A recent decision by the Chinese government to limit who can enroll in executive M.B.A. courses threatens a lucrative set of partnerships operated by top American business schools here.
The new rules bar government officials and managers of state-owned enterprises, known as SOEs, from attending expensive courses “or other training programs, which seemingly for study, are actually for networking and making friends.” The rules explicitly mention executive M.B.A. programs.
The ban is part of a sweeping campaign by Xi Jinping, China’s president, to stamp out corruption and extravagant spending by government officials. While the anti-graft effort has previously focused on a handful of Chinese university officials, education experts say the new ban represents the first time Western university programs have been affected, if indirectly.
The ban affects only certain American programs, but the sweep and unexpected nature of the edict show the risks foreign universities face operating in China, where regulations can change quickly for unclear reasons.
“The education sector is not immune from all of the roller-coaster rides of cultural differences and government interventions and regulatory issues that don’t make sense from a Western perspective,” says Ira Cohen, executive vice president of Universal Ideas, an education consulting company in China, and former executive director of Rutgers’s executive-education programs there.
During the last 10 years or so, there has been an explosion of executive-education and management programs in China, some run by business schools of prestigious American universities, including Harvard, Northwestern, Duke, and the University of Maryland. The schools have been trying to take advantage of a huge market where an affiliation with a top-notch global university is highly coveted.
So far, China’s own programs have been hit the hardest by the rule; The Wall Street Journal reports that enrollment is down 15 to 30 percent for programs at some of China’s top business schools.
American schools say they have not experienced the same drastic decline in enrollment, but they are concerned nonetheless. Gary Cohen, an assistant dean of executive programs with the University of Maryland’s Robert H. Smith School of Business, which offers executive M.B.A. courses in partnership with China’s University of International Business and Economics in Beijing, said the program was “not impacted heavily.”
“We lost one student,” Mr. Cohen said. “We hope that we may be able to get many SOE executives into our program later, that this policy may end. That it won’t be an ongoing issue.”
Officials from Duke’s Fuqua School of Business and Northwestern’s Kellogg School of Management said they had no decrease in enrollment due to the policy, and Harvard Business School did not respond to queries about the new rules.
If the ban continues, executives connected to the government may not be the only ones who could stop showing up in class. Other students from global companies often attend such programs to have networking opportunities with classmates from the government and government-run industries.
“For EMBA programs in China, networking is really important, maybe the top reason for students to attend,” said Bruce Peng, the founder of an investment company focused on China’s education sector. “I think these programs are and will continue to become less appealing for students from other industries.”
‘Too Many Seats’
These changes, combined with a market saturated with new business programs, may spell trouble for what was once seen as a lucrative opportunity for American universities.
“I figured at some point, we would see programs struggling,” said Patrick Moreton, a professor of strategy at Duke’s Fuqua school. “There are way too many seats.”
Whatever the impact, some say the bigger question is why, in a country that says it wants to forge greater ties with international companies, would the government limit access to business education?
Chinese administrators at some of the American business schools, who requested anonymity because they did not have permission to speak to the news media, say one of the main reasons for the government regulation is to curb a form of bribery.
A private company, for example, would pay the tuition for students from the government or government-run enterprise to attend a program in exchange for potential business deals.
Mr. Cohen, the education consultant, says the move will ultimately hurt China.
“You are diminishing a generation, or a part of a generation, of the intellectual capacity to be able to better operate their SOEs. They want to go global, but exposure to global business is being taken away,” he said.
For American universities that work in China or are interested in starting projects there, the ban should be a warning on how quickly the environment can change, said Jason Lane, a co-director of the State University of New York at Albany’s Cross Border Education Research Team.
Foreign universities “should always be cautious about getting involved in a place like China,” he said. “I would not say it is volatile, but it is fluid. Actors change quickly. Governments change. If you partner with the wrong government, then you may be out and people may not want to deal with you anymore.”
