China may have only started conferring MBAs 19 years ago, but its schools have done an impressive job getting expert help. The number of domestic MBA and EMBA programs has doubled since the beginning of the last decade to about 250 in 2008. There are also more than 50 foreign-affiliated MBA programs in China, many of them joint ventures (JVs) between foreign and domestic universities. For foreign schools wishing to set up operations in the country and grant business degrees, a Ministry of Education-approved partnership with a local institution is currently the only option.
The joint-venture model is not unique to China. In an increasingly globalized world, one way for top universities to continue pushing the envelope of education and knowledge is to partner with other leading institutions. The results are at times successful, at times disastrous.
When the model works, it works very well, as the Financial Times 2009 EMBA rankings testify: The top three programs in the world (Kellogg-Hong Kong UST Business School, HEC Paris-LSE-New York University Stern and Columbia-London Business School) are all JVs.
In China, JV arrangements can bring ample benefits to both sides, not the least of which is international exposure. Chinese schools may profit from the expertise of foreign universities in building quality management education programs and faculty development opportunities. Foreign schools, for their part, can benefit from relevance and research opportunities in the world’s fastest growing economy.
Delivering a strong performance in a rapidly changing market like China requires more than an established brand; in fact, established brands have the most to lose when a JV fails. China is littered with examples of failed JVs that have either shuttered their doors after a few years of frustration or continue to bump along, bleeding red ink. Increased competition, bureaucratic hoops and low enrollment are typically cited as the major problems.
Competition is connected to the small size of the local market, due to a shortage of qualified English speakers and experienced management-level degree candidates. In Shanghai, for example, domestic demand for executive business programs taught in English appears to have peaked. Total enrollment in English-language EMBA programs in the city rose from 162 in 2002 to a peak of 235 in 2007, but local Chinese student enrollment increased by only 3% during this period, with expatriates accounting for the majority of growth. In addition, foreign JV tuition rates, which range from US$20,000 to US$80,000 are simply too high for many price-sensitive Chinese students. Full company sponsorships are rare.
Programs that have withdrawn from the China market include business schools at the University of Iowa, the University of Maryland and London-based City University. City’s Cass Business School blames Chinese economic policy for its closure. "It proved too difficult to bring revenue earned from China into the UK," explained Amanda Chick, the school’s senior press officer.
Thankfully for the industry, the JV casualties in China are outweighed by success stories. The Washington Olin-Fudan program, for example, is in its ninth year and has ranked number one in mainland China every year that it has appeared in the Financial Times.
In some cases, the benefits of the JV approach are plain to see in program structures. Students of the Fudan International MBA Program, a collaboration between Fudan and the MIT Sloan School of Management, complete an MIT-designed curriculum taught by MIT-trained lecturers and receive a diploma from Fudan. "It is the longest-running joint program at Fudan and we have benefitted from it immensely. Everyone can see the success but nobody knows exactly how much effort went into the program to get to where we are today," said Forkson Fu, executive director of the Fudan IMBA program.
Another distinctive JV is the University of Nottingham and Wanli Education Group. Nottingham became the first foreign university to operate a fully independent campus in China in 2004. While Wanli helped set up its campus, Nottingham’s curriculum (including its MBA program) and staff are autonomous from its partner.
"We’re unique at the moment in terms of the independence we have, and our experience has been entirely positive. We’ve had enormous support from the local and national government and we continue to grow each year," said Chris O’Brien, director of Nottingham University Business School China.
The experiences of these schools suggest that JV programs can thrive and be mutually beneficial as long as a number of criteria are met. Firstly, choosing a suitable partner is vital. A local partner can help navigate the Chinese education system, increase the program’s domestic reach and also provide an established alumni network. Communication, flexibility, and trust are the building blocks to an enduring relationship, said Fu.
Patience is a virtue
Secondly, having the right leadership is important to committing to a long-term vision and executing an effective marketing strategy. Business degree programs are expensive to operate and most schools don’t begin to make back their initial investment for several years. Moreover, most programs are not aimed at making money for the foreign partner, but rather at breaking even while developing in China. Patience and persistence, therefore, are requisite virtues.
Finally, delivering value and maintaining quality are key to attracting students. The price of tuition must be in line with the program’s ability to teach appropriate skills and knowledge of international management, and improve a student’s career potential.
"It’s a tough market. Even though the conceptual reality of being successful in a JV program is clear, actually doing that can be difficult," said John D. Van Fleet, supervisor of international affairs at Shanghai Jiao Tong University’s Antai College of Economics and Management. "It’s all about leadership, operational excellence, delivering on marketing and getting your positioning right."
Patrick Moreton, associate dean and managing director of the Washington Olin-Fudan program, adds that a JVs’ success ultimately rests on identifying and exploiting a particular educational niche. "Most of the programs that have not found that niche have had trouble maintaining the program’s quality and financial viability," he said.
Despite the hurdles involved in running a JV program, the model can present a wealth of opportunities for both Chinese and foreign institutions. The JV programs that are able to offer a truly global vision will demonstrate a distinct value proposition. Those that cannot, on the other hand, will not only lose money, but damage their brand at home.