An opportunity missed in China

The recent call by Wen Jiabao, China’s premier, for urgent political and economic reform, has reignited debate over the state of the Chinese economy and Chinese industry. However, his call for change also embraces the antiquated and conservative Chinese business education system. Without urgent reform what chance is there for Chinese industry to achieve any sustainable competitive advantage?

Business education in China and MBA programmes in particular, are attracting record numbers of students. But despite the large numbers flocking to business school, this is failing to translate into business success among China’s corporations, even the most well known.

Last year marked the 20th anniversary of MBA education in China. There are now a total of 236 MBA programmes on offer at China’s business schools, compared with only nine piloted in 1991. Nevertheless, China’s myriad organisations fail to make the mark both domestically and on the international stage.

The Chinese government is aware of this paradox. In 1995 the Chinese central government publicly pledged to instigate major education reform on the mainland, and in 2009 education appeared once again as a key feature in China’s transition, with further government proclamations of sweeping policy changes.

Nonetheless, despite so much attention, education in mainland China – and business education in particular – remains woefully inferior compared with most European and US universities and business schools.

An academic brain drain continues to present a serious issue, with leading Chinese professors and students seeking career paths overseas.

Several factors may be at work here. Average starting salaries for graduating MBAs from leading US and European business schools are some 30-40 per cent higher than for graduates from Chinese business schools.

Leading US and European Union business schools are also viewed as producing superior academic research, with research conducted by the elite US (Ivy league) and UK (Russell Group) universities ranking among the most highly respected worldwide. Even academics at the leading Chinese business schools rarely publish in top-rated academic journals.

Top Chinese students still favour business education from a leading US or European business school and on graduation they invariably seek employment in the west, or choose a career in an international company based in China.

As a result there is a paucity of sufficiently knowledgeable and talented Chinese business professionals, meaning that Chinese companies are under-represented on the world stage.

The challenges facing business education in mainland China are even more serious given the country’s gradual shift from being the world’s lowest-cost producer and Beijing’s recent attention to domestic consumption and the development of local industry. For example, the government recently withdrew support for international direct investment in certain industries, including automobile manufacturing, to allow Chinese companies to become more competitive domestically and internationally. However, without a critical mass of suitably educated Chinese business graduates, such an improvement in competitiveness is highly unlikely.

The recent change in China’s political leadership was the opportunity for the government to reform its approach to business education. Changes could have included tailored executive education for Chinese companies and industry sectors; MBA and related programmes aimed at creating and maintaining a direct link between business education and business improvement; and the establishment of entrepreneurship as a core part of most business education programmes, allowing China to move closer to a culture that values innovation and creativity.

Such changes would have transformed China’s business education landscape and helped to make it a competitive force on the international stage. Sadly it was an opportunity missed.

Mike Bastin is a resea rcher at Nottingham University’s School of Contemporary Chinese Studies