SHANGHAI—If there was ever a need for business schools in China, it’s now.
Breakneck economic growth has far outstripped the supply of management talent. Meanwhile, Chinese companies in both the private and state sectors are responding to government incentives to “Go Out” and compete against the best companies in the world—while juggling fierce competition, rapidly changing technology and shifting macro-economic forces at home.
- Education: Exeter College, Oxford University (BA and MA), the Wharton School of the University of Pennsylvania (MBA), the Harvard School of Public Health (SM) and the Harvard Graduate School of Business Administration (DBA)
- Career: Harvard Business School, London Business School
- Extracurricular: Tennis and squash
No wonder some of the world’s most prominent business schools are eyeing China as the next educational frontier.
China Europe International Business School got to China early. That gives it a head start in terms of faculty and facilities. Its new pitch: “China Depth Global Breadth,” marrying insight into how China works with an international perspective that attracts students from China and around the world.
Dean John A. Quelch, a veteran of the Harvard Business School and London Business School, insists that despite economic turmoil in Europe, the CEIBS brand in China remains untarnished. “Germany is held in very high regard,” he insists. Besides, he adds: “People in China take the long view.”
Mr. Quelch talked with Andrew Browne in Shanghai. The following interview has been edited.
WSJ: Like everybody else in China, CEIBS seems to be investing massively in infrastructure. Tell us something about your expansion plans.
Mr. Quelch: The Shanghai campus will double in size by the end of 2013. We also have a campus that we opened in Beijing in 2010 and we currently have operations in Shenzhen that may convert into a fully fledged campus within the next two to three years.
We also have an appetite for going west, and looking at that hundred million people in the Chengdu-Xian-Chongqing triangle, who will eventually want their own business school and will not necessarily want—or be able—to fly to Beijing or Shanghai.
The reason why Stanford exists is because Harvard always thought that Californians would be happy to come east to Boston, and never imagined they’d want their own Harvard, a.k.a. Stanford.
WSJ: The No. 1 complaint of foreign companies in China is lack of management talent. Isn’t that a huge opportunity for you?
Mr. Quelch: First of all, China’s pace of expansion has outrun the speed with which managers can experientially develop themselves, and so our role is to be an accelerant. We take experienced or high-potential young managers, and we accelerate the speed with which they can assume more management and leadership responsibilities.
Second, because we cannot serve everybody—obviously—the admissions criteria that we apply and the rectitude of our admissions policies is extremely important to our overall economic impact.
WSJ: What’s the mix of students between college graduates and mid-career managers?
Mr. Quelch: We focus on more senior executives even compared with a Harvard Business School. We graduate 1,000 people a year, roughly, 800 of them are executive MBAs; average age 40. The other 200 are MBAs; average age 30.
You have to have an extremely strong teaching faculty—very practical, very experienced—to be able to command the sustained attention and respect of 40-year-old business people.
We are the No.1 revenue-generating business school in executive education in Asia built around our unique ability to deliver both “China Depth and Global Breadth.”
WSJ: How do the changes in the CEIBS syllabus over the years reflect the shifting dynamics of the Chinese economy?
Mr. Quelch: Initially the focus was on functional competency [in] finance, accounting and marketing etc. Now the emphasis is on integrated general management and problem-solving across functional silos. Teamwork and leadership in fast-growth markets are stressed in our curriculum.
WSJ: Lack of integrated management is said to be one of the weaknesses of many Chinese companies? Why is that?
Mr. Quelch: The main reason is that China is run by engineers [who] typically have strong skills in finance and accounting and economics, but with less developed skills in the areas of leadership, change management, marketing, to some extent strategy as well.
So the soft skills, as we refer to them in the States, are the ones which are underdeveloped in China. The hard skills are well-developed. And so our curriculum places considerable emphasis on overlaying soft skills on the foundation of hard skills that many students bring to the classroom.
WSJ: Isn’t part of the problem that state-owned enterprises have many of the same kinds of rigid hierarchies that you have in the Communist Party?
Mr. Quelch: That may be the case. But there’s one thing that I’ve discovered in China: no-one—and I’m talking about the state sector—gets promoted for breaking the rules, but no-one gets to the top if they just follow the rules. So there is an art in China to taking new initiatives but doing so in a manner that is not destabilizing.
WSJ: But can that system generate true innovation?
Mr. Quelch: I think you can, if you throw a considerable amount of money behind it. But certainly a major challenge in the state-owned sector is to achieve innovation.
In every country the public sector is different from the private sector, whether it’s the U.K. or the U.S., there’s an approach, a culture and a style that is different, norms that are different. But in China I think that the gap is wider, certainly than it is in the States, and it’s almost a case of natural selection where people come to a fork in the road in China and either go to the state sector or to the private sector. And the mental mind-set associated with each is more substantially different than it is in the U.K. or the U.S.
The innovation in China is much more likely to be generated out of the private sector, even though the state sector is hugely well-endowed with resources that could fund innovation.
WSJ: What advice would you give to Chinese companies headed overseas?
Mr. Quelch: Chinese companies should not go abroad as Chinese companies. They should go abroad as companies with an important differentiated value offering that consumers will be happy to pay for—and the country of origin is irrelevant.
WSJ: When will we see the emergence of global Chinese brands?
Mr. Quelch: I think that Chinese companies will add value initially in the B-to-B (business-to-business) sector, not the B-to-C (business-to-consumer) sector. Many people in China are eagerly awaiting the day when the first truly global Chinese brand enters the top-10 ranking of the world’s most valuable brands. I think that’s probably at least a decade away.
But Chinese companies like Huawei, ZTE—these companies have extremely good technology and know how to invest in technology acquisitions and, increasingly, they are acquiring or hiring non-Chinese to help them become global players. Those are the companies that are likely to be at the forefront of Chinese value-added overseas. Yes, there will be a Lenovo, there’ll be a Haier, there’ll be a Geely—we’ll all, as consumers, be interested in following the fortunes of these B-to-C companies, but I think the B-to-B space is where Chinese companies are really going to excel.
You look at Sany at the moment: it’s a very promising long-term competitor to Caterpillar.
WSJ: You say that Chinese companies are increasingly hiring foreigners and becoming diverse. Can you give examples?
Mr. Quelch: If you go to the U.K. website of Huawei, you will find that it’s all about Basingstoke. It’s not about Huawei as the global brand; it’s about Huawei as a company that is in Basingstoke.
This is where the Chinese are going to move faster than the Japanese because a major brake on Japanese global expansion ended up being the shortage of talented Japanese who were interested in, or linguistically able to, operate in international markets.
But the Chinese are much more outgoing, and perhaps because they’re coming 30 years later there are many more millions of Chinese who are English-language capable.
My guess is that whereas when a Japanese company made an acquisition the foreign executives immediately hit the equivalent of a glass ceiling, in the case of foreigners in a Chinese company, it’s going to be easier for them to move up the ranks.
What will really make a difference in that regard is reciprocity. If and when, for example, Sam Su of Yum Brands becomes the first Chinese CEO of a Fortune 500 company born in China then they will accept a free flow of non-Chinese executive talent throughout their organizations.
WSJ: What was the biggest surprise for you working in China?
Mr. Quelch: The biggest surprise is that there are no weekends in China. I’ve always been a very hard-working person, but I have been amazed at the degree to which on Saturdays and Sundays I find myself involved in professional activities.
The way I explain it to my friends in the U.S. is that you cannot achieve 10% GDP growth per year by working a 35-hour week – even if you’re as smart as the Chinese.
I remember Jack Welch famously held meetings on Saturdays with his people. But I think for many Chinese this is an historic moment of opportunity – a once-in-a-lifetime, maybe a once-in-a-millennium moment in time that no one wants to waste. So many Chinese display a relentless resolution to work hard today for themselves, their families and a better China.