More talk than action
MBA programmes are mushrooming and while opportunities are there for foreign involvement but the financial rewards are not.
The shortage of high quality local managers trained in the essential business disciplines of a market economy continues to hamper the progress of companies operating in China. "There is an absolutely huge demand on the part of state-owned enterprises and joint ventures for trained management," says Dr John Thomas from the international programme of Buffalo University Management School in the US. "Foreign companies are going to be in China for the long haul and they need good local managers who fit into a strategic and global human resources plan."
Business and training schools play an important role in providing a solid grounding in business concepts. In 1991, nine Chinese universities offered MBA programmes. There are now some 29 universities in China with full-time or part-time MBAs and this is due to climb to 50 by the end of the decade.
In Shanghai over 1,200 company managers and factory directors either have an MBA or are taking the degree at one of the city's four universities. Each one offers flexible courses which allow directors and managers to study part-time.
Lack of experience
But even such rapid expansion is way below the level required. A Shanghai study by the local Business News revealed that while foreign-invested enterprises and the big state-owned enterprises are enthusiastic about training programmes, most state enterprises have made little investment in this area.
Several experts also have reservations about the quality of tuition, caused by a lack of industrial or international exposure among Chinese faculty. "Even Qinhghua University or Fudan University do not have the faculty to teach executive MBA programmes ? most have never worked in industry which is required to teach these courses," says Mr Ira Cohen, managing director of UI Education and Training Consultants in Beijing.
Professor Bruce McKern, Dean of Mount Monash Eliza Business School in Australia, admits that limited travel is a problem among Chinese academics. "Not a lot have had exposure to Western management systems and very few have been exposed to education in a Western business school," he says. This will only change, he believes, when US-taught Chinese start returning to the mainland in large numbers. Since 1979, over 250,000 of China's brightest students have gone overseas to study, with at least half going to the US.
Foreign business schools and universities are well placed to top up this experience and Chinese authorities are becoming more receptive to their involvement.
In the past, foreign schools have not always found it easy to clear the first hurdle of negotiating with the State Education Commission. But the pressing needs of state enterprises as they struggle to compete in a market economy is starting to change things, by bringing into the picture economic and industrial government departments.
For example, Rutgers University of New Jersey has been working with the State Economic and Trade Commission. "The SETC has been given responsibility by the State Council to get state-owned enterprises into competitive shape," says Allan Roth, Professor of International Business at Rutgers. His university offers an executive MBA (EMBA) with Dalian University and it is planning to start a non-degree management development programme at provincial level, starting in Liaoning, from this autumn.
Another American university, Webster in St Louis, started a joint venture last Autumn with Shanghai University for Finance and Economics, which sits under the Ministry of Finance. It was this connection which enabled the venture to receive high-level ministerial sponsorship, according to Dean Wilfred Miles of Webster University School of Business and Technology.
Monash has just completed its first year of a joint venture EMBA programme with Shanghai Economic Management College, part of East China University of Science and Technology. It has the support of Shanghai Economic Commission.
Buffalo University Management School is looking to start an EMBA programme next February with Beijing's Renmin University. Praxair, the US industrial gases company, is providing corporate support.
With foreign cooperation becoming common and as more degrees are offered, the local education authorities have seen the need to introduce standardisation. "China is getting tougher and tougher on education programmes, with new rules controlling the issue of degrees," says Cohen. All unrecognised degrees are now to be stopped.
The quality of participants is also being addressed. From this year, the State Education Commission is to begin a national entrance examination for MBAs.
CEIBS leads the field
China Europe International Business School (CEIBS) was the first international business school to be established in China and it remains the flagship ' MBA institution. Initially formed in Beijing, it has relocated to the less politically stifling environment of Shanghai. It will soon move to new premises in Pudong and it enjoys the backing of the local government and European Union. EMBAs have been initiated in Shanghai and Beijing, with the new programme in the capital utilising a Siemens training centre.
CEIBS now has eight permanent faculty but it also draws on the resources of its academic council which is made up of some of the world's top business schools, including ' INSEAD of France, IMD of Switzerland, IESE of Spain, University of Michigan Business School (UMBS) and London Business School. With this backing, CEIBS is starting to create a name for itself in international academic circles.
Being able to draw on the resources of various international schools is a great advantage, says Stefaan van Hooydonk, executive development manager at CEIBS.
Others are less sure. "CEIBS is able to draw some really good faculty members, but there. are some drawbacks," says Arthur Yeung, Asia-Pacific Director of UMBS. "Most of the faculty members have other appointments. People don't have the time to come here to do some really good research, although there are some new initiatives in this area."
Roth says the multiplicity of schools is both' a curse and a blessing: "They lose their own identity and a certain element of continuity." He prefers a single-school approach, building an integrated programme with tightly knit courses.
Heads of foreign schools have been pouring into China over the past few years and many have started ad hoc initiatives. Collaborative ventures involving internships are most common.
Singapore's Nanyang Technological University has such partnerships with Fudan and Beijing universities. UMBS started offering executive education classes in China in 1989 and it has since added various initiatives. Asia is a major focus of the school and it is anxious to expose the faculty to the region.
For a similar reason, Harvard Business School is setting up executive education and research centres in Hong Kong, Tokyo and Singapore. The dean of the school, Mr Kim Clark, is pursuing what he describes as a "global faculty", adding that about 40 per cent of all international research is currently being conducted in Asia. "We can't do our work and be effective sitting in Boston," he says.
Keeping up standards
The cost of setting up a programme can be prohibitive, taking into account infrastructure, travel and faculty. "There is not one school in North America that has sufficient resources to offer an on-going MBA programme," says Cohen. He predicts many US schools will soon run out of patience with China and move to other markets.
As an alternative, the US Department of Commerce is reported to have been working on distance learning technology. It was mooted that a centre would be created in Shanghai but so far nothing has come of it. Roth says he also heard of US catholic universities forming a consortium to set up a school in Beijing.
But this whole subject in China is longer on talk than action and countries in eastern Europe and South America can sometimes prove more appealing. "Setting up a business school in China is an extremely expensive venture and a logistical nightmare unless you have a strong presence in China," says Hooydonk.
Webster University remains the single exception of a single foreign school offering its MBA programme in China. It started a joint venture last Autumn with Shanghai University for Finance and Economics. Faculty comes from both universities, supplemented by businessmen from the local community.
The initial class of 50 was drawn from 800 applicants; some even enclosed cheques to cover the US$8,000 cost of the MBA, said Dean Miles, who has been surprised that so many Chinese could afford the fees.
Webster, however, is far from being a prominent university. It has gone in when most colleges would have been reluctant to see a diminution of standards. At the prestige universities, the accreditation boards, alumni and taxpayers are there to safeguard the quality of a programme and prevent it from being diluted.
Another problem in China are the differing requirements of local and foreign firms. Foreign MBAs have little relevance to state-owned enterprises. Such training, making the Chinese manager highly attractive to a foreign enterprise, would likely precipitate a career move. Certainly, the state enterprise would be hard pushed to satisfy his salary expectations within a rigid pay structure. "In a state-owned company, everyone knows how much people earn," comments a representative of one state enterprise. The first class of CEIBS MBAs graduated last October and not surprisingly all 58 have found jobs -most with foreign-funded enterprises.
In any event, there aren't many Chinese individuals or institutions who could afford a top quality programme run by American professors. "It's going to cost them a minimum US$24,000 to US$40,000 per student to train them for an MBA which doesn't allow for adaptability to this market," says Cohen.
Even the EMBAs which seek to teach Chinese managers from both state firms and foreign-invested enterprises are flawed, argues Cohen. Most state enterprise managers need tailored programmes, he argues, in subjects such as accountancy, spreadsheets and personnel planning. By contrast, foreign firms have bigger budgets and their managers usually speak better English and have a better grasp of the rudiments of international business concepts. McKern admits Monash's biggest problem with state enterprise managers is their lack of exposure to English. A lot of resources at the school are spent trying to rectify this problem.
Initial hopes of greater foreign involvement were probably unrealistic. "Chinese universities expect American universities to bring a whole lot of money and they're just not going to do that," says Roth. But he does foresee a lot more activity by US schools in future. Enditerm
Management for the masses
Multinationals in China share the same objective as Chinese authorities in wanting to develop management training programmes.
However, the number of training and educational courses available in China do not come close to meeting the demand. It is this deficiency that persuaded the British Chamber of Commerce in China to canvass the views of its member companies in Beijing.
It concluded that there was a big gap between the mostly collaborative programmes involving international business schools working at MBA or EMBA level and the ad hoc training events, lasting for one or two days and organised by specialist training companies charging commercial rates.
With a view to bridging this gap, the chamber decided to found a management training centre, due to open next March. It will be a non-profit making training centre rather than a business school, offering post-graduate certificates in management as opposed to MBAs. Chinese delegates will be drawn from joint ventures, representative offices and state enterprises. About half of the delegates will come from state firms.
The scheme is being spearheaded by Mr Gordon Gurr, vice-chairman of the chamber. His enthusiasm for the new project stems from previous experience in helping found the Western Academy international school in Beijing.
The flexible and pragmatic structure of the new centre, with a greater emphasis on training than education, has appealed to a Chinese government desperate to improve managerial skills in state enterprises. The venture has received support from State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation.
Gurr believes that all companies ? state enterprises, joint ventures and rep offices ? would prefer to put several staff through general management training programmes rather than sending the occasional high-flyer on an expensive MBA course. The emphasis will be on promoting understanding of basic elements such as competition and business English.
Teaching will be in English and Chinese. A series of one-month modules will be tailored to individual and company requirements. Each module will include a four-day residential course with extra assignments and self-study taking place outside work hours.
The school will directly employ faculty and draw on the resources of several UK business schools. Eight schools, including Cranfield University School of Management, have been short-listed. The aim is to create greater continuity than most of the other programmes in China which involve foreign business schools. "A lot of programmes depend on people being flown in for a few weeks or even just a few days," says Gurr. The centre of gravity should be in China, he adds, and this can only be achieved with a full-time core faculty backed up by exchange work.
The initial feedback from businesses and academics has been positive. Mr Ira Cohen, managing director of Universal Ideas Consultants in Beijing, believes the British initiative is "the right approach".
However, there is a difficulty in explaining how a new concept will work to potential partners and founders. The International Director of Cranfield, Colin Gordon, was at first rather confused about the concept of the centre. Less interested in training for Chinese, he is more drawn to the centre's company-specific executive training programmes.
By the end of the second year, 300 students are expected to pass through the school each month.
The centre is now looking for corporate donations of US$10,000 to become a founder, followed by US$50,000 which will be used as prepayment for training. Conceived as a British initiative aimed at British companies, the project is now being taken to international parties.
The opening date of next March is ambitious given the amount that needs to be done, including finding adequate premises. But Gurr believes that fixing a date and sticking to it is the only way of getting things done in China.
If the centre can be shown to meet the needs of the different types of companies, similar schemes might be developed across the country. "The concept is easily translatable to other parts of China," he argues. "This is what the market needs, although it is just one model that is applicable to China."
For further details, contact Gordon Gurr on (86) 10 6500 2255 x 4504.