Made In China

With Western help, China's MBA programs gain footing as the nation becomes more capitalistic

October 24, 2004|By Gady A. Epstein | Gady A. Epstein,SUN FOREIGN STAFF

BEIJING - Considering that he was teaching in China, Professor Li Mingzhi of Tsinghua University must have been amused asking his MBA students for examples of a command economy, where the government decides how much people earn, how much people produce, and how much products cost.

"China," one student quickly piped up, "several years ago."

Actually, as this and hundreds of other MBA classes in this country demonstrate daily, the China in which the government makes all those decisions is receding into history. A few other countries might still have command economies - these students, knowing the map of Communism, named Cuba and North Korea - but China has become something altogether different.

The irony was not lost on the business school professor. This nominally communist nation is in the middle of the world's greatest business school case study on how to transition from a command economy to a market economy, and the explosion in MBA classes is an indication of how quickly that transition is accelerating.

Until 1990, no officially accredited master's degree program in business administration existed here. There now are more than 100 at 91 institutions, with an estimated enrollment of 30,000 to 45,000 students, plus dozens of programs that are not accredited by China but are sponsored by foreign universities.

Many American universities have set up affiliations with Chinese MBA programs, as the Massachusetts Institute of Technology and others have done with the program at Tsinghua, a historically science-oriented university considered the MIT of China.

Dozens of other foreign universities have made entries into the world's most promising business market, as the University of Maryland's Robert H. Smith School of Business has with an executive MBA program in Beijing. Maryland's program, set up in cooperation with Beijing's University of International Business and Economics, was launched in January 2003.

Last week, the University of Maryland announced two new MBA programs in China - one customized for Otis Elevator Co., the U.S. company that is China's largest elevator manufacturer, and another in Shanghai, where Gov. Robert L. Ehrlich Jr. was traveling with the university's business school dean, Howard Frank, on an economic trade mission.

And now, there is a nascent job market for these educated capitalists.

"There are so many more opportunities in recent years because more and more multinational companies are developing business in China, they are using a localized talent strategy, and also they are expanding their businesses," said Mao Donghui, director of the career development office at the School of Economics and Management at Tsinghua, which has more than 1,800 MBA students. "Especially in the finance and investment markets, [multinationals] are using more and more Chinese professionals."

Few opportunities

In the late 1980s, Chinese students returning with MBA degrees from the United States and Europe found few opportunities to put their new skills to use. Some graduates languished in state-owned companies where rewards were handed out based on seniority and relationships, not on the creative ingenuity of upstarts.

Job applicants who arrived with an MBA degree from the Wharton School and with skills some of these state-owned firms desperately needed were greeted with puzzlement.

"For the state-owned enterprises, the management and corporate governance is different from what you would say is Wharton management theory," said Qian Xiaojun, director of the MBA program at Tsinghua, in what can safely be described as understatement. Even now, Qian said, "They have boards of directors, stockholders ... but the actual role they play in the company's management is very doubtful."

But in the 1990s, the government dismantled many money-losing state-owned enterprises, sought foreign investment and accelerated market reforms. Today, private entrepreneurs, joint ventures and multinational companies are increasingly the engines powering the rapid growth in China's cities. Those firms develop entire suburbs for the growing middle class, manufacture the cars that get people there and make the mobile phones drivers use on their commutes.

Enthusiasm dented

The MBA market is responding quickly to this fast-growing economy, with mixed results. Shortcomings in some programs and low salaries for many graduating MBAs have dented enthusiasm somewhat, and the number of people taking the national MBA entrance exam, though nearly 28,000 for this year, has declined from a peak of nearly 40,000 in 2002. Still, demand for an MBA continues, with thousands of students willing to pay steep fees for a degree.

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