China 's M.B.A. Programs Attract Business Elite


From The Wall Street Journal

Liang Yingqi was frustrated.

The chairman of toothpaste producer Guangxi LMZ Ltd. saw his company's market share shrink and profit fall after Procter & Gamble Co. and Colgate-Palmolive Co. started selling some of their toothpaste products at about three yuan (36 cents) in China in 2001. After building up their presence in big Chinese cities for almost a decade, the global giants were now playing on his turf -- more price-sensitive consumers in smaller cities and the countryside, instead of the more affluent urban residents who were willing to pay seven yuan for a tube of toothpaste.

He couldn't figure out how these multinationals could compete on price while spending so much on advertising and sales. Puzzled and frustrated, he decided he needed to understand what was happening to his business. He enrolled in the executive M.B.A. program at Tsinghua University 's School of Economics and Management in Beijing in September 2002.

For each of the following 18 months, Mr. Liang would fly more than 1,900 kilometers to Beijing from southern Guangxi province to attend four days of classes. He graduated in January and wrote his thesis on competition strategies of Chinese toothpaste companies in domestic and international markets. More importantly, he learned how those multinational companies make their long-term development strategies and how to make his own. "We can't win a competition if we don't know our competitors," he says.

Attracting the Wealthy

Officially launched in China as a degree program in 2002 at 30 universities, executive M.B.A. programs are aimed at training executives who can build and manage more sophisticated companies as the country's economic power grows. Unlike programs in the West, which help midlevel managers prepare for a leap into general management, the programs in China attract some of the country's wealthiest and most influential businesspeople, who want to think big and understand the fast-changing global marketplace.

Growing up in a planned economy, few Chinese businesspeople have had formal training in managing big companies under a market economy. With China 's increasing integration into the world economy, they also need to deal with challenges of globalization.

"Companies in China have come to an important point where entrepreneurs can no longer manage their companies based on their past experiences," says Wu Changqi, associate dean of Peking University 's Guanghua School of Management. "Executive M.B.A. programs provide them a forum where they can learn practices of foreign and domestic companies."

Some students, like Mr. Liang of LMZ, have to compete with multinational companies in the domestic market, while others, like Liu Jun, chief operating officer of Lenovo China and an executive M.B.A. student at Tsinghua, have to learn how to grow globally.

"When you are running a business organization, you actually have very little time to think about the big picture," says John Akula, senior lecturer at Massachusetts Institute of Technology's Sloan School of Business, who teaches business law at both Tsinghua's and MIT's executive M.B.A. programs. "It will benefit you if you can spend a few days to think in a broader way what you are going to do."

Mr. Akula jokes that American executives with positions like his students at Tsinghua must prefer playing golf to sitting six to seven hours a day in a classroom.

The New Reality

But his Chinese students say they have no choice. "?Change with each passing day' used to be a mere phrase in dictionaries, but it has become a reality we have to live with," says Liu Shaoyong, chairman of China 's largest carrier, China Southern Airlines . As China 's gross domestic product per capita exceeds the current level of $1,000, more Chinese will be traveling by air, the pilot-turned-executive says. He believes that he needs to know more about the global air-travel market to make his 40,000-staff company more efficient and profitable.

More than 50% of the students at China 's top business schools -- Peking University's Guanghua School of Management, Tsinghua University's School of Economics and Management and Shanghai-based China Europe International Business School -- are either chairmen or chief executives of companies. As a result, they are more likely to practice and test what they learn from school in their daily management. All three schools say some of their students are billionaires or top executives of the largest companies in China .

But these students' high positions and enormous personal wealth have attracted a fair amount of critical comment. The media call these programs "rich people's clubs" and play up the phenomenon of luxurious cars parked on campuses every weekend. Some question how motivated these rich and powerful people are about learning while some say that snob appeal plays a big role in these programs' popularity.

Indeed, tuitions of as much as 250,000 to 290,000 yuan, or about $30,000 to $35,000, at top schools are out of reach of ordinary people in China , where tens of millions are still living on less than $ 2 a day. Zhao Chunjun, dean of Tsinghua's School of Economics and Management, denies that many of his students drive luxurious cars to classes and argues that better-managed companies can contribute to China 's economic growth, therefore helping narrow the gap between the rich and the poor.

The executives interviewed for this article say that attending the programs turned out to be a much bigger commitment than they expected and also a highly rewarding investment in both learning experiences and networking opportunities.

A Long Journey

Cao Kebo , president of Jiangnan MPT Co., which produces about 40% of China 's automobile bumpers, had to travel two hours by car from his company's headquarters in Jiangyin city in Jiangsu province to Shanghai before flying two more hours to Beijing. He missed only one of his 18 classes and doesn't think the trips were too much trouble. "As entrepreneurs," he says, "we have to deal with troublesome issues everyday." Mr. Cao's family is among the wealthiest in China .

Mr. Cao says that what he learned from Tsinghua will have a far-reaching impact on his company's development. "I didn't go there to get a tool kit of management," he says. "I learned ideas and visions." He also values the opportunities to interact with his professors and classmates. "It is not easy to find somebody in your company who speaks the same language as you," he says.

Already, some students are sending their deputies to school, too. Mr. Liu of China Southern Airlines is talking to Tsinghua about organizing a short-term training program for all of his high- and midlevel managers. Mr. Liang of LMZ asked his chief financial officer and chief operating officer to apply for executive M.B.A. programs at Tsinghua and Peking universities, respectively. But the chief operating officer didn't pass the admission test.

Indeed, as the popularity of executive education grows, the schools are getting more selective about admissions. Tsinghua business school's application and admission ratio rose to 4 to 1 last year from 2 to 1 in 2002, while the ratio at Peking University 's Guanghua school rose to 4 to 1 from 3 to 1.

Meanwhile, these high-profile students will also shape the content and style of China 's executive M.B.A. programs, the schools say. They pay close attention to their students' evaluation of each course and change their curricula and course contents accordingly.

As top executives, these students are more interested in courses like strategy-making, corporate governance and leadership building but have little patience with technical aspects of accounting, says Liao Li, associate dean of Tsinghua's business school.

The programs have also shifted from teaching translated Western case studies to developing more content that is relevant to China today. Last fall, Peking University 's Guanghua school withdrew a course on capital markets and added a new one on corporate governance. "The most important issue our students face is not how to invest in mutual funds," says Mr. Wu, the associate dean, "but how to deal with the opportunities and risks in state-owned enterprises' transition to shareholding companies."