Chinese Business Schools: Where Managers Are Developed

2016-12-01


An excerpt translation from Dans les fabriques chinoises a managers, Les Echos, 04/11/2016

Chinese business schools are a part of China's transition towards a new business model. Very well equipped, they strive for world-class status and attract high quality professors- compensating them past European standards.
American and European deans need to take note- China is their new competition.

On a scorching July day, excitement is in the air. Situated in the northeast of Beijing, in the city's most prominent university area, students from the Guanghua School of Management are heading to their graduation ceremony.

In their mid-thirties to early forties, these managers adorn their cap and gown- an image strikingly similar to US campuses. This is juxtaposed by a number of selfie sticks and group poses- a phenomenon quite unique to China. This 2016 cohort will be a new class of Executive MBA graduates from one of the oldest Chinese business schools, founded just some 30 years ago. Designed to train managers with 15 years of working experience, this 2-year, part-time degree costs around 85 000€ and is the first Executive MBA ever launched in China. Situated on the famous Peking University campus, these graduates will join a prestigious group of alumni, such as LI Keqiang, the Prime Minister of the PRC.

The entire 2016 cohort hurries to sit near the front of the stage. Huge loudspeakers blasts music akin to that of Tiananmen Square's opening of the General Popular Assembly. Everyone stands when Guanghua Dean, CAI Hongbin, appears on the red carpet, followed by the school's Associate Dean, MAO Dawei.

Together, they join in chorus to sing the national anthem.

            "In their annual rankings, the Financial Times and The Economist emphasize internationalization of business schools. But for us, we are here to serve our country," says Associate Dean of the Executive MBA program, LIU Qiao.

LIU previously worked for McKinsey and spent over 15 years studying and working abroad before returning to China in 2010.

Founded in 1985, Guanghua is one of the four best management schools in China. Along with its rival in Shanghai, the China Europe International Business School (CEIBS), Guanghua was created in the wake of the economic reforms launched by DENG Xiaoping, the father of China's "Reform and Opening" policy. After three decades of planned economy, in 1990, Shanghai and Shenzhen opened their stock exchange. Later, in 1994, Beijing adopted its first labor laws to regulate private employment. SOE managers needed to train. Among them, many Communist Party civil servants and officials were driven by the desire to make money.

            "China's Reform and Opening policy occurred over forty years ago and, at that time, there was not an adequate system of education. Managers of Chinese companies advanced up the hierarchy even if they had minimal or no basic education," says DING Yuan, Dean of CEIBS.

In order to decrypt the economic transformation, Chinese business schools are preparing the second generation of decision-makers. These new leaders, if all goes well, will continue driving growth for the national economy. Today, it is not a question of assimilating the basic principles of capitalism, but rather how to decipher the world's second largest economy.

            "Given the domestic economic slowdown, management will become increasingly important", explains Charles Chen, supervisor of the Executive MBA at CEIBS. "The business environment is more and more complex and, at the same time, more and more stimulating. Innovation, brand management, intellectual property... All of these are new issues for China," adds his colleague DING Yuan.

Established in Beijing in 1984, based on an agreement between the Chinese government and the European Commission, CEIBS closed its doors a few years later in 1989. It reopened in Shanghai in 1994, as the city offered better conditions. 

Guanghua Prof. LIU Qiao admits that there are two major challenges for the Chinese managers: "managing companies much bigger than before and in an increasingly complex environment." In 2015, China registered its lowest GDP growth, 6.9%, in 25 years. Now one of the main priorities for the government is that Chinese business schools prepare white-collars workers - helping them find new growth drivers, especially abroad. Chinese companies are increasing their acquisition efforts- buying advanced technologies to upgrade its economy.  The purchase of Syngenta, a Swiss cement manufacturer, by ChemChina, Jingjiang Hotlier Group increased its stakes in Accord group, the takeover of the German Kuka (industrials robots) by Midea, a leader  in electrical household appliances in China, are just some cases of this trend.

In 2015, Chinese companies have invested 20 billion € in Europe alone- a 44% increase from the previous year. Business schools are part of this phenomenon. Executive MBA programs that are delivered in English are popular among Chinese executives who are eager to succeed internationally.

            "At the beginning, our Executive MBA in English was dedicated to expats in China or for the Chinese working for multinationals," says DING Yuan, "Today, there are less and less expats, but fortunately, more and more Chinese managers choose our English EMBA, so it helps!" "We explain to our students how to realize an acquisition, how to integrate the company. But we also teach them that 70% to 80% of mergers and acquisitions fail," says Charles Chen.

Between 2012 and 2014, David Sancho, a Spanish living in Shanghai, attended the Global Executive MBA at CEIBS when he was the CEO of Mango China, a Spanish ready-to-wear brand. His classmates worked for Foshan, BYD, Heineken, L'Oréal and Jaguar.

              "Most of them were Chinese working for multinationals," he reminds,
"They were here because they already had business relations abroad and wanted to know more about Western culture. Almost three quarters of them came from Asia:   Chinese, of course, but from the US, Hong Kong and Taiwan. The school was very Chinese, I did not perceive it well at that time. We had Tai-Chi lessons and often ended up at the KTV in the evening!"

Now, Chinese business schools are much more international. In 2014, Guanghua launched its global Executive MBA program, Guanghua-Kellogg Executive MBA, in partnership with Chicago-based Kellogg School of Management. The degree costs 930,000 RMB or 127,000€. The classes are held in Beijing, Chicago, Shanghai, Xi'an and Shenzhen. At the end of their courses, students can choose an elective class in Miami, Tel Aviv, Hong Kong or Toronto. The advantage of such a global program is the powerful network.

Guanghua and CEIBS have also recruited European and American professors who have personal and/or professional interests in China. Some of whom come as visiting professors, like Raffi Amit, a renowned professor at the Wharton School of the University of Philadelphia, USA. Amit has been teaching and researching in China since 1988.

            "At that time, I was teaching at the University of British Columbia in Vancouver and I had to introduce capitalism to a communist country! None of my students could speak English and the interpreter was terrible," he remarked.

Last July, he gave a lecture on risk capital to Guanghua Executive MBA students. "I never saw a better environment for start-ups than in China right now," Amit explains to his 70 students wearing translation headsets.

            Amit gives advices: "China is the best place now to start a business. You are lucky to be here!" Aside, he says: "I am not here for the money. China is unavoidable in today's business world. Wharton strongly encourages us to come here to teach."

However, Amit is an exception. Beijing and Shanghai business schools' strength is that they typically attract professors who were born in China but have studied abroad and have a PHD from the US, Europe or somewhere else in Asia. "A junior professor in a Chinese business school can earn up to $60,000 a year. American schools offer triple that salary.

            "It is not very attractive in terms of salary, but it is very good for young Chinese researchers willing to come back home," says XU Jing, a marketing professor at Guanghua.

She joined the school in 2007, after earning a PhD at the University of Michigan, to be closer to her husband.

            "Out of our 70 full-time professors, 70% are foreign passport holders, however, if you look at the country of birth, 40% of them were born in China," says DING Yuan of CIEBS.

He, himself, is a Chinese-born French citizen. He has a PhD in Accounting from the University of Bordeaux IV and has also taught at HEC.

            "We can offer really good salaries to attract foreign professors and a complete package offering accommodation, medical coverage, the school for the kids, etc. We try to create a positive environment. Because resources at Chinese universities are strength so we have to compensate. We particularly look for mid-career professors who have proved their worth and want to see the impact of their theories in real life. For them, we can pay a lot to keep them."

DING Yuan last big cheque was for Larry Farh, a Taiwanese with an American passport, who was working for the Hong Kong University of Science and Technology (HKUST). Larry Farh is well-known in Asia for his work on paternalistic leadership. He now teaches at CEIBS.

            "Everyone from the school decided to convince him. No other school could have done that," says Katherine Xin, a professor at CEIBS since 2010.

She personally met with Farh when he was a HKUST professor.

            "We are a very young school and not as famous as the Western business schools, CEIBS professors are not the best in their disciplines, all of this takes time," she recognizes.

After spending 14 years in the US, Xin came back to Shanghai to take care of her aging parents.

With the same qualification Chinese business schools can offer to young professors a pay five times higher to the one they could get in France. Western business schools are warned!