Watson Wyatt ties China, Hong Kong businesses

Watson Wyatt is consolidating its five offices in Greater China - Beijing, Shanghai, Shenzhen, Hong Kong and Taipei - into a single business unit in an effort to become the dominant consultancy on the mainland by 2005.

The firm globally tends to allow each country office to operate independently and, in many cases, let municipal offices run on separate P&L lines. But it feels that it can optimise its business in the fast-changing Chinese environment by more directly leveraging the expertise of its consultants in Hong Kong.

Frank Gallo, the Beijing-based managing consultant for the firm's China business, is now the managing consultant for Greater China. He says the consolidation is driven by a number of factors.

First, it reflects broadly the increasing business opportunities for Watson Wyatt in China. With more companies integrating their China and Hong Kong operations, clients increasingly want a single point of contact to Watson Wyatt. The consolidation also reflects the growing integration and cooperation throughout the Pearl River Delta region.

"A few years ago, Chinese companies just wanted a management system linked to what was happening in Beijing," he says. With increasing foreign competition and China's accession to the World Trade Organization, Chinese companies are more interested in global best practices and technology. As most of Watson Wyatt's expertise is situated in Hong Kong, consolidating the Greater China business seemed a way to take advantage of growing opportunities.

It is also a way to give Hong Kong-based consultants the chance to handle mainland projects and broaden their knowledge, Gallo adds.

Among the areas that Watson Wyatt specializes, he points out that more Chinese companies are interested in supplementing their benefits with retirement and other schemes. Watson Wyatt also hopes to broaden its investment consulting practice to new mainland clients, as well as its insurance and financial service consulting business. But again, the knowledge and experience mainly resides in the Hong Kong office. "With this consolidation, we can offer all of these services where the law allows to our friends across the border," Gallo says.

Paula DeLisle, previously the firm's managing consultant in Hong Kong and now its vce president for business development in Asia Pacific, notes that the firm's advisory work in the fields of asset management and insurance have gotten it more deeply involved in all aspects of management in China.

For example, Watson Wyatt has advised foreign fund management companies on a China entry strategy, or advised foreign insurance companies on buying a stake in a domestic insurer. As joint ventures and M&A takes place, new entities have human resource needs that Watson Wyatt also wants to win business on.

Watson Wyatt's biggest business is in benefits and retirement. Aaron Wong now runs this in Hong Kong, and has also been named to replace DeLisle as Hong Kong managing consultant. He notes the opportunities for this work in China in the past have been very limited, but says companies are increasingly looking to supplementary schemes in order to woo and retain talent.

Chuly Lee, the firm's Asia-Pacific managing director, says there are no plans to consolidate other offices around the region. But if the Greater China strategy works out, "We won't exclude it."

Once all five offices are consolidated, the Greater China practice will involve 220 associates. Hong Kong and the three mainland offices will operate within the new unit starting July 1, while Taipei will join at a later date.

In addition to retirement/benefits, insurance and investment consulting, Watson Wyatt also consults on human capital issues such as compensation; M&A HR issues; information technology; data services and research; and communications.