Management Education in China

Author:  Josh Kobb, International Programs Director, HEC Paris Executive Education

First Published:  November 2007

During the last two decades we have been witness to the spectacular growth of China and its economy and the opening of its doors to the West. Any traveller to China will invariably comment on the speed at which the country is modernizing; not only its skylines but its mindset. And clearly China’s success as being the world’s low-cost manufacturer has contributed to the West’s ability to control its own inflation. Gradually Chinese companies are moving up the value chain: Lenovo, TCL and Huawei are often cited in the management press as examples of China’s move into more sophisticated industries. And the next phase of economic development for China, namely the internationalization of its enterprises, including its SOEs, is underway.

At the same time, China faces many risks in the upcoming years. It may be argued that China’s success to date is based upon its ability to control macroeconomic and social factors: the RMB does not float freely on the market, commodity prices are kept artificially low and labor laws remain undeveloped. With entry into the WTO and social evolution, China will not remain low-cost in the long term. Its challenge is to develop its service industries, to invest more heavily in R&D and to build its own international brands. In short, China must find sustainable competitive advantage in the global economy.

Much of this success will depend upon China’s ability to develop its leadership and manage its human capital. In a widely distributed report, McKinsey claims that China is facing an acute leader-shortage, requiring 75,000 individuals capable of piloting on the international scene. This situation will only worsen as the labor force will actually begin to shrink as a result of the one-child policy. Here we are faced with a contradiction: if China has been so successful, how can it be claimed that China is lacking leaders?

The Chinese education system, based on rote learning and memorization, encourages homogeneity and standardization. At an early age, children are moulded and diversity is discouraged. In the classroom, students are passive learners, simply repeating what the teacher or professor presents. In the social hierarchy, the Professor is next to god, so dissenting opinions are inconceivable (or at least impossible to communicate). Creativity, analysis and problem solving are discouraged from an early age; a cognitive schema that accompanies the individual throughout his or her life.

In the work place, Chinese enterprises have historically been managed centrally, with objectives being defined at the central party level. In this scenario, the role of leaders and executives is to implement, not to decide. Here we see again that creativity, analysis and problem solving are not key skills within the Chinese organization, which is often sited as the principal obstacle to the success of Chinese enterprises in the global economy.

Leading global business schools typically have significant Executive Education offers. The approach, particularly concerning custom-designed programs, is to work closely with the client organization to identify and communicate organizational challenges, at a strategic level, in order to design and deliver the appropriate training program to ensure added value. In the West, we show clear ROI on training programs at the organizational and strategic level. The discussion between training provider and client is thus focused on training outcomes for the organization. However in China, training has traditionally been considered an individual perk to reward loyalty and results, especially when sending executives for overseas training. In discussions with HR managers, the impression is that there is little concern about returns for the organization, making a customized approach to the design of training programs more difficult. Hence, significant effort needs to be devoted to educating HR professionals about the returns to the organization of training programs.

Management training for degree programs presents a different set of challenges for foreign management education institutions in China. Looking first at MBA programs, we must understand the evolution of the marketplace. The MBA, as an American product, was not until recently available in China. Young managers at first, in the early 1990’s, began an exodus abroad for their studies. There was a predominant perception that a foreign MBA, anywhere, would guarantee immediate success and expatriate-level packages upon return to China. While a small number of Western returnees did in fact achieve significant advancement, many more have come to the realization that there are no guarantees. Working one’s way up in the short term is still necessary, with the MBA adding its value in long-term career advancement. Though the number of Chinese undertaking foreign MBAs is still significant today, the big difference is that these individuals are better educated about the programs they choose and their expected outcome.

With the economic growth of China, local MBA hopefuls are now more conscious of the risk that is involved with studying overseas. In particular, concerns over high tuition are coupled with the risk of being out of touch with local developments and the Chinese job market. With the growth of quality MBAs now offered in China, either via Chinese Business schools or via foreign-Chinese joint ventures and partnership programs, an increasing number of potential MBAs are looking at home-grown programs. Interesting to note, in particular, is the success of CEIBS, which has quickly gained a top position on the international market. CEIBS was, in fact, the sixth largest recipient of GMAT score reports in 2006 by Chinese test takers and appears consistently in global MBA rankings. The number of GMAT test takers, which is a good indication of market size, grew steadily for Chinese nationals. However, it peaked in the academic year 2001-2002. Though recovering slightly, the numbers are far below the “golden years”.

The EMBA market is a growing one in China. Executives, in the 35-45 year range typically did not have the opportunity to pursue formal business programs such as MBAs when they were younger. At that time opportunities for foreign study were limited, the local market was undeveloped, and individuals often did not have the necessary language skills. They are faced in mid-career with the need to reinforce business skills and gain global vision. These executives, who often do not have the time to pursue full-time programs, will look more closely at distance learning and local programs. Increasingly, foreign business schools are establishing joint ventures with local universities to offer EMBAs in China.

Maintaining international standards in management training in China is key, in particular for degree programs. The national accreditation system in China is still in its initial stages, and no specific MBA accreditation body exists. In October 2006 we saw a student uprising in the Jiangxi province where students violently protested when they learned that the degree they received was not of the value they initially believed. A small number of Chinese MBAs are accredited internationally (CEIBS, Tsinghua) by the AACSB. Joint venture MBAs face a challenge of maintaining their standards in order to deliver their home degree, while satisfying local requirements concerning academic partnerships. And within the environment of growing demand, Chinese authorities have begun to look more closely at MBAs and joint venture programs in order to better control the quality of teaching, going as far as establishing a moratorium on new joint programs.

Clearly there is a need for management training at the highest level within Chinese organizations in order to enhance Chinese competitiveness in the global economy. Many of the skills required for international leadership are lacking in China, in particular critical thinking, problem solving and creativity. Younger managers are increasingly looking away from foreign study to focus on local programs, as are executives. So the challenge is to find the means to provide international standards in China, in order to best prepare managers and executives for global competition.

HEC Paris has recently focused its efforts on Executive Education in China, and now offers its EMBA program under the auspices of the Training Center of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC). The program is taught entirely by foreign faculty, with no local university partner, and is an example of government-education partnership to meet training needs. Specifically targeting SOEs, much of the ROI for the individual comes from the “soft skills”. Participants engage in business simulations and work extensively on case studies. This western methodology, which helps build communication skills and team work as well as problem solving skills, is a key added-value for the student body and a differentiator from local programs.

In the design phase of the program, working closely with the Training Center of the SASAC, it was decided that the program should be open to the largest number of qualified participants as possible. Language, it was decided, should not be a barrier in itself to entry, keeping in mind that many Chinese executives never had access to English training or international exposure. This needs to be viewed from the local context and is not a value judgement on the individual. HEC, in order to meet this specification, had to design its program and delivery accordingly. All material, including presentations and cases, are translated prior to modules. Simultaneous interpretation is available, and text books are chosen in part for their availability in Chinese. HEC teaching faculty is accompanied by a team of local teaching assistants, who help bridge the cultural and linguistic gap that may exist. These local assistants, who are most often PhD students, receive training from HEC for their support role in the classroom. This aspect of the program is also noteworthy, as it allows HEC to identify academic talent and to foster international exposure within young Chinese faculty.

In many ways this program is an example of innovation in meeting the specific needs for management training in China. HEC brings international methods and standards to a largely non-international population, allowing HEC to fulfil its mission of improving corporate competitiveness on an international level.

GMAC, Asian Trend Report, 2007

GMAC, Profile of GMAT test takers

For more information on:

HEC Paris Executive Education