Chinese B-Schools Lift their Game

As the schools' reputations improve, more local students are choosing to study at home rather than earn degrees abroad

At Cheung Kong Graduate School of Business in Shanghai, students used to dig into case studies from faraway places—Southwest Airlines' (LUV) strategy to overtake major U.S. airlines or BMW's product line in Germany. These days, though, they're examining business issues much closer to home: how beverage maker Wahaha grew to be a national brand in China, for instance, or how PC maker Lenovo successfully expanded overseas.

Foreign case studies haven't been thrown out altogether, but the new emphasis on Chinese business reflects the changing priorities of China's business schools. As the curricula become more relevant to Chinese students, the schools' reputations are improving, and more local students are choosing to stay home rather than earn degrees abroad. In an exclusive poll of 253 recruiters from such companies as Huawei, General Electric (GE), and Nokia (NOK), 34% of respondents called the supply of high-quality talent from China's MBA programs "excellent" or "good," up from 19% last year, according to BusinessWeek China's third annual survey of Chinese B-schools. The quality of MBAs "is becoming better and better," says Mike Wang, human resources manager at Morgan Stanley (MS) in Beijing.

This year, companies are hiring more business-school graduates and paying them higher salaries than ever before. Recruiters offered jobs to an average of nearly five MBAs in 2007, up from fewer than four in 2006, according to the survey. Some 29% of respondents paid their first-year MBA hires $1,000 or more a month, up from 24% last year, and more than 7% said they paid graduates of top schools more than $2,700 a month, up from 3%. In the survey, conducted for BusinessWeek China by employer branding consultant Universum Communications, respondents ranked the "best overall" MBA program and the best in teaching marketing, analytical, financial, and operational skills. "There is a significant improvement in the perception of Chinese MBA students," says Henrik Schmidt, vice-president of Asia-Pacific for Universum.

A Handful of Schools Win High Praise

Business education in China has come a long way. The first MBA programs at nine Chinese universities started accepting students only 16 years ago. Today, 96 universities offer more than 230 MBA and executive MBA programs. Tuition costs as much as $32,000 for a one-year program, more than any other degree in China. As the country's red-hot economy sparks the growth of both local and foreign businesses, demand for MBAs is high. Next year the government plans to increase MBA enrollment by 24% and accredit an additional 30 or so universities.

In the BusinessWeek China survey, corporate recruiters singled out a handful of schools for their highest praise. China Europe International Business School (CEIBS), a venture of the Shanghai municipal government and the European Union, was named the top program by 38% of recruiters. Beijing International MBA (BiMBA) at Peking University, run jointly with a consortium of U.S. colleges, was a close second, with 31% ranking it No. 1. Some 9% of respondents said the top program was Tsinghua University's School of Economics & Management (SEM), a venture with Massachusetts Institute of Technology's Sloan School of Management.

These schools are attracting top students who not long ago might instead have headed overseas for an MBA degree. With the economy so strong now, many students worry that spending time outside China may hurt rather than enhance their job prospects.

"I have colleagues and friends who are finding it hard to find a job after returning from overseas," says 27-year-old Rachel Zhang, a student in the CEIBS MBA program. "I thought of going overseas to study, but I realized that in the long run I wanted to come back to China. So I asked myself: 'Why not choose a business school in China?'" Adds Rolf Cremer, CEIBS dean and vice-president: "If they go outside, they have a strong feeling they might miss the boat. There is a tremendous buzz radiating out of China."

Programs Becoming More International

That buzz is also attracting international students. About 9% of BiMBA's students come from overseas. Cheung Kong GSB, which ranked seventh in the survey, boasts international enrollment of 15%. Of 118 students admitted to Tsinghua University's SEM last year, 34 were foreign. "China attracts lots of attention from students who are looking for career opportunities or business opportunities," says Pearl Mao, the executive director of Tsinghua MBA programs.

CEIBS is also wooing international students. About 30% of this year's class of 191 comes from 25 different countries, including Italy, Russia, Malaysia, India, and the U.S. That's up from 10% five years ago. For Isard Serra Balague, a 27-year-old Barcelona native, studying in China was an easy choice. He applied to CEIBS after working as a telecom engineer in Spain, where many of his clients wanted to set up business in China. "For me it was clear. I wanted to come to China," he says. "A lot of people are now doing MBAs in Spain. So we have to find the added value for our degree."

As China's student body has become more international, so have the programs. About 60% of CEIBS' full-time faculty of 50 professors is foreign, from 19 different countries, while BiMBA's professors are drawn from such top universities as Columbia, Stanford, and the University of California at Berkeley. Tsinghua's program now has an international advisory board that includes such business luminaries as Wal-Mart's (WMT) Lee Scott, former AIG (AIG) chief Maurice Greenberg, and former Goldman Sachs (GS) president and co-chief operating officer John Thornton.

Mixing Confucius With Western Management

What's just as important as international connections is the fact that schools are now tailoring their programs to better serve the needs of managers in China. In late October CEIBS, along with Shanghai Lujiazui Development, opened a new research center that will provide consulting and educational programs for Chinese financial bodies and government agencies. CEIBS also recently set up a Research Center for International Entrepreneurship with Zhejiang University School of Management.

In the meantime the use of Chinese case studies is on the rise. At the top MBA programs students are analyzing the operations of Lenovo, Haier, China Mengniu Dairy, and other mainland enterprises. In a course on competition strategy at BiMBA, readings include Sun Tsu's The Art of War and cases on military battles drawn from ancient and modern Chinese history. "We are integrating Chinese philosophy and realities with Western management theories," says BiMBA's U.S. dean John Yang.

Perhaps no school has gone as far as Cheung Kong GSB, which runs its MBA program from a 70-year-old villa in Shanghai. Courses range from the globalization of Chinese companies to Confucian humanism. While its faculty is drawn from top universities worldwide, the majority of professors are of Chinese origin.

Focus on Manufacturing in China

One of them is Zheng Yusheng, associate dean and a professor of operations management. After spending 20 years in the U.S. and becoming the first tenured Chinese professor at University of Pennsylvania's Wharton School of Business, he returned to the mainland in 2002 to help set up the school.

His understanding of both Western and Chinese business cultures has made a mark on the MBA program. "In the U.S. there is almost no manufacturing, so what we teach there is how to manage retailers," he notes. "China is a center of manufacturing, so we focus on manufacturing here. I say: You need to produce the right product, at the right time, for the right customers. That's exactly what we have been doing."

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