China’s Anti-corruption Campaign Drives Out MBA Students
You know how some critics dismiss MBA programs as a boondoggle? They equate it to a “vacation” or “high school” for the quarter life crisis set. They argue that students could learn the same lessons by starting a company, enrolling in a MOOC, or (gasp) reading a book. Sure, they might miss the so-called networking. But they easily make that up by strategically targeting potential mentors and investors, right?
Well, these detractors can welcome a new member to their table: The Communist Party of China. These days, this one-party state is embroiled in a campaign against bureaucratic graft. In the good ol’ days, Chinese civil servants could overtax-here-and embezzle-there with impunity. They were party members in good standing. And they knew who to pay off so they’d look the other way. With rising incomes and greater freedom came higher expectations. Fearing that their underlings’ excesses could threaten their credibility and power, the party bosses have unleashed an anti-corruption campaign, which has netted officials like party chiefs and governors.
Historically, China has been known for having more purges than a bulimic. Party officials strove to punish partisans who weren’t deemed purists. In the end, the nation was tarred by excesses like the Cultural Revolution. Now, this anti-corruption fervor could damage a major driver for economic growth: Business schools.
That was the message behind a recent Wall Street Journal article by Wei Gu. According to Gu, “China’s top business schools say 15%-30% of students withdrew from EMBA programs in the fall semester” as a result of this clean up effort.
So how did business schools – sometimes lampooned as insulated from and out of touch with business cycles – get dragged into this? Last year, party officials dismissed MBA programs as glorified networking instead of valuable training. As a result, party officials banned members from accepting scholarships from executive MBA programs.
Yes, the irony is thick. In a one party state – where who you know can be more important than what you know – networking is now considered a luxury. Or, in this case, it is a state-paid expense. Gu reports that part-time EMBAs in China cost nearly $100,000 – and is often paid with public or company funds. In fact, tuition costs have more than doubled at Beijing’s Cheung Kong Graduate School of Business (CKGSB) in the past seven years.
But is it a necessary expense? Many schools believe so. In fact, CKGSB entices party officials with scholarships, often paying 90% of their tuition. That’s because many aspiring entrepreneurs want to build guanxi (connection) with government officials, to help them navigate the bureaucracy and curry favor with party elders. “Relationships are the most important thing in Chinese businesses,” said Qian Shizheng, a finance professor at Fudan University. “People are eager to build relationships in small trusted circles.”
With government directing many functions typically handled by the private sector, many officials (and leaders of state-owned companies) need EMBA training to perform their jobs. Gu reports that “their work can include complex tasks such as designing free-trade zones or approving overseas acquisitions. [As a result], many feel that their college educations were inadequate.” In other words, party overreach could eventually stifle their country’s economic growth – deepening a risk aversion that critics charge already dampens its startup sector.
In the meantime, enrollment drops are roiling Chinese business schools, where EMBA programs are their biggest revenue source writes Gu. Consequently, schools may resort to trimming their faculties – particularly international faculty who bring the renown needed to attract foreign students. To counter, some Chinese business programs are researching overseas expansion. On the mainland, the party’s hostility towards EMBA programs could dampen partnerships between Chinese business schools and American counterparts like MIT, USC, and Washington University, which funnel faculty and resources to their programs
At the same time, some students have adjusted to the new status quo. Shizheng notes that some dropouts have formed a chat room on a Chinese social network to stay in touch. “…people are eager to build relationships in small trusted circles,” Shizheng point out.
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Source: Wall Street Journal