MBAs "Made in China" Becoming Common

[Filiprish]

IMO, with the growing number of MBAs, China is making huge progress in the right direction.

Made in China

With Western help, China's MBA programs gain footing as the nation becomes more capitalistic.


By Gady A. Epstein
Sun Foreign Staff

October 24, 2004

BEIJING - Considering that he was teaching in China, Professor Li Mingzhi of Tsinghua University must have been amused asking his MBA students for examples of a command economy, where the government decides how much people earn, how much people produce, and how much products cost.

"China," one student quickly piped up, "several years ago."

Actually, as this and hundreds of other MBA classes in this country demonstrate daily, the China in which the government makes all those decisions is receding into history. A few other countries might still have command economies - these students, knowing the map of Communism, named Cuba and North Korea - but China has become something altogether different.

The irony was not lost on the business school professor. This nominally communist nation is in the middle of the world's greatest business school case study on how to transition from a command economy to a market economy, and the explosion in MBA classes is an indication of how quickly that transition is accelerating.

Until 1990, no officially accredited master's degree program in business administration existed here. There now are more than 100 at 91 institutions, with an estimated enrollment of 30,000 to 45,000 students, plus dozens of programs that are not accredited by China but are sponsored by foreign universities.

Many American universities have set up affiliations with Chinese MBA programs, as the Massachusetts Institute of Technology and others have done with the program at Tsinghua, a historically science-oriented university considered the MIT of China.

Dozens of other foreign universities have made entries into the world's most promising business market, as the University of Maryland's Robert H. Smith School of Business has with an executive MBA program in Beijing. Maryland's program, set up in cooperation with Beijing's University of International Business and Economics, was launched in January 2003.

Last week, the University of Maryland announced two new MBA programs in China - one customized for Otis Elevator Co., the U.S. company that is China's largest elevator manufacturer, and another in Shanghai, where Gov. Robert L. Ehrlich Jr. was traveling with the university's business school dean, Howard Frank, on an economic trade mission.

And now, there is a nascent job market for these educated capitalists.

"There are so many more opportunities in recent years because more and more multinational companies are developing business in China, they are using a localized talent strategy, and also they are expanding their businesses," said Mao Donghui, director of the career development office at the School of Economics and Management at Tsinghua, which has more than 1,800 MBA students. "Especially in the finance and investment markets, [multinationals] are using more and more Chinese professionals."

Few opportunities

In the late 1980s, Chinese students returning with MBA degrees from the United States and Europe found few opportunities to put their new skills to use. Some graduates languished in state-owned companies where rewards were handed out based on seniority and relationships, not on the creative ingenuity of upstarts.

Job applicants who arrived with an MBA degree from the Wharton School and with skills some of these state-owned firms desperately needed were greeted with puzzlement.

"For the state-owned enterprises, the management and corporate governance is different from what you would say is Wharton management theory," said Qian Xiaojun, director of the MBA program at Tsinghua, in what can safely be described as understatement. Even now, Qian said, "They have boards of directors, stockholders ... but the actual role they play in the company's management is very doubtful."

But in the 1990s, the government dismantled many money-losing state-owned enterprises, sought foreign investment and accelerated market reforms. Today, private entrepreneurs, joint ventures and multinational companies are increasingly the engines powering the rapid growth in China's cities. Those firms develop entire suburbs for the growing middle class, manufacture the cars that get people there and make the mobile phones drivers use on their commutes.

Enthusiasm dented

The MBA market is responding quickly to this fast-growing economy, with mixed results. Shortcomings in some programs and low salaries for many graduating MBAs have dented enthusiasm somewhat, and the number of people taking the national MBA entrance exam, though nearly 28,000 for this year, has declined from a peak of nearly 40,000 in 2002. Still, demand for an MBA continues, with thousands of students willing to pay steep fees for a degree.

The most expensive executive MBA programs in China were set up by American universities in cooperation with Shanghai schools and cost more than $40,000, according to Jonathan Di Rollo, author of the China MBA Guide 2004, which evaluates more than 160 programs in China and Hong Kong. The tuition for a standard MBA at Tsinghua is $8,700, in a country where the annual per capita GDP is about $1,100.

But what these students get for their money varies widely. Given the country's short history of private markets, many of the MBA programs are developing the knowledge base required to teach these students. As might be expected in any market, including the United States, some programs have been launched here simply as moneymaking operations, taking advantage of a trend and explicit government policy.

"The government line is that China needs managers, so therefore China needs to educate people about business," Di Rollo said.

Some programs, lacking faculties with experience abroad, have difficulty teaching anything beyond theory about market economics, a field in which they have little or no practical experience. This was the case in the early years at even the programs with top brand names, such as Tsinghua, which began its accredited MBA courses in 1991. Qian arrived to teach there in 1995.

"Nine years ago, most of the professors didn't quite understand what's going on within organizations or companies, so they just taught what's in the books," Qian said. "So there was a big gap between what they teach and what's going on in the companies."

American textbooks

Now such big-name programs generally have professors who have taught abroad and use textbooks from American business schools. Even so, Qian noted, teaching students about the emerging Chinese economy remains a challenge, because Chinese companies don't want to share their mistakes.

"Unlike Harvard Business School case studies, most of the Chinese cases are success stories," Qian said. "Chinese companies just don't tell you, 'I did wrong,' but they will tell you, 'You see how good I have done, and how well I handled this issue.' ... Developing very valuable Chinese cases is really difficult right now."

Of course, many of the students enrolling in these programs aren't necessarily searching for the best business education. They are making contacts, looking for ways to get into the business world or out of a dead-end job. Some don't even seem to need a business education, having helped start one or two companies themselves. Others, like Li's student Yang Fan, say they need the degree to match the increasing demand for management-skilled workers in China.

'A higher level'

Yang worked for years as a sales representative for a state-owned import-export company based in his native province of Inner Mongolia. He moved on to sales jobs at a private company, looking for "a better opportunity to advance." But he decided to quit his last job as a sales and marketing manager for a joint venture firm and get a business degree: "I want to move to a higher level," he said.

Yang's prospects as a student in the higher-priced international MBA program - taught in English, with a two-year tuition of $10,600 - might be a job that pays as much as $16,000 a year, based on school officials' accounts of the salaries of recent graduates.

That's still lower than some might expect in the increasingly international markets of Beijing and Shanghai. But Yang feels the degree is becoming more of a necessity.

"More and more students at top American universities, Yale, Wharton, they are coming to China to work," Yang said. "They compete with us. [It's a] big challenge."

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