Brand value as a liability

Webster University China launched its first MBA program here in 1996. Since then, it has developed three additional MBA tracks, as well as undergraduate programs for foreign students, on-line programs and outbound study options. Webster now has about 220 students studying in China at any one time, and approximately 1,200 alumni from its China-based programs.

A number of collaborations in China feature Western partners with much higher brand reputations than Webster has. Yet Webster has grown to a level of interaction unrivaled by any other Western b-school here. Why might this be?

– Webster has less brand reputation at risk when it offers degrees here. Top-ranked b-schools are rightly focused on preservation of existing brand value, so if they offer degrees in China at all, they seek to tie up with only the top schools and to micromanage all aspects of pedagogy with their own fly-in faculty. (MIT’s collaborations here – now four – don’t count, as MIT doesn’t issue it own degrees in any of them.) Webster hires business practitioners already based in China, as well as faculty from its local partners, to teach in its programs, along with some faculty from St Louis. This faculty team is far less expensive and more flexible than fly-in faculty teams are, allowing Webster to expand its offerings and to price competitively with domestic b-schools.

– Snowball effect. With its range of programs in China, Webster now has sufficient breadth that it can afford to engage faculty for an entire term, as opposed to the several-days-intensive model common with many programs offered by name b-schools here. That model is required because the salaries of those fly-in faculty are covered by only one program. Webster’s MBA courses, however, can extend over many weeks – inherently better pedagogically than the several-day-intensive approach.

A 2007 Harvard Business Review article, "China’s Good Enough Market," illustrates the challenges that multinationals have faced in many sectors in China. The multinationals entered the market with premium-tier products, but then struggled to maintain share as the market evolved and other players (often local) developed products "good enough" for the China market. Webster’s increasing China presence indicates that it is offering market-relevant, "good enough" business education here.

Additional evidence of Webster’s promise:

– Survey upon survey of businesses in China has revealed that the No. 1 challenge in recent years has been finding and retaining good teams. Rick Foristel, head of Webster China since 1997 (leadership longevity itself is a promising indicator), asserts that the HR challenge is now the biggest one he faces. Most other foreign b-schools with a presence here are still struggling with establishing market relevance, with the JV partner, with repatriation of earnings and other such start-up problems.

– As a consequence of last year’s tie-up with Apple on the iPhone, China Unicom decided it needed to provide its managers a stronger Western perspective on business leadership. It turned to Webster, sending 50 students to the Shenzhen and Guangdong programs starting in 2010. Western b-schools offering single programs here don’t have the capacity to admit such a large group, and while any b-school would have loved to develop a stand-alone program for such a marquee client, Webster already had the in-China capacity, as well as a price point that was attractive: With tuition of RMB128,000 (US$18,747) Webster’s MBA programs are priced similarly to those of the leading domestic b-schools.

Some people in the business education sector in China, usually those affiliated with top brands, turn up their noses at Webster: "Well, they’re not a quality brand, are they?" By several measures, Webster’s operations here don’t meet the standards of leading business schools in the West (lots of adjunct faculty, heavy component of local faculty, no research at the parent institution, etc.). A VW Santana isn’t a BMW. But many have made the case that the ranking system of universities in general, and b-schools in particular, is a net drag on education quality (one leading example here). I’m skeptical of the idea that the value of a business-focused education marches in precise correlation with the ranking of the conferring institution.

In the China environment, sniffy comments from top-brand b-school players remind one of the multinationals who have derided "good enough" products in the China market as not being up to some global standard, and have consequently limited market share and relevance. Brand quality is in the eye of the beholder, and though not all beholders have 20/20 vision, they are still the decision makers.

John D. Van Fleet works in the university sector in China. He lives in Shanghai.