China's Business School Boom

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China's Business School Boom

Are China's business schools keeping pace with demands from the business world and their international competition?

By LAURA FITCH

As China's economy continues to grow, domestic business schools supplying talent for the market are increasing in international status and number. However, can domestic business school programs expand fast enough to keep up with rising student demand and the appetite of China-based companies for their graduates?


In 2009, Shanghai-basedChina European International Business School (CEIBS)was rated number 8 worldwide by the Financial Times in their annual business school ranking-the first Chinese school to break into the list's top 10 since the paper began its MBA program rankings 10 years ago. Hong Kong UST Business School came in at number 17.

CEIBS Professor and President Pedro Nueno says the maturation and development of China-based business management programs is driven, in large part, by the development of the overall Chinese economy.

"Certainly CEIBS has benefited greatly from the astounding economic development of China during the past 15 years of the School's existence, as have other business schools. In addition, during China's double-digit economic growth over the past 20 years, China has become a focal point of international attention; today, given the global financial crisis, the nation stands out even further as the world’s largest growth economy. This situation does benefit business schools. It serves to attract the world's best students, best professors, best researchers and most ambitious educational entrepreneurs and leaders. And in few places has the importance of management education been as well understood as in China."

Daisy Wang, Assistant dean and the director of MBA admissions and marketing for
BiMBA-Beijing International MBA at Peking University - says not only is the quality of business education in China increasing, so too is the number of business schools.

Education providers in China are recognizing and responding to the domestic need for business talent, says Wang. The increasing demand for higher-quality MBAs is being driven by the needs of multinational companies, as well as state-owned and private enterprises.

"There is big potential for business education in China in terms of demand and supply."says Lei Zhang, Executive Director of MBA programs at Tsinghua University's School of Economics and Management.

"China has experienced such fast growth over the past 30 years that business schools- a relatively recent addition that began in 1991 with nine government approved programs-cannot yet produce enough graduates to meet the expanding needs of business,"says Zhang.While the number of business schools in China has recently proliferated, Zhang says the country still lags behind in the number of schools and graduates necessary for an economy of its size.

Every few years the Ministry of Education approves schools in batches of 10, 20 or 30.With seven batches approved so far this year, China now has a total of 256 business schools that educate about 40,000 students a year. But although the number of schools has risen exponentially, Zhang says it still lags behind the number of business schools in the US.

Over the past decade, the number of business schools in the US has increased annually by roughly 6%, So that today about 1,000 MBA degree programs serve an estimated 130,000 students. Roughly one quarter of all graduate students in the US will earn an MBA degree. But only one in every 20 of the roughly 420,000 graduate students in China will graduate with a business degree.

While China needs more trained managers, MIT Sloan Associate Dean Alan White predicts there will be a decrease in the number of Western universities that establish branches in China.

"Chinese universities will become world class and this will decrease the impact of Western schools that do not understand the needs of Chinese students, as well as the Chinese universities who understand these needs," he says, nothing that for these reasons MIT Sloan works with leading Chinese universities and does not attempt to install a full MIT operation in China.

MIT Sloan was one of the first Western business schools to partner with a Chinese university when the MIT Sloan/Tsinghua IMBA program began in 1996, with a pilot class of just 15 students.


The Fudan-MIT International MBA Program was launched in 1996 through collaboration between Fudan University School of Management and MIT Sloan School of Management. This program, taught entirely in English, aims to cultivate professionals with an international perspective and entrepreneurial spirit, well-adjusted to the demands of economic globalization in China and the rest of the world.


MIT-Lingnan MSMS Program was initiated in 2009. Students can start with the first year of the International MBA at Lingnan and the second year at MIT Sloan. Graduates of the program will receive an MBA degree from Sun Yat-sen University and a master degree from MIT.


SJTU ACEM and MIT Sloan partner in offering a MBA/MS dual degree option. Candidates are selected from first year SJTU MBA Program students and successful candidates spend their second academic year at MIT.SJTU ACEM-MIT Sloan MBA/MS dual degree option enables students to supplement the broad-based management education received at SJTU with the additional knowledge and management tools they can acquire at MIT.


NEW WAYS OF THINGKING


Many potential Chinese students with aspirations for employment in multinational corporations believe a business school education will help them develop the required leadership and critical thinking skills that are not encouraged in traditional Chinese classrooms, where there is more emphasis on rote memorization and respect for authority.

Manchester's Fiona says this focus on self-improvement and the desire to get ahead in the business world has been helping drive the local business school boom. "So much has been written and talked about regarding the need for individuals to have improved critical thinking, leadership and team building skills-the softer skill side of business."Says Fiona ."There is still a gap that needs to be addressed and business schools and addressing that gap."

A recent survey of
part-time and full-time MBA and EMBA graduates by the Graduate Management Admissions Council(owners and administers of the GMAT exam)found that 91% of graduates saw an improvement in their critical and strategic thinking skills, while 84% said their leadership and team building skills improved a good or great deal, says Fiona.

STAYING HOME TO STUDY

Many China-based programs are seeing a noticeable rise in the number of Chinese MBA applicants. Zhang says that over the past three years Tsinghua has seen a steady climb in Chinese applicants last year the number increased by 18%.

This may be due to a variety of factors. "The gap of economic development, living conditions, opportunities and many other things have narrowed between China and developed countries, so more and more students simply consider an MBA as a purely [academic choice] rather than ranking advantage of going abroad and staying there," says Yvonne Li, Operations Director of the CEIBS MBA Program.

The sluggish overseas job market and the often prohibitive costs of obtaining and MBA overseas are also giving prospective students reason to consider options closer to home, says Li. "Many Chinese MBA students plan to work in China after graduating because the job market is better here than in many developed nations. If they leave China to study, they lose contact with their business networks and fall out of touch with business trends."


Those choosing to study in China are well rewarded. According to a recent BusinessWeek report,salaries here for graduates from local MBA programs are comparable to their Western counterparts ranging from USD 30,000 to 50,000 a year. Taking purchasing power into consideration, these salaries are on par with, or higher than those earned by the graduates of the top western MBA programs. As income levels rise in China,these salaries are also expected to rise at a faster pace.

ATTRACTING FOREIGN STUDENTS


Chinese students are not the only ones who are increasingly choosing Chinese MBA programs. The numbers of foreign students applying and being admitted to Chinese business schools is also on the rise. The percentage of foreign students admitted to CEIBS has increased from 7% of 130 students in 2002 to 38% of 200 students today, says CEIBS' Li.


Tsinghua's business school has seen a 42% increase in the number of international students from last year.The number of Europeans rose from just 8 to 28, bringing the total number of countries represented in the Tsinghua business classroom to 38.The number of American students alone has gone up by 40%, says Zhang.

CHANGING FOCUS


China's business school expansion comes at a time when business schools worldwide are reconsidering their academic programs in light of the current financial crisis.

CEIBS is turning the focus inward, with more focus on China including compulsory language courses for foreign students and required studies in China HR management, a notoriously difficult business area in China.

BiMBA is shifting focus to customer relations, offering prospective students a one-on-one career planning service to help them clarify whether their target is an MBA course in China or overseas-or if they should even go for an MBA at all. 

And China's business school programs are proving exportable. CEIBS has launched a two-year EMBA program in ACCRA,Ghana. CEIBS professors teach the courses and the Africa-based EMBA students in China. Upon graduation, they will become part of the school's 7,000-plus-member global alumni network. The first class began in March in 2009, with 42 students:36% are employed by foreign-owned enterprises,31% are from private enterprises and 3% are government employees. Most are from Ghana and Nigeria.

So are the Chinese schools competing with international schools? "I don't think so,"says Zhang, nothing that the number of applicants to business schools in China, while increasing, is still small.Tsinghua gets roughly 200 applicants to its business school, compared to Harvad's 8,000.

"We target a totally different market," says BiMBA's Wang.Most Chinese students enrolling in MBA programs at home are focused on finding careers in China upon graduation.

Given the significant psychological and monetary investment required to obtain an MBA abroad,students who choose this route are generally not just focused on obtaining an MBA degree, and as such, Chinese MBA programs do not pose a direct challenge to their foreign counterparts, says Judge's Siegfried.


But for students looking to do business in China after receiving their degree, the China-based programs have one important advantage-location. "The clear benefit of the CEIBS MBA and EMBA programs, for our students, is that we are located in China,'"says Nueno. "Simply put, there are some important things that one can only understand by actually 'being there '."

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