July 2010: China's market for MBA and EMBA is changing rapidly, in terms of both supply and demand
by China Economic Review
The effects of the economic downturn were nowhere near as profound here, nor as prolonged, as they were in the West, and the economy is once again growing at breakneck speed. But parts of the business school sector felt the pain nevertheless.
The business education enterprises in China most dependent on multinational corporations (MNCs) suffered in 2009, as training and development budgets were trimmed. Only those able to rely more on China's internal growth have continued to fill their Ministry of Education-set quotas. About 20% more prospective students took China's MBA admissions exam in 2009 than in 2008, down from the previous 30% or so year-on-year increase but still noteworthy. And the MOE authorized an additional 53 schools (a total of 182 now) to offer the MBA degree in 2009. It's a good time to look more closely at the market - current and potential.
The demand side
In China as in the West, enrollment has steadily declined in traditional two-year full-time MBA programs. Notable exceptions include the heavily localized foreign-affiliated programs offered in English: a few of MIT's collaborations, the full-time MBA program at the China Europe International Business School (CEIBS) and Webster China's MBA programs. Part-time MBA options, on the other hand, have blossomed.
In the Executive MBA world, aggregate enrollment in Chinese-language programs has outpaced GDP growth for a few years now. Enrollment continued to expand in 2009, despite the global economic downturn. While English-language EMBA enrollment, by definition more exposed to the MNC sector, seems to have recovered this year to 2008 levels, English-language program enrollment has not nearly kept up with Chinese-language enrollment.
Tuition levels are less of a factor now than they were several years ago for those deciding on whether to take a Chinese-language or an English-language EMBA program: The gap between the average tuition of the two categories has narrowed to less than 10%. So the relative growth in the Chinese-language program environment versus the English-language program environment must be attributed to something else. The most plausible explanation is that an increasing percentage of the decision-makers for EMBA funding are Chinese enterprises (whether private, SOEs or the government itself), which look at the local programs and discern relatively higher China-specific value in them, primarily the brand of the parent university plus networking opportunities with rising or already-risen Chinese business leaders.
The supply side
Though the local b-schools continue to enjoy a protected position in the market, the protection is diminishing with the rapid increase in the number of authorized schools. The leaders (Peking University and Tsinghua in Beijing, and Fudan and Jiao Tong in Shanghai,) can see the Chinese characters on the wall. Starting a few years ago, they have all aggressively focused on trying to hire more foreign-trained faculty, to the point that it's nigh impossible for fresh PhDs from the leading domestic b-schools to gain appointments at their own or similarly-ranked institutions. Such hiring is promising for the long-term development of Chinese b-schools, as the domestic environment doesn't yet have nearly the capacity required to produce sufficient quantities of globally-relevant faculty. But it's hard luck for domestic applicants for the time being.
In the foreign-degree environment, the MOE hasn't approved any new "joint programs" (in which the foreign partner confers a degree and the local partner awards a certificate) for years now, and with some justification - the programs aren't delivering enough development for the Chinese partners. But dual-degree MBA programs, in which both parties confer a degree and no MOE approval is required, show more promise. Shanghai's Tongji University launched one such program with the University of Manchester last autumn, joining Peking University's Guanghua School of Management, which has several such programs, and the high-profile Tsinghua-INSEAD EMBA in the space.
Two degrees not enough for you? Hong Kong University launched a three-degree EMBA program with Columbia and the London School of Business in spring 2009. Shanghai's Fudan University has tied up with Korea University and the National University of Singapore to offer what they call S3, in which students study in all three locations, and take degrees from whichever two of the three they designate.
CEIBS and Webster continue to enroll the lions' share among the foreign-affiliated entities here. CEIBS enrolls nearly 200 students per year in their full-time MBA program, and more than 700 EMBA students. Webster has about 220 students enrolled in their four locations in China.
We've also seen at least two new entrants in the space. The University of Manchester has opened an office in Shanghai with the aim of launching their own EMBA program, and Duke University's Fuqua School of Business signed an MOU with Shanghai Jiao Tong's Antai College, one piece of which calls for the establishment of an EMBA program. Fuqua has also broken ground on a stand-alone facility in the Kunshan suburb of Shanghai. Headed the other way, the University of Maryland's Smith School withdrew its EMBA program from Shanghai some months back, after years of struggle.
A bit of advice
The business education market in China may be compared to the automobile market in the US 90 years ago, when a rapid increase in urbanization and disposable income, combined with technological development and market savvy on the part of suppliers led to an explosion of offerings and aggregate consumption. We're now seeing thousands of locally based offerings in the business education space here, along with rapidly increasing market segmentation (joint degrees, domestic degrees, dual degrees, certificate courses, etc.). Look for the market to continue to evolve at the pace that China's overall economy is, and for more players to be left in the dust kicked up by the wheels of well-tuned and faster-running enterprises.
A bit of advice to potential MBA or EMBA students: Taking such a program is one of the largest investments you will ever make in your career, with the time invested being more valuable than the cash. Consider first whether such a program will bring sufficient ROI, and only then which type of program offers the best ROI for your specific circumstances. Market research is essential. Spend time with current and former students and faculty. Sit in on a class. Some offer big brand value but may not have a cohort of students, or a curriculum, that support your goals. Others may not have such brand value but may offer in return a stronger cohort or curriculum.
To foreign institutions looking to enter the China market or to expand here: Your competitive environment is much more severe than that of your Chinese counterparts. You'll need to bring your best game. The market will grade your performance!
The business education enterprises in China most dependent on multinational corporations (MNCs) suffered in 2009, as training and development budgets were trimmed. Only those able to rely more on China's internal growth have continued to fill their Ministry of Education-set quotas. About 20% more prospective students took China's MBA admissions exam in 2009 than in 2008, down from the previous 30% or so year-on-year increase but still noteworthy. And the MOE authorized an additional 53 schools (a total of 182 now) to offer the MBA degree in 2009. It's a good time to look more closely at the market - current and potential.
The demand side
In China as in the West, enrollment has steadily declined in traditional two-year full-time MBA programs. Notable exceptions include the heavily localized foreign-affiliated programs offered in English: a few of MIT's collaborations, the full-time MBA program at the China Europe International Business School (CEIBS) and Webster China's MBA programs. Part-time MBA options, on the other hand, have blossomed.
In the Executive MBA world, aggregate enrollment in Chinese-language programs has outpaced GDP growth for a few years now. Enrollment continued to expand in 2009, despite the global economic downturn. While English-language EMBA enrollment, by definition more exposed to the MNC sector, seems to have recovered this year to 2008 levels, English-language program enrollment has not nearly kept up with Chinese-language enrollment.
Tuition levels are less of a factor now than they were several years ago for those deciding on whether to take a Chinese-language or an English-language EMBA program: The gap between the average tuition of the two categories has narrowed to less than 10%. So the relative growth in the Chinese-language program environment versus the English-language program environment must be attributed to something else. The most plausible explanation is that an increasing percentage of the decision-makers for EMBA funding are Chinese enterprises (whether private, SOEs or the government itself), which look at the local programs and discern relatively higher China-specific value in them, primarily the brand of the parent university plus networking opportunities with rising or already-risen Chinese business leaders.
The supply side
Though the local b-schools continue to enjoy a protected position in the market, the protection is diminishing with the rapid increase in the number of authorized schools. The leaders (Peking University and Tsinghua in Beijing, and Fudan and Jiao Tong in Shanghai,) can see the Chinese characters on the wall. Starting a few years ago, they have all aggressively focused on trying to hire more foreign-trained faculty, to the point that it's nigh impossible for fresh PhDs from the leading domestic b-schools to gain appointments at their own or similarly-ranked institutions. Such hiring is promising for the long-term development of Chinese b-schools, as the domestic environment doesn't yet have nearly the capacity required to produce sufficient quantities of globally-relevant faculty. But it's hard luck for domestic applicants for the time being.
In the foreign-degree environment, the MOE hasn't approved any new "joint programs" (in which the foreign partner confers a degree and the local partner awards a certificate) for years now, and with some justification - the programs aren't delivering enough development for the Chinese partners. But dual-degree MBA programs, in which both parties confer a degree and no MOE approval is required, show more promise. Shanghai's Tongji University launched one such program with the University of Manchester last autumn, joining Peking University's Guanghua School of Management, which has several such programs, and the high-profile Tsinghua-INSEAD EMBA in the space.
Two degrees not enough for you? Hong Kong University launched a three-degree EMBA program with Columbia and the London School of Business in spring 2009. Shanghai's Fudan University has tied up with Korea University and the National University of Singapore to offer what they call S3, in which students study in all three locations, and take degrees from whichever two of the three they designate.
CEIBS and Webster continue to enroll the lions' share among the foreign-affiliated entities here. CEIBS enrolls nearly 200 students per year in their full-time MBA program, and more than 700 EMBA students. Webster has about 220 students enrolled in their four locations in China.
We've also seen at least two new entrants in the space. The University of Manchester has opened an office in Shanghai with the aim of launching their own EMBA program, and Duke University's Fuqua School of Business signed an MOU with Shanghai Jiao Tong's Antai College, one piece of which calls for the establishment of an EMBA program. Fuqua has also broken ground on a stand-alone facility in the Kunshan suburb of Shanghai. Headed the other way, the University of Maryland's Smith School withdrew its EMBA program from Shanghai some months back, after years of struggle.
A bit of advice
The business education market in China may be compared to the automobile market in the US 90 years ago, when a rapid increase in urbanization and disposable income, combined with technological development and market savvy on the part of suppliers led to an explosion of offerings and aggregate consumption. We're now seeing thousands of locally based offerings in the business education space here, along with rapidly increasing market segmentation (joint degrees, domestic degrees, dual degrees, certificate courses, etc.). Look for the market to continue to evolve at the pace that China's overall economy is, and for more players to be left in the dust kicked up by the wheels of well-tuned and faster-running enterprises.
A bit of advice to potential MBA or EMBA students: Taking such a program is one of the largest investments you will ever make in your career, with the time invested being more valuable than the cash. Consider first whether such a program will bring sufficient ROI, and only then which type of program offers the best ROI for your specific circumstances. Market research is essential. Spend time with current and former students and faculty. Sit in on a class. Some offer big brand value but may not have a cohort of students, or a curriculum, that support your goals. Others may not have such brand value but may offer in return a stronger cohort or curriculum.
To foreign institutions looking to enter the China market or to expand here: Your competitive environment is much more severe than that of your Chinese counterparts. You'll need to bring your best game. The market will grade your performance!
