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Western Business Schools Turn To China's MBA Market

Western business schools are flocking to China – a partially untapped MBA market. But there are concerns that the invasion is diluting China's brand value.

Thu Sep 18 2014

A decade ago, a northern UK business school set about creating links with the world’s next biggest economic power. Executives from the University of Nottingham’s business arm had their sights set on Ningbo, a city on China’s east coast.

The Chinese government had just approved legislation that would permit the establishment of foreign campuses on Chinese soil. It was to usher in a new era of western-led education in China. But Nottingham wanted to go one step further – it wanted a new Chinese university.

Central to its Asian ambition was Professor Yang Fujia, a Chinese academician appointed Chancellor two years' prior, in 2001. The university spent the following 13 months pushing forward a case for the establishment of their own Chinese institution, the University of Nottingham Ningbo China (UNNC).

In March 2004, the Chinese Ministry of Education approved plans for Nottingham’s blueprint. Few other western schools had made such a move. Nottingham was one of the first.

UNNC admitted its first crop of 254 students a few months later, in September. Its first post-graduate graduation ceremony was held in 2007, following approval to launch master’s programs, and later PhD’s.

Last month, Nottingham celebrated UNNC’s 10th anniversary. Today, the Chinese university offers five different business master’s programs for domestic students, and four for internationals. But it is not yet done with its Asian expansion.

In the final weekend of August, 30 senior officials from banks and insurance companies began their first classes at the new Guangdong-Nottingham Advanced Finance Institute.

A collaboration between Nottingham and the Guangdong University of Finance, the new business school seeks to train senior financial managers in the city of Foshan, in Guangdong, which has the largest GDP of any Chinese province – about £550 billion.

Professor Lu Lei, president of Guangdong University of Finance, has high hopes. “[The] Institute will play a very important role in the future development of China’s financial sector… Which is critical to the economy of Guangdong and Southern China,” he said.

Professor Lu was desperate to partner with the many western business schools establishing camps in his country. Not only are schools like Nottingham launching campuses, but many more are delivering business education courses taught in English to Chinese citizens.

These citizens hold western schools in high regard. Less than 2% of East and Southeast Asian citizens sent GMAT scores to Chinese business schools in 2012, according to Graduate Management Admissions Council data. But they sent scores to the United States in their droves.

“It is true that western business schools – particularly those in the USA, Canada, and Western Europe – have become popular for East and Southeast Asian applicants,” says Liansheng Wu, MBA program director at the Guanghua School of Management, based in Beijing. “[They] realize the need for a global perspective,” says Liansheng.

Provision of business education delivered in English in China is accelerating at a rate of knots.

In June, London Business School announced it would team up with Fudan University in Shanghai to teach a dual degree masters in management (MiM) next year, capitalizing on the MiM’s growing appeal. That adds to Fudan's deals with a raft of western MBA providers including MIT Sloan School of Management in the US, and BI Norwegian Business School of Europe.

The same month Cornell's Johnson School teamed up with Tsinghua University in Beijing to deliver a double degree MBA together. Tsinghua already has a long-standing deal with MIT, as well as an executive program with INSEAD of France and Singapore.

Another US stalwart, Duke’s Fuqua School of Business, just launched a program from a joint venture with Wuhan University in Kunshan, a city just outside Shanghai.

Western schools are looking to China because of the huge market of young professionals who want a western-oriented education, according to Roy Chason, assistant director of marketing at Shanghai’s China Europe International Business School.

“The Chinese market is very competitive, and young undergraduates are seeking to upgrade their global skill sets in order to work both in multinational companies... And private enterprises,” Roy says.

The might of the Chinese economy, which is set to surpass the US as the world's largest economy this year, means it is not just locals seeking a western-led business education.

China now attracts 8% of the 4.3 million globally mobile students, also closing the gap on the US, which has 11% of the world total, according to the Institute of International Education.

“Increasingly, people are realizing that there is – and will continue to be – a need to understand China’s business process,” Liansheng says.

But with such a huge increase in English language MBA programs, western schools risk damaging the Chinese market.

“The impact of foreign schools on the brand value of Chinese business schools is certainly a vital consideration for all involved,” says Liansheng. He thinks western schools are building their “brand equity” in China.

But accusations have also flown that US and European schools are setting up virtual shop windows to cash in on demand, rather than improve the Chinese education sector.

Liansheng admits that top western business schools could attract students away from incumbent Chinese schools, but considers the invasion an opportunity to strengthen Guanghua’s brand and global sights. 

He also points out that there are set-backs to launching such solo ventures: “Operating alone precludes the western business school from the numerous educational, cultural, and political advantages of being associated with a top Chinese educational institution.”

CEIBS in Shanghai, ranked in the top-20 within the global MBA Rankings, attracts large numbers of foreign MBA students, with about 35% coming from around 25 countries.

Established 20 years ago by the Chinese government and the European Commission, it is perhaps a shining example of the growth of collaboration. Because of its international reputation, CEIBS is able to attract the best local candidates.

“Unlike slower paced western markets, students in China are fascinated by this country’s accelerated growth as well the as professional opportunities at their disposal,” quips Roy.

He is careful not to refer to CEIBS as a Chinese business school. “Rather, [we are] a global business school operating out of Shanghai. We are unique and wish to play on the collective strengths of our heritage,” Roy adds.

The Shanghai Advanced Institute of Finance is newer – it launched its MBA program in 2009 – but with over 300 MBA and EMBA students it is no minnow.

It attracts a large number of foreign candidates for these programs, with applications from internationals doubling in the past year, according to Gloria Wang, international affairs officer.

“It’s highly recognizable by the recruiters, as they believe the students have gained important insights into the local market,” she says.

Western-Chinese collaborations are buoyed by these strong hiring prospects. Western MBA candidates come to SAIF to find work in the local market.

“The strong economy in China, Shanghai in particular, has a positive effect on the employment rate,” says Gloria. “Nearly all our international students have anticipated working in Shanghai or Greater China, which is also what motivated them to study here.”

However, Liansheng says that top western business schools still represent an attractive opportunity for Chinese students to learn the details of western business practices.

“Having a mechanism through which students have access to multiple business perspectives is increasingly valuable and necessary,” he adds.

But the rapid westernisation of China’s business education market may represent a shift to a more open education sector.

“The education system in China is evolving and improving,” Roy says. “As China’s professionals become more global and have more choice, they are becoming more demanding, and so the local offering of programs will logically evolve.”

He believes top Asian schools will soon be looked at as the leaders, rather than followers, in the development of modern management techniques.

Liansheng says that the emergence of business school partnerships is having an impact, but he doesn’t see such a shift in China’s education market. “Things are rarely so definitive in China,” he adds.