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The MBA Boom

A range of new MBA programs have sprouted to train a new generation of Chinese managers

by Virginia A. Hulme

Companies in China have long suffered from a shortage of PRC employees with international-standard management skills. By 2006, the Shanghai Education Commission estimates, China will need 37,500 masters of business administration (MBA) graduates each year.

To fill this need, MBA and executive MBA (EMBA) programs have been springing up across China in recent years. In 1991, when the PRC government first recognized MBA programs, the Ministry of Education (MOE) had approved such programs in only nine universities, and just 100 students were enrolled. By 2001, MOE had approved 62 institutions, and by 2003, 10,000 students were enrolled. But according to the People's Daily, China's top schools admitted nearly half of the matriculating MBA students in 2002. EMBAs didn't officially arrive in China until 2002, when the State Council's academic degree committee approved 30 programs.

Different types of programs: Local, joint, imported

MBA and EMBA programs in China fall into roughly three groups: local (run solely by PRC institutions), joint (run jointly by a PRC and a foreign institution), and imported (run by a foreign institution, with a passive Chinese partner).

• Local programs

Local MBA programs are usually taught in Chinese or, because some foreign professors cannot speak Chinese, in English with translation.

In addition, many of the texts used are either in English or are translations of US textbooks. Though local programs provide the same MBA basics as joint and imported programs, they tend to place greater emphasis on Chinese conditions and problems facing Chinese enterprises. Dean Bing Xiang of the Cheung Kong Graduate School of Business (CKGSB) notes, "As little as five years ago, it was okay for MBA programs in China to use only US cases. Now, if you want to be successful in China, that's not enough—you must study Chinese business cases too." And as more Chinese companies look to expand abroad, international experience is also important. Local programs are also trying to improve their international exposure through more student and professor exchanges with foreign universities.

Large, well-established universities, such as Beijing, Qinghua, Fudan, and Shanghai Jiaotong, offer more electives, concentrations, and specialized MBAs than most of the joint and imported programs (see Rise of Specialized MBAs).

• Joint programs

Many of China's top universities have joint programs with foreign universities in addition to their own programs. (Some universities have several joint programs; Paul Swenson of the US Commercial Service, Shanghai, notes that in some cases foreign partners have complained that the host school favors other joint programs over their own.)

Joint programs are taught predominantly by the staff of the overseas university, with a few of the local institution's professors teaching topics in which they have more expertise than their foreign counterparts, usually topics related to China's economy. Most, if not all, of the teaching is in English, though in some programs all the courses are co-taught. Under this arrangement, the foreign professor does most of the lecturing, but a professor from the Chinese institution is always present to give a Chinese perspective, show how a particular concept applies in China, or simply help translate and explain difficult concepts in Chinese.

Most of the course takes place in China, but sometimes programs conduct several courses and/or graduation ceremonies at the foreign institution's home campus. The foreign university usually grants the degree. The Chinese university offers a certificate verifying the joint program, which gives the foreign degree instant credibility within China (as long as the Chinese institution is reputable).

Class sizes tend to be smaller in joint programs than in local ones. This is one reason that joint programs tend to offer fewer electives and concentrations; some do not offer any choices at all. Some of the programs reviewed for this article hope to be able to expand their offerings in the next few years.

• Imported programs

Several foreign schools run their China programs largely on their own. Though PRC law requires all foreign MBA programs to have a Chinese partner organization, some foreign programs have managed to find partners willing to leave the day-to-day running of the program, as well as most of the business decisions, up to the foreign partner. As a result, these programs are, in effect, imports. They offer exactly the same core courses in China that they offer at home, with 100 percent of the professors flown in from the home-country institution. Imported programs tend to offer fewer electives and concentrations, if any. All of the teaching and materials are usually in English, with no translation. As a result, these programs tend to attract younger and mid-career professionals who have a good grasp of English and often work in foreign-invested enterprises. Most of the course takes place in China, but several courses and/or graduation may take place at the foreign institution's home campus.

The options: Full-time, part-time, EMBA

Because business education is so new in China, the types of students choosing each of these program structures differ slightly from those in the United States, where many people planning a career in business take off a full two years from work to complete an MBA.

• Full-time

In mainland China, Chinese universities, rather than the joint or imported programs, tend to offer full-time MBA courses. In Hong Kong universities, a significant number of full-time students come from the mainland. Students in full-time courses tend to be younger and have less work experience than part-time and EMBA students.

• Part-time

Part-time studies allow students to keep working while earning their degrees during evenings and weekends. Part-time courses tend to attract mid-career professionals with significant work experience. Because classes take place on evenings and weekends, most students live in the same city in which the course is offered.

• EMBA

In China, EMBA programs tend to cater to top executives—and generally have a price tag to match. Because business education has only recently arrived in China, most of the senior management of Chinese companies never had the opportunity to do an MBA early in their careers. As a result, it is not unusual to find EMBA programs in China with a high number of CEOs, general managers, presidents, and vice presidents among the student body. Many of these executives have had little chance to study English, so EMBA programs are frequently taught in Chinese, with translation of lectures by foreign professors who do not speak Chinese. These programs generally offer classes during intensive four-day weekends once a month, allowing students to fly in from around the country.

Which course?

English-language ability often determines the type of program a Chinese student may attend. In general, the joint and imported courses are considered more rigorous because most of them are based on long-established programs with good reputations. Still, prospective students should make sure that these programs are fully accredited in their home countries. American courses are popular, as the United States is considered the world leader in business education.

Even at top PRC universities, MBA programs still have some way to go to match the top foreign offerings. "MBA programs at top Chinese universities still piggyback on their university reputations," says Jim Leininger, a Beijing-based senior consultant for Watson Wyatt Worldwide. "Even though they have all the content and case studies found in most US programs, they are still not quite at the level of the top US programs. Their students don't have quite as much experience as those in top US programs.

"From a recruiter's point of view, the intangible qualities of potential employees—such as ability to work independently, think strategically, and take initiative—are more important than the degree itself. The people who get into top MBA programs usually have these skills, so these programs act as good filters. Chinese MBA programs have made great progress in recent years, but still fall a little bit short of their foreign counterparts in fostering and developing these skills."

Which program a student should pick depends greatly on his or her current situation and future plans. As mentioned above, English-language ability is one determinant. If a prospective student's level of English is not high enough to study in English, then he or she will almost certainly have to attend a local program, though some Hong Kong programs also offer MBAs in Chinese. The prospective student's current position is another factor. If he or she is already a senior manager, the student will likely aim for an EMBA program.

The extent of internationalization a student desires also plays a role. Students wishing to gain more international experience and exposure will want to choose a joint or imported program. These programs offer students an education that will be recognized abroad and thus may help them advance in their careers beyond China. Students looking for a program geared to solving problems confronted by Chinese enterprises may prefer a local program.

Finally, the quality and size of alumni networks are factors in choosing a business school in China, just as in the United States. Most program administrators believe that students with high-level positions from a variety of professional, educational, and cultural backgrounds make the most desirable classmates. What students learn from each other is often just as important as what they learn from the curriculum, say most administrators, and students can learn more from classmates that are different from themselves. Ira Cohen, executive vice president of Universal Ideas Management Training Co., Ltd., which oversees Rutgers University's EMBA programs in China, stresses the benefits of diversity in the classroom. "The ability to work with people from other cultures is essential in today's international business environment, whether you work in a multinational or a Chinese enterprise."

One advantage of choosing a joint program is that the alumni are generally considered alumni of both schools—and thus have two networks to tap into. Prospective students may also want to consider how much time students spend together. A few of the EMBA courses require students to live together during the intensive four-day teaching sessions, in part to allow the students to get to know each other better and strengthen future alumni networks.

Paying the way

All students are eligible for student loans from PRC commercial banks. Some schools have arranged for students to obtain loans from a particular bank. For instance, Shanghai Jiaotong students can borrow from Shanghai Pudong Development Bank, while students at Renmin University in Beijing can borrow from the Bank of China.

Most programs offer scholarships and awards to outstanding students after several courses have been completed. EMBA students tend to be fully sponsored by their companies, but most companies, wary of the difficulty of retaining an MBA graduate, only partially sponsor their employees—and require that they return to the company after graduation. Some employees, reluctant to be tied to the company that has sponsored their studies, prefer to pay their own way and have the freedom to change jobs after graduation.

The job search

Post-graduation job placement seems to be less of an issue for MBAs in China than in other countries, in part because many of the students already hold full-time positions and do not need to find jobs upon graduation. Another factor is China's strong economy. As China-Europe International Business School (CEIBS) MBA Program Director Gerald Fryxell put it, "We have certainly benefited from being in China, which has such a booming local economy. We were able to place all of our 2001 graduates within three months of graduation. More recently, however, placement does seem to be getting more challenging." Graduates of schools in less economically vibrant areas of China may face a longer job search. And as more MBA graduates flow into the job market over the next few years, competition for the best jobs will undoubtedly increase.

Paying the price for skilled managers

Companies face a dilemma. Of course they want skilled managers trained to international standards, but so do their competitors. Retention of skilled managerial staff is a severe problem among companies in China. And companies have much at stake—many pay a large portion, if not all, of the cost of their employees' MBA studies. Companies must come up with ways to keep these employees in which they have invested so much.

Incentive packages take many forms and often include both sticks and carrots. The main stick used is a contract that requires the employee to remain at the company for a certain number of years after completing a company-sponsored MBA—the so-called "golden handcuffs." If the employee leaves before the time is up, he or she must pay a stiff fine. This approach does not always work, as another employer may be willing to buy out the employee's contract. If this happens, the company may not have actually lost money, but it has lost valuable time and effort in training—and is once again without a trained manager.

Carrots used include better benefits, such as higher pay or more vacation time. But packages that include a promotion to a position with significantly more responsibility and that convey a sense that the company truly values the employee seem to be most effective (see The Key to Retention: Committed Employees).

Another problem companies may face, according to Patrick Powers, director of China operations for the US-China Business Council, is jealousy among employees who were not chosen to get an MBA. "Internal competition to get advanced training can be fierce, and failure to have a clear selection process can lead to bickering and bitterness among staff who don't make the cut. This envy tends to be worse when the chosen employee has been sent abroad for schooling," he says, "but sending bright, capable staff to local MBA programs is still a good perk for a company's best staff. And when a company makes it clear to the employee that it has a career path planned for the employee once he or she has the MBA in hand, retention tends to be less of a problem."

Next lessons: Expansion and competition

Outside of Beijing and Shanghai, offerings are much slimmer, but foreign universities are beginning to offer MBAs in the interior. For instance, Missouri-based Webster University recently set up a program in Chengdu, and the Chinese University of Hong Kong is cooperating with Xi'an Jiaotong University to establish an EMBA course in Xi'an, Shaanxi.

Interest in MBA education remains strong, though applications fell slightly in 2003 for the first time since China began offering the MBA entrance examination, or gongshang ruxue kaoshi, in the mid-1990s. Competition for the best students is fierce, particularly in Beijing and Shanghai. In these two cities, there may well be some consolidation under way. Indeed, the foreign partner of one joint program reviewed for this article has suspended its program in Beijing indefinitely because it could not recruit enough students. Such competition among Chinese MBA programs is sure to intensify as new programs emerge—to the benefit of both students and the employers who hire them.

Virginia A. Hulme is associate editor of the CBR. The author would like to thank the many MBA professors and administrators who furnished information for this article.

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