July 15, 2024

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Bain’s new boss says consultancy pulling back from work in China

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The new boss of consultancy Bain & Company has said the firm is pulling back from advising certain industries in China, as rising tension between Beijing and Washington heightens scrutiny of western businesses operating there.

Christophe De Vusser, who takes over as global chief executive of Bain on July 1, said the US-headquartered firm will operate “less frequently” in “sensitive industries” in China.

It comes after Chinese police raided Bain’s Shanghai offices last year, interrogating staff and confiscating computers and phones, amid a wider series of moves by Beijing against western businesses.

“We continue to operate in China within the regulatory and legal environment that is required to operate there,” said De Vusser in an interview with the Financial Times. “There is a clear set of sensitive industries that are at the heart of discussions from a geopolitical basis. So in these industries we will indeed operate less frequently.”

He did not specify the industries that Bain was pulling back from, but said that all of the firm’s Chinese work first went through its central risk committee.

While Bain has adjusted its business to comply with new regulations in China on data and cyber security, he added: “Are we clear on how the regulatory environment will evolve [in China]? I think nobody is clear how exactly it will evolve.”

De Vusser, a Belgian who was head of Bain’s European private equity advisory business, cited geopolitics as one of four global trends that will dominate his time in charge of the firm, which employs about 19,000 people.

He takes over after a bruising period for the consulting industry: most firms have cut pay and bonuses and limited hiring after a slowdown in dealmaking. While Bain has avoided significant lay-offs, earlier this year it offered some consultants in London redundancy with six months’ pay, partly paid temporary leave, or an option to move to one of its offices overseas.

“We’ve gone through two slower years as an industry and now we’re back to double-digit [growth] in the first half of the year,” said De Vusser, adding that recent growth was being driven by technology and artificial intelligence advisory work. The firm has also benefited from a rebound in M&A activity, given its historic focus on working with private equity.

Bain has also had to contend with the fallout from a corruption scandal in South Africa, where an inquiry found it had helped to undermine the country’s revenue collection service through advisory work that helped allies of former president Jacob Zuma. It has been banned from working for South Africa’s public sector until 2032.

In 2022, the UK government handed Bain a three-year ban from tendering for British government contracts over the South Africa scandal, but it reversed the decision after less than a year.

“We made mistakes in South Africa in the past that we feel bad about,” De Vusser said. “The most important learning from those mistakes was that we’ve changed, in a significant way, in what we do in terms of risk. We have a structural risk committee at the board.”

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