Political shifts in China raise questions about local development of Western business schools

Qian Yingyi, Dean of Tsinghua University School of Economics and Management (left) and Ilian Mihov, Dean of INSEAD (right), celebrated the signing of a partnership between the two institutions on June 14, 2016. Insead/Tsinghua SEM

The Chinese Communist Party’s 19th national congress takes place on October 18, and several issues will be highlighted, among them the consolidation of Xi Jinping’s powers. This consolidation has been particularly visible through China’s ways of handling its soft power, such as education.

The education of managers and executives is a growing challenge in 21st-century China – a country whose economy could become the largest in the world by 2030. Having built strong companies serving its huge domestic market, including Huawei and Alibaba, the country now faces important global expansion challenges.

To address them, Chinese business executives need to have international exposure, global management skills and be open to cultural diversity. In Western countries these competencies are acquired both through professional experience and in business schools. Western business schools increasingly favour international classes that bring together students from various nationalities and/or offer global curricula that take their students abroad – the Financial Times weighs 15% of its business-school Executive MBA rankings on the international dimension of MBAs.

With this in mind, many Western business schools have built partnerships with their Chinese counterparts, creating joint and double degrees in China and developing shared research programs. There are at least 35 such programs currently, with more no doubt in the works.

As a result, Chinese business schools have stormed the global rankings: In the top 15 schools in the 2016 Financial Times executive MBA rankings there are two programs delivered in China by Chinese business schools (Antai Shanghai JiaoTong University and CEIBS) plus two delivered in China as joint program between a local university and a Western institution (Insead-Tsinghua and Washington University–Fudan). By comparison, in 2010 there were none. Additionally there 256 approved MBA programmes and 50 approved EMBA programmes delivered in Chinese by local business schools.

But recent changes in China’s education and political landscape over the past three years potentially can disrupt this win-win model.

New regulations

The first change happened in the summer of 2014: as part of the anti-corruption drive of the Chinese government, executives from state-owned enterprises (SOE) and government officials were asked to pay for their own tuition fees. Previously, EMBA tuition was mostly were paid by private companies as “gifts” (personal research). In response, many such executives stopped joining EMBA programs, yet the Chinese government subsequently embarked a major move to make SOEs more efficient. So how can this be achieved without their executives acquiring international-level management training?

Another major change took place the following year. Initially EMBAs represented a “free market”: each business school could organise its programme – which are highly profitable – as they wished. It was during this time when joint programmes with Western business schools were set up. But in 2015 the Chinese government decided that EMBAs would be regulated like MBAs, thus enforcing a national control on all schools and programmes concerned.

The third event took place early 2017. The Central Commission for Discipline Inspection – the ideological watchdog of the government – sent inspectors to 29 universities with the objective of identifying possible corruption, financial discrepancies, “upholding the party’s leadership” and rooting out “political bias”. As a result 14 of them – including some top Universities like Beijing University and Tsinghua University – were accused of ideological infractions. Political control of universities is now on the agenda even if, traditionally, Chinese universities governance have a dual hierarchy, an academic and a party one.

The latest move took place in August 2017 and concerns a major foreign academic institution. Cambridge University Press (CUP) was asked to block online access to 300 politically sensitive articles from the China Quarterly journal. After removing the articles, CUP finally reversed course under the global outcry of the academic community.

What should universities expect now?

The end result is that Chinese universities are now being closely controlled by the government and that the scope of this control will necessarily expand. One can imagine that foreign universities delivering programmes in China will next be scrutinised. Many such programmes have no local partner, recruit locally and deliver their classes in hotels. According to the website WhichMBA there are over 200 such programmes in China, mostly American. Because these programmes have no official license, they might be the first to suffer from this tightening of education. Partnerships of Chinese universities with foreign universities could also be concerned, especially if they are considered more as money making programmes than there to help develop the skills of Chinese managers and executives.

Another conclusion is in the numbers: the more than 300 MBA/EMBA programmes in Chinese delivered by Chinese universities are now training managers and executives – bringing them to level when it comes to business skills. Their only drawback is their lack of international dimension – almost no international students and few international faculty: In the 2016 Financial Times EMBA rankings, one sees Fudan University with 9% of international faculty and Shanghai JiaoTong University with 3%. Compare this to major global business schools, which average over 40%.

While China is sure of its strength and potential as a nation, the place of unfettered international business education within that vision is uncertain. At the very least, it’s clear that Western business schools should be aware that their future in China may be much more closely monitored than it was in the past.