Joint Business Education Alliances to Advance the State of Business in China
By Peter
J McAliney, MBA CMC PMP
Executive Summary
China’s
role in the global economy has increased significantly since its policies of economic reform were instituted in the late 1970’s. To support this increased economic role, China
has seen a migration of business ownership from state owned enterprises (SOEs) to private ownership. Demands for productivity and profitability in Chinese companies are beginning to resemble more and more
the demands expected in western business organizations. In order to meet these
demands, China needs to nurture the development of professional
managers. It is contingent on the higher education system - and business education
in general - to provide these professional managers the tools and skills they need.
Its
higher education system, however, is an undeveloped asset. In order to support
the growth that China envisions, it will need assistance from
outside the country. Alliances with business education institutions from outside
of China will need to be established to begin the process
of knowledge transfer and human resource development. It is through international
business education alliances that a greater awareness of the environment will begin to emerge.
This process will promote peace and development across borders.
Background
In 1977-78, the Chinese government announced a shift in national attention to
reconstruct itself economically by implementing a policy of reform and opening up to the outside world. The goal of this program was to transform China
into a powerful nation with modernized agriculture, industry, science, technology and defense.
This has been referred to as “The Four Modernizations” (Lianqing, 1996).
Since that time, China as a country has stepped up
to this challenge. The average year over year GDP growth rate for the period
between 1979 and 2004 was an astonishing 9.6 percent (NBS, 2006a), with a reported 9.9 percent increase in 2005 (NBS, 2006a)
and first half 2006 growth of 10.9 percent (NBS, 2006b). While the rate of GDP
growth is not expected to continue at this torrid pace indefinitely, a March, 2006 report released by the State Information
Centre calls for a not insubstantial yearly average 7.5 percent GDP growth between 2006 and 2010 (Reuters, 2006).
Driving this growth is an increased employer base.
According to statistics provided by the first country-wide National Economic Census conducted in 2005, state-owned
enterprises numbered 192 thousand, collectively owned enterprises numbered 456 thousand, and private enterprises numbered
1.98 million (Hhuiqing, 2005). While the number of both national and collectively
owned enterprises decreased on average 47 percent since 2001, the number of private owned enterprises increased almost 50
percent. Regardless of the constituent ownership structure for the increased
number of business entities in China, they share a common
need for an increased number of professional resources, that is, managers, to run these entities.
The demand growth for management and professional talent is estimated by McKinsey and Company to be about 75,000 globally capable executives
over the next five years (Van Dam, 2005). This pent up demand is already manifesting itself negatively in today's business environment where employee
turnover rates in professional management jobs range from a reported twenty to thirty percent (Fahy, 2006; Van Dam,
2005). In order to achieve productivity targets, more trained professional
managers are needed.
In addition to a larger
absolute number of professional managers Chinese business needs to see productivity improvements from its company managers. These improvements in part will come from learning and applying management theories
that have become the currency used by managers in western companies to sustain profitability. Western managers have formally learned these
management theories through a network of institutions within the higher education infrastructure including undergraduate,
graduate, and executive business programs. This formal business education has
also been enhanced through on-the-job application with senior executives who have spent years turning these theoretical constructs
into practice.
While China’s higher education system has made great strides in the last
twenty-five years, it continues to largely focus on the "hard" technical skills (Fahy, 2006).
There are a multitude of reasons for this, one of which is that the higher education infrastructure - teaching methodologies
and tools, delivery mechanisms, faculty qualifications, technology - is undeveloped.
These same infrastructure inadequacies exist in the higher education business infrastructure. Whereas in the west we have heard more than one eulogy delivered for the MBA degree (Doria, Rozanski, &
Cohen, 2003; Mintzberg, 2004; Pfeffer & Tong, 2002), business education in China has tremendous growth potential. Undergraduate, MBA, Executive MBA and other business education delivery formats stand
to contribute a great deal to the development of professional managers, which in turn will contribute to increased productivity
for the Chinese economy. In order to deliver on this potential, elements in the
business education infrastructure need to be addressed.
Recognizing that parity in higher education will lead to sustainable
development throughout the globe, UNESCO has designated the first decade of the 21st century as the “UN Decade
on Education for Sustainable Development” (UNESCO, 2005). It has established
awareness and created an environment to encourage inter-university cooperation in the areas of education, training, and research. Such programs as the INITWIN/UNESCO Chairs programs are intended to contribute to
sustainable national, regional, and international development.
This paper
will describe the business education landscape and corresponding infrastructure in China
today. It will look at the different types of educational alliances that exist
today that are helping to address current needs of the economy while concurrently seeding organic growth for the Chinese business
education infrastructure. To better understand the context for today’s
business education environment, the paper will present a historical perspective of the development of China’s
higher business education infrastructure since the announcement of the four modernizations in 1977-1978. It will place these higher business education developments within the context of macro economic events,
political events, and general higher education legislation that have been enacted since 1977.
An understanding of this picture will inform an analysis of what kinds of business education alliances China
can adopt with international business education institutions to achieve its goal of educating managers in a growing and maturing
economy.
Historical Perspective and Recent Developments in Chinese Business Education
Business
education must first be set within the context of China’s
overall vision for higher education. In order to increase the number of traditional
college age (18-25) individuals participating in higher education from a 15% participation rate in 2005 (Ross & Lou, 2005) to a target of a 45% rate by 2020 (Whitman, 2004), China has
committed to aggressively focusing on strengthening the higher education infrastructure.
In 2004, 1,396 universities offered programs in management of which 491 conferred Bachelor degrees in management. There are over 300 schools and institutions that specialize in management. While there are 96 sanctioned MBA programs (Chunjun, 2006) and 30 EMBA programs (Peng,
2003), there are in total over 160 MBA programs, at more than 80 institutions, in more than 30 locations in China (Di Rollo,
2004).
Historical Perspective
The history of business
education in China can be traced back to the Chinese classicist and one of the foremost reformers of his time, Zhang Zhidong
(Chunjun, 2004). Concerned with rejuvenating China, he searched for a way for China to survive in the modern world that could
accommodate Western knowledge but preserve traditional ways. He encouraged study
abroad for Chinese students, the establishment of a school system, the translation of Western and Japanese books, and the
acquisition of knowledge from foreign newspapers.
During
the 1920’s and 1930’, business schools emerged with the establishment of the school of management at Shanghai
Jiaotong University (Chunjun,
2004; Deng & Wang, 1992; Goodall, Warner, & Lang, 2004). Management education in this period was confined
to a very small scale due to Japanese occupation in the 1930’s and 1940’s, continuous civil wars, and the fact
that industry was controlled for the most part by a small group of bureaucratic capitalists and warlords (Deng & Wang, 1992). Similar
to business education in the west, these schools focused on scientific management and production-oriented techniques commonly
referred to at that time as “Taylorism.” (Taylor, 1947) Practical management education was introduced to China through foreign firms such as British American
Tobacco and Kanebo. Workers education focused on minimal, repetitive skills and
manager education focused on controlling the production flow. This was appropriate
given the industrial base in China at that time.
Between
1949 and 1976 business education was directed to serve the specific needs of the State.
Three streams of business education were promoted: economic management dealing with macro level Marxist economics and
socialism theory; industrial management engineering, and; financial budgeting to support the bookkeeping requirements of the
centrally planned economy (Peng,
2003). “Political correctness” became more important than practicing good management techniques and
professional managers became both scarce and suspect (Goodall, Warner, & Lang, 2004). This focus on the centrally-planned economy meant Chinese
companies were simply production units in a national economic system (Newell, 1999). In some cases, managers and workers were sent
to the USSR for business and management education (Warner, 1995). Expulsion of the Soviets in 1960 was followed by the Cultural Revolution. During the Cultural Revolution in 1960’s and 1970’s, Maoist’s preferred
managers to be “red” rather than “expert.” The entire
education system had virtually been uprooted which caused long-term damage to business education and the economy as a whole
(Nolan, 1995).
Developments Since 1976
The integrative nature of business in China
requires that business and management education be viewed within the context of the political, economic, and higher education
environments. Table 1 presents a comprehensive view of recent developments in these environments that have impacted business
education in China.
The first formal inter-country partnership in business education occurred in 1984
when an MBA program was launched by Dalian Institute of Science and Technology and the State University of New York, Buffalo,
following conversations between Deng Xiaopeng and former US Secretary of State Henry Kissinger (Peng, 2003). That same year saw the China-Europe Management Institute (CEMI) launch as a partnership between the European
Commission and China’s National Economic and Trade Commission. While the Dalian-US program faded into obscurity, the CEMI program matured into the
China Europe International Business School (CEIBS), one of the more prestigious business education institutions in China today
(Fischer, 1999).
China’s
political and economic environments are marked by a distinctive move towards
