MT MBA & Business Education Guide: Autumn 2011 - China calling

A stint in China is becoming a CV must-have for the corporate titans of tomorrow, and with more than 120 MBA programmes to choose from and double-digit economic growth, it's an attractive place to study and work for other reasons, too, says Andrew Saunders.

by Andrew Saunders
Last Updated: 09 Oct 2013

Back in the days of the pioneering American settlers, ambitious young high achievers were exhorted to 'go west' in search of fame and fortune. A century and a half or so later, their corporate equivalents are increasingly turning that advice on its head, shunning the now-safe choice of a cosy berth in Europe or the US and heading east for the excitement and opportunity afforded by China.

It's not hard to see why - with the west bogged down by intractable financial woes, China's remarkable growth rate of over 10% is buying it an increasingly large say in global economic affairs. Employers now prize the value that having experience in the world's most populous nation on their CVs can bring to the next generation of senior managers - so if you're thinking about riding out the market gloom at home by doing an MBA, you too could do a lot worse than head east.

'The best people are now being made country managers in China. It will become the new pathway to the top of the corporate ladder,' says Professor John Quelch, dean of Shanghai's China Europe International Business School (CEIBS), citing the likes of Tesco's Philip Clarke and McKinsey's Dominic Barton as examples of this new breed. Both are newly minted chief execs with spells in the Asia-Pacific region under their belts.

'That's a reflection of what applicants to CEIBS are thinking, that Chinese experience will give them a leg up in their careers,' says Quelch. He adds: 'Our students are real internationalists with an adventurous streak, they are taking a bet on the future.'

It's a gamble that is set to pay off, he believes, as China continues to climb up the global commercial pecking order. 'Within 10 years I predict as many as 20 Fortune 500 companies will have Chinese CEOs.' And he should know - his long and distinguished career, including stints as dean of London Business School and many years as associate dean and professor of business administration at Harvard, means the 70-year-old Quelch has more knowledge of what's going on in the world of business education than most.

And as the boss of China's largest business school (which has a new branch in Beijing as well as its main campus, plus an outpost in Ghana), Quelch is determined to make the most of the opportunity this presents. As befits a man with dozens of marketing textbooks to his name, he has come up with a catchy phrase to sum up what the school has to offer - China depth, global breadth. 'In business education - as in consulting - it's very hard to come up with a USP, but no international school can match us on China depth, and no Chinese school can match us on global breadth,' he says. 'It's a sustainable sweet spot.'

CEIBS awards 800 executive MBAs annually, making it by far the largest provider of these part-time qualifications. 'Columbia is next at 300,' says Quelch. Of CEIBS's students, 85% are taught in Chinese, which adds the complexity of simultaneous translation for those lecturers who do not speak the language. Its exec MBA graduates are also older, averaging 40 rather than 30, which Quelch says makes them more demanding and raises the standard of teaching across the board.

The traditional full-time MBA course is the one which attracts most non-Chinese students, a 50/50 mix, and they are very serious about China. 'Our students realise that to understand the country, you have to immerse yourself in it. You can't "do" China on a two-week tourist visa. Singapore is Asia lite, Hong Kong is China lite, for the real experience you have to go into the belly of the beast,' he says. The price of this full immersion? Around $50,000.

Quelch joined CEIBS (which was set up as a remarkably far-sighted JV between the EU and Shanghai's municipal government in 1994) as dean in 2008 and he is busily engaged raising the profile of the school around the globe. 'There are 120-plus MBA programmes in China now. Strategically, I've always been mindful that Harvard allowed Stanford to come into existence by underestimating the need for western America to have its own university. The power of the geographical analogy between the US and China is not to be underestimated. And, although we have our own Beijing campus now, we are also looking at a fourth location in the west of the country. I don't want the Chinese Stanford to pop up while we are still congratulating ourselves at having opened in Beijing.'

He is also working hard to establish a very substantial teaching faculty which will see the school well into the future. 'My five-year plan for CEIBS is to work on the positioning, with the emphasis on quality. I don't expect to boost our size by a large measure. I do need to boost the full-time faculty though - we have 65 at present with about the same visiting faculty. Visitors are fine but you can't build an institution on them. It's like asking Richard Branson if it's OK for half his top managers to just pop in for a couple of weeks a year.'

To this end, he has instigated what must be one of the biggest academic recruitment drives around, looking for 30 expert professors across all disciplines and from anywhere in the world. 'We want to go from 65 to 100 in two years. We're encountering the same issues and using the same professional methods to get over them as do the major corporations. Relocation is the key challenge for us, just as it is for the firms who move here.'

But what about the Chinese students? How do they compare to the usual crowd of wannabe bankers and consultants which populate so many MBA courses in the west? 'China is still largely manufacturing driven, so we see a lower percentage of our graduates going into financial services,' he says. But perhaps the biggest difference is in broader attitudes to education. 'The Chinese have a voracious appetite for learning. They know it is a source of competitive advantage - and when there are 1.3 billion people to compete with, it does raise the bar a little,' Quelch says.

That prodigious double-digit economic growth also impinges on expectations. 'If your economy is growing at 10% rather than at less than 2%, then the opportunity cost of sitting in a classroom is that much greater.' In other words, CEIBS has to add value at a rate of 10% a year just to stop its students falling behind those who remained in the workplace. 'They are much more demanding that they receive actionable learning which will help them make money next week,' he says. 'European students expect China to be highly energetic and competitive, but I don't think they have always translated that into what it will mean for them.'

Another revealing factor is the number of bosses and proprietors to be found among the CEIBS executive MBA students. 'We did a sweep of 10,000 EMBA alumni - 1,200 of them were CEOs or chairmen,' he says. That's a lot more than you would expect from a European or US school, where education is seen as a tool you use to get to the top, rather than one you continue to need once you have got there. 'At Harvard, for example, the same figure would not be more than 5%.'

There are also differences in terms of the disciplines which are most in demand. 'If the US is run by lawyers, then China is run by engineers,' Quelch says. 'What that means is that in China there is no shortage of talent in the hard subjects such as finance, but there is less expertise in the softer areas of leadership, change management and HR, for example.'

When it comes to what western firms looking to operate in China are in search of, one issue is pre-eminent. 'Talk to the heads of western multinationals in China and it's always talent, talent, talent,' he says. 'How do you spot it, hire it, develop it? And how do you avoid hiring second raters who happen to speak good English rather than first raters who do not?'

It's also very important for foreign firms to understand the Chinese modus operandi, he says. Take the concept of guanxi, the hard-to-translate expression which defines the network of personal influence and connections which individual Chinese business people rely on to get things done. 'Guanxi can be used very positively, if you want something and you know someone who knows someone who can help, you can get an introduction and accelerate the process,' explains Quelch. 'But if I am an underperformer and I have got great guanxi, I can prevent myself from being removed.'

The historical US analogy also applies to the contemporary Chinese business scene. The sheer size of the market means that, for many Chinese firms, it is easier, faster and cheaper to grow by building domestic sales than it is to move overseas. 'Chinese companies will take their time to go overseas, as many US firms did in the past. It is easier to add a sales team in Szechuan than it is to open up a beachhead in California.'

Domestic competition is therefore strong, making it hard for foreign firms to gain a firm footing there - and that's before they even start tackling the complexities of the Chinese way of doing things. But there is one aspect which helps level the playing field for incomers, says Quelch. 'The distribution network in China is very fragmented, so in many markets it is as difficult for a local company to achieve national distribution as it is for a multinational.' He reckons that only P&G and Coca-Cola have cracked national distribution so far, but that others are not far behind. 'Yum! Brands (the firm behind fast food names such as KFC and Pizza Hut) is very interesting. China is its fastest growing market and the vice-chairman of the whole group is the China general manager. It has around 3,500 branches in China at present, but it is aiming to have 20,000 in 10 years' time.'

Quelch also believes that the financial crisis and ongoing economic problems of the west have helped the Chinese grow in confidence on the international commercial stage. 'There are many Chinese, however humble they may be in public, who are jumping for joy at what has happened in the west, because it gives them a three-year catch-up advantage.'

Nor does he shy away from the role business education played in that crisis. 'It's disingenuous to claim that business education did not play a part. A lot of the financial engineering techniques that were used on Wall Street were hatched in PhD programmes and became part of the equation. It was a classic case of innovation outpacing morality, and that's not going to end simply because we have had a crisis. The problem will persist for as long as the financial institutions have the ability to compensate graduates above the rest of the marketplace.'

However, ongoing success in both China and the west depends, Quelch says, not on finger-pointing but analysis. 'At CEIBS we have courses where the three models of capitalism "bamboo capitalism" as The Economist called it, plus the US and European variants, are presented and debated.' The stated aim being not to decide which is best, but, rather 'how can we solve global problems by combining the best of all three? That's where progress is always made, at the interfaces.'

He also believes that CEIBS is uniquely well placed to operate at the interface between east and west, because of its founding EU influence. 'It's a very great thing for the EU to have this asset, no American school has anything like it. Romano Prodi is a visiting professor, as is the former French prime minister Laurent Fabius, and we have visits from senior EU figures every other week. The fact that it's on their radar is good for us, and the connection into Europe is equally valued on the Chinese side. The EU is a bigger trading market for China than the US.'

So if you're hoping to earn a place in the upper echelons of the global corporate hierarchy of tomorrow, it's time to put China on your career map.

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