Xinmeng Bai was one of nearly 100,000 people who applied for a place on a Chinese MBA in 2016. By last year that figure had doubled — growth that highlights the increasing reputation of home-grown Chinese business schools.
She wanted to do business in China and therefore attended the Cheung Kong Graduate School of Business in Beijing between 2017 and 2018 before working for her family business in the country. “You get an opportunity to learn more about the Chinese economy, visit giant Chinese companies and build connections in China,” she says.
Chinese students have long been a lucrative source of tuition fee income for business schools in other parts of the world, but a confluence of factors is threatening that revenue stream.
Many schools in North America and Europe have been forced to suspend classes and shift all learning online because of the escalating coronavirus crisis. This includes Harvard, Stanford and Columbia.
Many Chinese students are stuck abroad or in quarantine, with many countries in Europe, the US and Australia imposing travel bans. Embassies and consulates are closed around the world, bogging down visa processing. The moves are supposed to curb the spread of the virus, but also are a multi-billion dollar risk to western universities.
Australian business schools are heavily reliant on Chinese students
The number of Chinese students overseas doubled to 869,000 in the decade to 2017. Australia is the most reliant on Chinese students, who account for one in 10 students at its most elite universities. The International Education Association in Australia warned that income would drop by A$8bn if Chinese students could not attend the first semester of 2020.
This highlights the reliance on Chinese fee income in Australia, where the travel ban threatens to damage its reputation as an open-doors nation that embraces overseas talent. The same is true of the US, even if many students made it back to campus before the travel curbs were imposed. Last year, there were 300,000 Chinese students in the US, while Europe is not immune: there were 86,000 in the UK alone.
Many pre-experience masters programs are especially at risk. “There are cases when Chinese students would arrive for their new master’s program at a western school and find themselves ‘back to China’, with a class of 95 percent Chinese students,” says George Iliev, China director at the Association of MBAs and Business Graduates Association.
This has sometimes led to complaints from Chinese students. So a rebalancing towards a more diverse cohort would be healthier for these programs, he adds.
Fewer Chinese students are studying in the US
The current hardship comes at a particularly tough time for the US market, where business schools had already experienced a drop in Chinese applications because of trade tensions between the US and China. Donald Trump’s administration had recently tightened visa rules for Chinese students on STEM courses amid concerns over intellectual property theft by China.
“We’ve observed a decline in applications internationally from Chinese students, particularly to business schools in the US,” says Sangeet Chowfla, CEO of the Graduate Management Admission Council, whose GMAT entrance exams have been canceled in China and many other countries. The application drops are “due in part to the growth of high quality business schools within China itself, but there are also political forces at play”, he says.
Increased interest in ‘home-grown’ business schools
Because of all this, many Chinese students now find themselves drawn to home-grown institutions, which have been through more than two decades of continuous improvement, and now offer a viable alternative to overseas schools. This year, 17 Chinese schools were included in the Financial Times Global MBA ranking, up from zero in 1999. Seven — including the business schools of Shanghai Jiao Tong University and Peking University — have achieved the coveted “triple crown” of accreditations from three respected awarding bodies around the world, including AMBA.
“The current generation of Chinese MBA applicants simply see greater career opportunities within China, and want to build their network within China rather than outside of it,” says Lawrence Linker, CEO of MBA Link, an admissions consulting firm in Singapore.
Frank Zefeng Peng is one of three million “sea turtles” — the name given to Chinese students who return home after their studies overseas. Peng left Chongqing for a high school education and a communications degree in the US. But he came back to China to work as a journalist and editor at the Global Times, a state tabloid.
Now, Peng is studying for an MBA at Shanghai’s China Europe International Business School (CEIBS), where classes have been put online due to the coronavirus outbreak. He is in search of a career transformation, possibly a pivot to running his own business.
“China has many case studies about organizations such as Alibaba, JD and Didi,” he says, citing successful Chinese technology companies. “Instead of applying to overseas programs that mainly focus on western business cases, doing an MBA in China provides me with more opportunities to better understand businesses in China.”
Some US schools, including the Gies College of Business in Illinois, took out insurance policies to guard against a potential plunge in tuition fee income from overseas students. Others have tried to make up for the shortfall by recruiting students from elsewhere, but it’s not clear whether other countries can replace China, a large market. It has been estimated that a 10 percent drop in international enrollment at US universities in the past two academic years cost the US economy $5.5bn.
“Immigration of highly skilled talent fuels economic growth,” says Russ Morgan, senior associate dean for full-time programs at Duke University’s Fuqua School of Business in the US. “There could be long-term implications for any economy if talent mobility continues to be an issue.”
He is less concerned about a short-term tuition fee loss, more so about losing the global diversity that is the hallmark of an MBA. It enriches discussion through group learning, for example.
Morgan insists it’s too early to draw conclusions, saying that most international students had already applied for the forthcoming academic year before the worst of the crisis struck. For now, the outcome of the coronavirus for business schools is uncertain.