Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
McKinsey claimed in marketing materials that it had advised the Chinese central government on boosting domestic consumption and reforming healthcare policy, raising fresh questions over the consulting firm’s denial that it ever worked for Beijing.
A McKinsey China website that was shut down in 2019 said that about 10 per cent of its clients in the country were government agencies or non-profit groups.
“McKinsey’s impact in China goes well beyond our work in the corporate sector,” it said, according to an archived copy of the website, mckinseychina.com, which now redirects to McKinsey’s main international site. “In the past decade alone, we’ve served over 20 different central, provincial and municipal government agencies on a wide range of economic planning, urban redevelopment and social sector issues.”
The marketing materials added that the firm had “advised several central government ministries on a range of high impact issues, from designing healthcare reform policies, to providing talent and leadership development programs for the next generation of government leaders, to crafting policies and specific measures aimed at spurring more domestic consumption”.
McKinsey is facing calls from some US lawmakers to be barred from contracting work for the federal government because of alleged inconsistencies in its statements about its business in China.
Bob Sternfels, McKinsey’s global managing partner, told a Congressional hearing earlier this month that the firm had never worked for the Chinese central government.
“We do no work, and to the best of my knowledge never have, for the Chinese Communist party or for the central government in China,” he said on February 6.
The marketing claims about advice to central government ministries were live on the McKinsey China website from at least 2014 to 2019. Asked about them by the Financial Times this week, the firm said: “The defunct website being referred to, which was not part of McKinsey.com, contained inaccurate representations of our client service, and was taken down several years ago. We stand by our previous statements that the central government of China is not now, and to our knowledge has never been, a client of McKinsey.”
State media reports in China at the time said the consulting firm did contribute to healthcare reforms unveiled in 2009. An article on the central government’s website, published by the official Xinhua news agency, noted that in March 2007, to “leverage external brains and gather a wide range of ideas”, McKinsey’s China arm was among seven groups commissioned to provide independent research.
State-owned China Youth Daily said the country’s healthcare reform working group, led by the state planner and health ministry, commissioned McKinsey and other institutions to “design independent and parallel medical reform plans”.
Before the legislation was announced, China’s state media in 2008 asked McKinsey for details of their proposal, but a spokesperson for the firm declined to comment, citing company policy to “not discuss any matters related to clients”, according to state-owned Health Times.
The Financial Times reported last week that a McKinsey-led think-tank had separately advised China to deepen co-operation between business and the military and to push foreign companies out of sensitive industries as part of a research project for the National Reform and Development Commission, Beijing’s central planning agency, as it finalised China’s 13th Five-Year Plan in 2015.
That work was undertaken by the Urban China Initiative, which McKinsey founded with Tsinghua and Columbia universities, and contained a foreword from one of McKinsey’s most senior partners in China, who presented a copy to China’s then-premier Li Keqiang.
On Tuesday, Senator Josh Hawley accused Sternfels of making false claims to Congress when he said McKinsey had never worked with the CCP or China’s central government.
“Those were strong words. Unfortunately for you, they were not true,” Hawley wrote in a letter to Sternfels, calling on McKinsey to provide “comprehensive documentation” on its past or present collaborations with the Chinese government, including work by the Urban China Initiative.
McKinsey said last week that “the Urban China Initiative is not McKinsey”, and rejected “efforts to use a document McKinsey didn’t write and work we didn’t do to call into question our 75-year history of supporting the US government”.
McKinsey was paid at least $101mn by the US federal government in the year to September 2023, including $63mn from the Pentagon, according to government data.
Read the full article here