A Breeding Group for Important Ideas

Both China's system for public company ownership and China's securities law originated at the Guanghua School of Management in Beijing

Located on the verdant century-old campus of Peking University, in Beijing's western suburbs, the Guanghua School of Management includes both a host of MBA programs and a doctoral program designed to produce the next generation of scholars to populate China's growing list of B-schools.

Designed for students with the potential to assume leadership positions in China's booming economy, the MBA program is offered both as a full-time and part-time program. Guanghua also offers an international MBA -- in conjunction with the National University of Singapore and France's ESSEC -- for those seeking careers with multinationals. Guanghua Dean Weiying Zhang met recently with BusinessWeek B-Schools Editor Louis Lavelle to discuss changes at the school. Edited excerpts of their conversation follow:

In 1999, to open itself up to Western management ideas, Guanghua stopped hiring alumni as faculty, opting instead to recruit new instructors from Western B-schools. Today, 80% of all faculty have PhD.'s and more than half of them were educated in the West. Why was this necessary?

1999 was a turning point in our school's development. In China, the economy and also education are both in transition. In the early stages of reform, although many universities established management schools, they had no idea what business school meant. We realized we must have international exchange if we want to be real business schools. This was a break in the breeding system. This was a very big change.

At many top-tier Chinese business schools, an interview is part of the admissions process. But at Guanghua, the interviews are conducted with business executives in addition to faculty. Why is it important to include executives in these interviews?

For MBA students, our faculty may have no true judgment about their potential. Business people have good experience about who will be leaders in the future. This is very important.

Guanghua has a history of creating big and important ideas. Both China's system for public-company ownership and China's securities law originated here. What does Guanghua do to encourage this kind of research?

Compared to other Chinese business schools, we emphasize that our faculty must create ideas which should have an impact on Chinese business and government policy. Students learn from these kind of people, not just people who know textbooks. Our faculty, when they do research, it's not just enough to be rigorous. They also have to make their research relevant.

Chinese B-school applications have been on the decline for three years. But you maintain that the drop-off was the result of changing admissions requirements, not declining interest in management education, and that applications will surge in coming years. Is the MBA rapidly becoming the "price of admission" for a good job in China?

This market has become more mature. In the beginning, everybody wanted to do an MBA, and they weren't suited for that. Now, the market has become more mature, more rational. When more and more people have telephones, more and more people buy telephones -- the value increases. [It's the same thing with the MBA.] If you have no MBA degree, you can't find a job.

Much has been made of the fact that top-tier business schools such as Guanghua are increasingly an exception, and that the vast majority of Chinese business schools are of poor quality. Will the best schools eventually put the bad schools out of business, or is there enough demand to go around?

I see it becoming more like a hierarchy. In America, there's a top, a second tier, a third tier. This is also hierarchical. [Top ranked schools in China] can't meet all the demand.

What's driving all the demand?

Chinese companies must be competitive internationally if they want to survive. They must have a well-trained management team. You don't make money because you're lucky. Now, it's more difficult. In the past, most Chinese companies were domestic. Now, they've become global competitors. If they don't have professional management training, they don't survive. If [business schools] don't provide good managers, Chinese companies can't compete.

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