Consulting giants wager on workarounds to stay compliant in China
Global management consulting firms are increasingly navigating a legal and ethical tightrope in China, employing unconventional strategies to maintain operations despite tightening Western sanctions and Beijing’s growing hostility toward foreign influence.
According to reporting from Reuters, industry leaders like KPMG, Bain & Company, and EY have been operating in mainland China in a way that test the limits of international compliance and domestic Chinese regulations.
As the Chinese economy cools and geopolitical friction with the West intensifies, these consulting firms are reportedly seeking ways to circumvent barriers that would otherwise prevent them from working with state-linked or sanctioned entities.
Key developments
Reporting from Reuters highlights several instances where major firms managed sensitive engagements:
Sanctioned partnerships
KPMG’s China business assisted Russia’s Sberbank – a heavily sanctioned entity – with its expansion into the Chinese market. The work allegedly included licensing, IT assessments, and tax filings for a fee exceeding $400,000.
Intermediary strategies
To bypass restrictions on foreign firms working for state-owned enterprises, some consultancies have used local ‘middleman’ companies. EY staff reportedly pitched for a project with Chongqing Rural Commercial Bank via a third-party tech firm to obscure their direct involvement.
Failed bids
Bain & Company reportedly discussed using an intermediary to receive payment for a market analysis project for Sberbank, though the deal ultimately did not move forward.
Risks of the workaround model
Industry experts warn that such manoeuvres risk immense reputational and regulatory weight. Even if a transaction is structured to appear compliant – such as using a local branch or an intermediary – US authorities often have broad discretion in determining what constitutes a “sanctions evasion”.
Despite these risks, the Big Four and their peers are incentivized to find a path forward as their revenue growth in China has slowed significantly since 2022. For now, firms like KPMG maintain that their actions are fully compliant with all applicable laws, even as the boundaries of those laws are being pushed to their limits.
Pressure from Washington
The US Treasury’s secondary sanctions are designed to penalize foreign entities that provide “material support” to sanctioned parties, effectively forcing global firms to choose between the US financial system and prohibited markets. Under current guidelines, the Office of Foreign Assets Control (OFAC) maintains broad discretion to define what constitutes material support, often including any transaction that helps a sanctioned entity evade or circumvent restrictions.
As of early 2026, these measures have been expanded to specifically target foreign financial institutions and service providers that assist Russia’s military-industrial base or its largest state banks, such as Sberbank. Even without a direct link to the US, a firm can face “blocking sanctions” that freeze its global assets or sever its ability to maintain the correspondent bank accounts necessary for international trade.
These strategic pivots occur against a backdrop of increasing hostility toward international advisors, as seen in several high-profile enforcement actions by Chinese authorities.
One of the most prominent cases involved the New York-based Mintz Group, which saw five of its employees imprisoned for two years following a 2023 raid on its Beijing office. They were released last year. Other major firms including Bain & Company and Capvision have also faced disruptive raids and intense regulatory scrutiny under expanded anti-espionage laws.
