certainly does not include all management consultants here in Hong Kong, particularly, perhaps, non-Hong Kong headquartered consultancies. Quite what proportion of management consultancies operating in Hong Kong are represented in our final sample is impossible prudently to say. Many firms answered the questionnaire anonymously, so we cannot tell which did and did not respond with any certainty. In the course of the study, we noted some reluctance for management consultants to cooperate, and many refused to do so. Several respondents expressed their concerns about the confidentiality of any information they might give, and, despite making it clear that all responses would be confidential and anonymous, many questionnaires were only partially completed. Many of the open ended questions asking for turnover, breakdown of business activities and others were not completed by sufficient respondents in some instance to do any meaningful analysis. Data for these sparsely answered questions is not used or presented.

Data is broken down predominantly by whether or not consultancy firms are Hong Kong or non-Hong Kong headquartered. This is because, as with users and non-users, all consultancies here are Hong Kong firms in the precisely the same legal sense.

Individual management consultants

To obtain data on the propensity of individual management consultancy employees to join a potential professional institution, and to get a profile of educational and working experience background of such employees, they, too, were surveyed. A two page questionnaire was administered to a cross-section of management consultancies’ personnel via some of the consultants we interviewed. A total of 200 of these questionnaires were sent out. Some 44 were returned in time to be analysed, giving a response rate of 22 percent.

Foreign management consultants’ associations

In the process of gathering secondary data on and from management consultants’ trade associations and professional institutions around the world, we also incorporated a two page questionnaire. Of the 58 questionnaires sent, 11 were returned in time to be analysed, a response rate of 19 percent.

Users and non-users compared

Table 8.

Has your firm/operation here in Hong Kong engaged management consultancy services from any of the following sources in the past seven years within Hong Kong, in China, or in the rest of the Asia-Pacific?

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