China Anti-Corruption Moves Hit EMBAs

Chun Chang

Chun Chang, executive dean and finance professor at the Shanghai Advanced Institute of Finance

Anti-corruption measures in China are driving students out of executive MBA programs and drying up the primary revenue stream for the country’s business schools, the Wall Street Journal reports.

Some 15% to 30% of students withdrew in the fall semester from EMBA programs, after the Communist Party ordered officials and managers from state-owned enterprises to quit the programs, the WSJ reported Jan. 8.

China’s government has described the EMBA programs, which can cost as much as $100,000, as posh networking clubs, and banned officials from receiving scholarships to them. Government officials may only take the programs if they have official approval and pay their own way.

OFFICIALS IN EMBA PROGRAMS PROVIDE GUANXI OPPORTUNITIES

About 5% to 8% of EMBA students in China are government officials, the Financial Times reported in September. But the presence of officials in EMBA programs attracts other students wishing to build connections to government and state firms.

Much Chinese business revolves around connections, known as guanxi. The move against officials’ EMBA enrollment arose out of concerns that the programs would foster corruption and bribery. “Authorities are trying to address public criticism of collusion and corruption between officials and businessmen,” Fudan University School of Management dean Lu Xiongwen told the WSJ.

Part-time EMBA programs in China typically cost about $100,000, and the average minister-level official earns about $30,000 per year, according to the WSJ. The Chinese Communist Party and government education ministry have said officials attending shorter, cheaper programs not covered by the ban now cannot have tuition reimbursed.

Liu Ji, a former senior government official and honorary president of the China Europe International Business School, described the government’s edict as an overreaction. “You may find individual cases of corruption within the EMBA community, but we mustn’t let a rat’s dropping spoil a whole cauldron of soup,” he told the Financial Times.

ALIBABA GROUP FOUNDER JACK MA HAS AN EMBA

Prominent Chinese officials including Fu Chengyu, chairman of the state enterprise China Petroleum & Chemical, Hunan Province governor Du Jiahao, and Chongqing mayor Huang Qifan are EMBA alumni, along with Alibaba Group founder Jack Ma and Fosun Group founder Guo Guangchang, the WSJ reported.

Cheung Kong Graduate School of Business, a private institution in Beijing funded by a Hong Kong foundation, focuses on private enterprise, but gives scholarships covering up to 90% of tuition to senior officials, dean Xiang Bing told the WSJ. “Although most of our students are already very successful, they want to learn from the school and their peers,” Bing said.

EMBA programs have grown to become Chinese business schools’ largest revenue source, in part because of demand from party officials and state company managers, whose responsibilities can be complex due to the strong role government has in the economy, according to the WSJ.

Chun Chang, executive dean and finance professor at the Shanghai Advanced Institute of Finance, said the country’s B-schools now have to adjust to a “new normal.”

“Chinese business schools were too reliant on EMBAs,” Chang told the WSJ.

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