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Historians date the beginning of China’s modern economy from 1978, two years after the death of Mao Zedong and the end of the disastrous cultural revolution. But many modern institutions, notably in business education, are even younger. Wang Chunqi earned the first MBA degree granted by a mainland Chinese university in 1993, when China was on the cusp of its period of supercharged growth.
Ironically, Wang himself did not seek out the opportunity but — in an echo of the planned economy from which China was emerging — had it thrust upon him. After finishing his first degree in engineering in 1977, he was sent to work at Yizheng Chemical Fibre, building automated production lines. By 1991, the company was the world’s fourth-largest producer of polyester yarn.
“I had no [management] experience, but at that time getting into university had nothing to do with your background,” Wang says, speaking in the lobby of his office tower in Shanghai’s Pudong district. The area was still mostly farmland when he began his MBA but is now a dense cluster of skyscrapers.
“The company leader recommended me. I had a certain status there,” Wang says. “There were a few of us who were recommended to take the test, but I was the only one who passed. Actually, I really didn’t understand what this discipline was all about.”
The Chinese government selected nine universities to pioneer domestic MBA education. The inaugural year was 1991 and the group included Beijing’s three top universities — Peking, Renmin and Tsinghua.
Tsinghua, which is known as China’s answer to Massachusetts Institute of Technology, was famous for its engineering department. Future central bank governor and premier Zhu Rongji, an architect of China’s economic reform during the early 2000s under President Jiang Zemin, was appointed as founding dean of the new School of Economics and Management.
For Wang, business school meant leaving his wife in Nanjing to live in a dorm room with two classmates in Beijing. But the schools had been instructed from on high to launch MBAs and were not fully prepared. With no standardised course materials, professors often taught from handwritten notes. A distinct business curriculum had not yet been established, so Wang took classes with masters students in engineering for the programme’s first year.
In the second year, 15 of 70 masters students were chosen to proceed to the formal MBA programme. Much like the so-called “third generation” of Chinese political leaders centred around Jiang, Zhu and former premier Li Peng, who all trained as engineers, the selection process for MBA students placed a premium on engineering skills.
“They didn’t want teachers; they wanted people with experience managing factories — people with experience in industrial science,” Wang says. “If you studied the humanities, foreign languages or something like that, they didn’t want you.”
For an engineering student, topics such as marketing strategy, joint venture management and western accounting were unfamiliar. The course required three years of full-time study and Wang recalls working into the night by torchlight after the dormitory shut off the electricity at 10 o’clock.
“Compared with engineering, it wasn’t really difficult, but it required a new way of thinking. Sometimes I didn’t understand what I was reading,” he says.
Wang earned the distinction of becoming China’s first MBA because he asked for permission to graduate several months early. “When I graduated, they hadn’t even figured out what the diploma should look like. They just gave me an engineering diploma,” he says. “Later I swapped it for the real thing.”
Yizheng Chemical was preparing to be one of the first mainland companies to complete an initial public offering in Hong Kong. For his MBA thesis, Wang researched issues surrounding Yizheng Chemical’s listing and was given special permission to return to the company to participate in the road show.
Though not of his own choosing, the experience fundamentally changed the course of Wang’s career. Shortly after the IPO, he left Yizheng Chemical to join First Eastern Investment, a Hong Kong-based private equity firm.
Wang’s career shift neatly tracks the changes in China’s economy. Yizheng Chemical thrived in the 1990s and early 2000s, when the country grew rapidly by mastering existing technology from rich countries and taking advantage of cheap labour costs to seize market share.
Now high-pollution, low-margin industries such as chemical fibre are giving way to higher-value-added industries, including financial services. Yizheng Chemical, which today is owned by state oil refiner Sinopec, is struggling to survive in an industry beset by overcapacity, and its shares are in danger of being delisted.
Yet Wang maintains a traditional view of what makes an effective business leader. “You need to understand technology and industrial science,” he says. “A lot of investment bankers who do IPOs come at it from the perspective of the humanities and make all kinds of promises to investors. That won’t fly.”
MBA places and senior faculty in short supply
It may be barely 20 years since China produced its first MBA student, but these days some 30,000 managers graduate with an MBA each year from 236 Chinese business schools, writes Della Bradshaw.
That is huge growth by international standards — China now has nearly three times as many MBA schools as the UK — but given the size of China’s management cadre, the numbers are tiny.
One reason for this is the lack of qualified instructors, says Zhou Lin, dean of Antai College at Shanghai Jiao Tong University. “Thirty thousand seems to be a small number, but if you look at the supply side, in China there are not enough quality programmes. The bottom schools are really struggling.”
One reason is that it is difficult to hire faculty, says Lu Xiongwen, dean of management at Fudan University in Shanghai. “It is not difficult to hire junior scholars but it is to get senior scholars.”
Even at Tsinghua University in Beijing, one of the world’s most prestigious universities, the management school has been able to fill only nine of its 30 chaired professorships.
A second reason for the relatively slow progress is the quota system. The government tells each university how many students it can enrol and the university allocates places to each department. Even if there is huge demand for an MBA, the designated number cannot be exceeded.
Prof Lu believes the system should change: “[The number of] MBAs should be determined in the market.”
Another significant difference between MBA study in China and that in the US or Europe is that the majority of students in China study part time.
At Tsinghua University School of Economics and Management just 98 of the 437 students who enrolled on the MBA programme this academic year are studying full time. At Antai, 80 of the 550 MBA students study full-time, says Prof Zhou. “When MBA students have decided they want to study full time, they will go abroad.”