Intro
This week, The Financial Times reported that McKinsey & Company has barred its China practice from working on generative AI projects.
Not because of any formal regulation — but because of geopolitical reality.
The decision reflects a quiet but profound truth about consulting today: in sensitive markets, the hardest decisions are about where not to play.
Here are three lessons worth noting, drawn from both the Financial Times and complementary reporting by the Wall Street Journal:
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1. Risk is the strategy
In what many academics and policy makers now refer to as the “AI Cold War”, industries like generative AI and quantum computing have become tightly bound to national security.
In this climate, multinational clients increasingly expect their advisors not just to understand what’s possible — but what’s politically palatable.
As the FT reported, McKinsey’s decision was “prompted by Washington’s growing scrutiny of US companies operating in sensitive sectors such as AI and quantum computing in China,” despite no explicit ban.
Or as the WSJ put it in their October 2024 reporting:
“Western consulting and audit firms that have long done extensive work in China are increasingly caught in rising geopolitical tensions between Beijing and Washington.”
Clients don’t just hire you to deliver slides — they hire your judgment about where not to go.
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2. Revenue finds a way
Despite these tensions, China remains a lucrative consulting market.
According to the WSJ, consulting spend in China grew 53% between 2017 and 2023 — one of the fastest growth rates globally.
“Even as China tries to reduce its reliance on the West, it also needs help navigating barriers erected by Washington… In some ways Chinese authorities and companies need foreign consultants even more today.”
Chinese clients continue to value Western expertise, even in sensitive sectors like AI. To serve this demand, firms have adapted creatively — relying on locally staffed, legally separate Chinese units that allow them to work within the rules while maintaining presence.
For example, the WSJ highlighted that BCG signed a $530,000 deal in Beijing to advise on establishing an AI hub — even as the US tightened export controls on AI technologies.
McKinsey’s decision here is notable not because demand has disappeared, but because they chose to pull back despite it.
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3. The US still comes first
When priorities collide, global firms will always protect their largest, most lucrative market.
McKinsey’s US practice remains its engine — estimated at more than 14,000 consultants and $6–7 billion in revenue, compared to ~1,000 staff in China and a much smaller (and shrinking) share of global fees.
As the WSJ analysis of the Big Four and strategy firms in China noted:
“Western firms have largely navigated rising tensions between China and the West through unique structures… but if they felt as though their affiliate in China was doing things that weren’t consistent with its way of doing business, they could easily jettison their affiliate.”
When forced to choose, firms will prioritise protecting their licence to operate in the US over riskier growth in China.
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The quiet rules of consulting
The best advisors aren’t just trusted to deliver.
They’re trusted to know where not to.
In geopolitics as in consulting, relevance comes as much from restraint as from reach.
How many firms can really claim that?
This post comments on:
The Financial Times: McKinsey bars China practice from generative AI work amid geopolitical tensions
23-July 2025
Additional Commentary: Handelsblatt McKinsey responds to criticism and streamlines leadership
23-July 2025
Ben Appleton is the founder of Strat-Bridge, a specialist executive search partner to the strategy consulting industry. He works with global consulting firms and senior leaders across the UK, Germany, Switzerland, and beyond — helping them build capability at the Partner and Director level.
