Are Business Schools taking their Own Courses before Going to China?
May 16th, 2008
In the current issue of Business Week a short article describes some of the difficulties confronting non-Chinese universities that try to operate MBA programs in China. I talked with Alison Damast, the journalist who wrote the piece, and am briefly quoted in the article.
Earlier this month another piece on this topic appeared in the Chronicle of Higher Education. Paul Mooney, the Chronicle’s China correspondent, interviewed me for that piece, too. It is longer and describes in detail some of the travails faced by one institution trying to offer an undergraduate program in China, connecting the specific example to some larger themes, as does Damast’s piece.
Both articles suggest that running higher ed programs in China is often much harder than initially imagined by college administrators when they start these programs. I would say that’s a profoundly true and common pattern, based on my study of this area and direct experience with a couple of US universities that have tried to operate programs in China.
Many early entrants are getting thumped on the nose, finding that their China dreams are not unfolding as planned, or at least not being fulfilled as fast as planned. Some institutions are retrenching, scaling back their programs. Others are putting their tail between their legs and just going home, completely withdrawing from China. Others appear to be trying to muddle through.
I think eventually some programs will flourish, too. Clearly China’s economic ascent creates an enormous market for high-level education and training in China, and many non-Chinese institutions do have some comparative advantages with respect to providing certain kinds of the needed training. For example, PRC companies are new at doing outward-bound investment, so a domestic institution’s MBA course on cross-border M&A is likely to be less valuable than one form a country where cross-border M&A has been routine for decades. They same is true for many other areas; institutions in more developed economies have richer experience with many matters that Chinese managers now want to know about. Also, top Western institutions enjoy a kind of global cachet that is not yet matched by any Chinese school; so far no Chinese institutions has the global reputation among students, recruiters and faculty that cause it to be a beehive of activity for the non-China market. Additionally, some PRC students expect their careers in China to be focused on working for wai qi or foreign-invested enterprises, and those students are more likely to have the language skills and cash needed to get a foreign degree delivered in China. They are also more likely to judge a credential from a foreign institution quite valuable, since the employers they expect to work for are themselves foreign institutions. Finally, non-Chinese institutions benefit from having developed their programs in hyper-competitive markets subject to less political constraint and recent historical trauma than Chinese institutions. They have more freedom, resources and experience, even if they sometimes know shockingly little about China itself.
But higher ed institutions need to approach China as successful MNCs have—with patience, a long-term plan, a meaningful commitment of resources, and clear-headed, hard-nosed practicality.
Providing education services in China is in some ways harder than selling carbonated beverages and fried chicken. Language, culture and political differences are substantial obstacles (One could set aside some difficult conversations more easily if you are manufacturing or selling widgets rather than offering education, no?).
Also, I think a lot of schools fail to apply the lessons they teach in their own MBA programs to their China operations (market analysis, feasibility studies, strategic planning, capital budgeting, and an appreciating that lots of things will need to be adapted when your operations cross borders).
One fundamental problem is that the model of flying a professor to China to teach in an educational program there essentially reverses the economic model that has substantially driven China’s economic success—instead of arbitraging the gap between low Chinese wages and high prices in the “developed” world, many of these programs try to reverse that logic and collect tuition in China to cover high-priced non-Chinese labor costs. That’s challenging!
There will likely be some continued shakeout as some early market entrants pay “pioneering costs” and retreat. (They went to teach but will themselves have learned a lot about China and the difficulty of doing international business). Others will gain some degree of first mover advantage as they build up their PRC alumni networks and local reputations and figure out how to operate successfully in China. Still other institutions not yet on the scene will awaken to the potential of China and start dreaming their own China dreams. One hopes they will learn some lessons from the varied record of early market entrants.
Finally, note that the development of foreign degree (and non-degree) higher ed. programs in China is just part of a broader phenomenon—general growth in the cross-border provision of higher education services. For centuries students have been crossing borders to get educated; now universities are doing the border-crossing. This is an interesting facet of globalization, with potentially significant cultural and political repercussions in China and elsewhere. UNESCO and the OECD have jointly sponsored a series of conferences on the topic and issued a document with guidance for how accrediting agencies, nation-states and educational institutions can facilitate growth in this area.
I am now writing a law review article about the surprising and sometimes disturbing details of the PRC regulatory environment that governs non-PRC participation in China’s higher ed. sector. It will be finished later this summer.
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