Source: Fortune
by Ethan Baron
July 23, 2015
Hopefuls from all over the world head to Shanghai to land a spot at the China Europe International Business School.
CEIBS professor Pablo Cardona oversees a block-balancing exercise during the boot camp.
Photo by Ethan Baron
“China is not ready for democracy,” professor Bala Ramasamy tells the boot campers at the China Europe International Business School (CEIBS). Ramasamy, a Chinese citizen of Malaysian origin, and a lively lecturer, notes that a number of Asian countries saw economic growth under dictators, including the Philippines’ Ferdinand Marcos, Indonesia’s Suharto, and China’s Chiang Kai Shek, who oversaw significant economic growth.
“When you come to this part of the world our definition of a dictator may be different than yours,” Ramasamy says. “I would prefer a dictator any time, a good one, because leadership, yes, is important—but it need not be a democratically elected leader. I have to defend China. Our definition of human rights is different. Human rights is survival. Human rights is getting out of poverty. If a dictator can take us out of poverty, then our human rights are actually getting better.”
Not all of China ready for democracy: Prof
Ramasamy’s assertion raised eyebrows around the lecture hall, particularly among the several Guatemalan participants, whose experience of dictatorship, as one woman pointed out to Ramasamy, was far from positive.
Research has shown that democracy will only last if GDP exceeds $6,000 per capita, Ramasamy says. “Shanghai is ready for democracy, but Guizhou is not,” Ramasamy says. “When we talk about political reforms in China, political reforms will move as fast as the slowest province in China. We have to wait for Guizhou to reach a certain level of development, then we can talk about democracy.”
CEIBS professor Bala Ramasamy talks with boot campers.
Photo by Ethan Baron
In fact, as the boot camp was wrapping up, China was throwing more than 100 human rights lawyers and activists into prison on allegations of organizing illegal paid protests. But to be sure, the Chinese Communist Party has overseen remarkable economic progress, with the GDP growing at 10.6% in 2010, then shrinking slightly over the following years to 7.4% last year—still a high number, particularly compared to the 2.4% in the U.S. And China has cut its level of extreme poverty to single-digit realms from 84% in 1980. Over the past 20 years, life expectancy has gone up five years to 75. Disposable income has risen to $4,670 this year from $1,250 in 2006, a 270% increase.
For international students, getting an MBA from a Chinese business school provides unique opportunities—entry into a 1.3 billion-person economy, for example—and poses considerable challenges—such as trying to say “forecasting the aggregate directly” in Mandarin.
Boot camp features lectures, company visits
Sixty-eight early career professionals from a wide spectrum of fields attended the five-day CEIBS boot camp July 8-12, conducted in English as is the international MBA program. The chance to experience China and learn about business and business school there cost $1,264, with lodging in upscale campus housing included. Participants attended four lectures from CEIBS professors on campus, and each boot camper visited two of four major global companies.
“For me, the idea of trying to commit to something halfway around the world, you want to get some taste of it before you commit to it,” says participant William Armstrong, 29, of Houston, who has a BS in finance from Texas A&M. “I’d heard about CEIBS before—I lived in Beijing for about a year. It seems like the best program currently in China, and I’ve been wanting to find a way to move back here. If I decide to do an MBA I think I’ll probably come here, it’s just a question of if I decide to do an MBA.”
The CEIBS campus in Shanghai
Photo by Ethan Baron
The campus, built in 1999, and designed in the manner of a traditional Chinese garden by the famed Chinese architect who designed the glass pyramid at the Louvre, I. M. Pei, sits on 20 acres just outside central Shanghai, and features more than an acre of reflecting pools and its own glass pyramid. The new portion of the school was completed last year. About 80% of first-year MBA students, including internationals, live in on-campus dorms.
Shanghai, population 24 million-plus, houses in more than 120 skyscrapers 500 feet or higher the offices and regional headquarters for dozens of major global and Chinese firms. The country’s financial hub, it has the highest per-capital disposable income in China. “Shanghai will eventually become a Hong Kong or Singapore,” assistant director of marketing Roy Chason tells boot camp participants.
The CEIBS MBA typically takes 18 months, but the school added this year an accelerated 12-month MBA that front-loads electives but leaves less time for career development and extracurriculars. “If you need to find a job you need to be in this 18-month program,” MBA director Simin Chen tells boot campers on the first day. “If you’re company sponsored, or in a family business, or if you don’t want to work, 12 months.”
At the boot camp, a recruiting mechanism for the CEIBS international MBA program, lecturers hit participants with one dominant message: opportunity.
“The most important factor of change in the 21st Century is what I call the Chinese Renaissance,” professor David Gosset, a Parisian and the school’s foremost China expert, tells participants. “China is already a global power. Everything China does has a global impact. China is regaining a position of centrality. China is reshaping the world in which we live.”
Gosset cites an estimate from former Rand Corporation analyst and U.S. presidential adviser Michael Pillsbury, who predicts China’s economy will double the size of America’s by 2049. China’s evolution will include a focus on effective governance, but “don’t expect liberal democracy,” Gosset advises. “The most important organization in China is, of course, the Chinese Communist Party. The Chinese Communist Party is here to stay, to lead the change, for the foreseeable future. What we have in Europe and the U.S. is not a model for them,” Gosset says.
China key player in global commerce
The Chinese economy makes up more than 10% of the world economy; the country is the major trading partner of Russia, India, Brazil, and Africa as a whole, Gosset says, noting that the West is not an intermediary in that commerce. “We now live in a world where the South/South relations are as important as the North/South relations,” Gosset says.
CEIBS MBAs can find career opportunities within China, or in companies trading with China, Chason tells participants.
“Things are changing extremely rapidly,” Chason says. “You have to ask yourself, ‘Regionally where do I put my eggs?’ You have to look away from the short term and immediate trends and see in the long term where things are going, because it’s going to affect your career.
“China will affect your career, significantly, and probably your life.”
Of course, in nearly every major city around the world, China has a presence. It projects itself through a collection of vectors: goods, technology, people, finance, culture, its military, and diplomacy, Gosset says. “China is already a network of networks whose reach is already global,” Gosset says.
To succeed in many areas of global business, therefore, knowledge and experience of China is necessary, MBA director Chen tells participants. “With this, you have very much an advantage,” Chen says.
Case method teaching with a focus on China
The CEIBS international MBA uses the case method, and is built around a core curriculum very similar to top those in top U.S. MBA programs, Chen says. “We blend this international knowledge with China practice in a way that nobody can match us,” Chen says. “Many of our faculty members come with a U.S. background. Our curriculum was originally modeled after Wharton’s.”
As in elite U.S. programs, CEIBS students undertake in their second year an experiential learning course, working in groups to solve strategic issues for companies that in the past have included Dow, Bayer, BP, Siemens, MasterCard, Nike, and Coca-Cola.
CEIBS boot camp participant William Armstrong of Houston
Photo by Ethan Baron
Also in the second year, and also similar to programs in top U.S. schools, CEIBS offers for the fall term an international exchange program with about 30 partner schools, including Wharton, the U.C. Berkeley Haas School, UCLA’s Anderson School, Duke’s Fuqua, Michigan’s Ross, the University of North Carolina’s Kenan-Flagler, Indiana’s Kelley, and Dartmouth’s Tuck, along with European institutions such as London Business School, Spain’s ESADE and IESE, France’s HEC and INSEAD, plus other schools including the Indian School of Business, Hong Kong University of Science and Technology, and Canada’s Queen’s, Rotman, Sauder, and Schulich schools.
Elective courses provide opportunities for concentration in finance, marketing, or entrepreneurship, and 30 to 50 students per year take a one-week elective course overseas, last year in Japan, France, and the U.S. This year the course will send students to South Korea, Japan, Israel, France, and the U.S.
Last year, CEIBS added an entrepreneurship concentration. At CEIBS and other top business schools, few MBAs start businesses right out of school, but around a third do within 15 years, says entrepreneurship professor Rama Velamuri. Faculty encourage students to pursue ventures if they’re passionate, but Velamuri warns that the Chinese market has become more difficult. “In the early stages of China’s economic miracle, there were lots of what I call open spaces … where entrepreneurs could move in and start ventures—15-20 years ago,” Velamuri says. “Nowadays, I would say that most of the gaps in the market have been filled. There are relatively fewer low-hanging fruit. No matter what industry you enter you are likely to find competitors, especially local competitors.”
Local partners recommended for China startups
Because of the challenges for international entrepreneurs working in Chinese markets, CEIBS recommends finding a local co-founder, “somebody who can provide you with the access to local resources, who can provide you with a deep understanding of the local contexts, who can help you overcome language barriers,” Velamuri says.
Nevertheless, the entrepreneurship environment is very favorable in certain areas, Velamuri says. “In China there are large sectors of the economy where there are hardly any barriers to startups. Especially in technology, it’s very easy. By and large the sectors that youngsters are typically interested in in China and generally I would say in emerging markets are quite friendly from a regulatory perspective.”
During the boot camp, which is in its third year, lectures highlighted career opportunities within China for international MBA graduates. Both the government and private sectors boast massive cash reserves, and the rapidly growing consumer class is hungry for Western- and Chinese-made goods, Chason says. The country’s chemical and energy sectors are booming, and auto production exceeds that of the U.S., Europe, and Japan combined, Chason says, noting that BMW, Nissan, and Ford recruited at CEIBS last year, as did Honeywell Aerospace. Most major consulting firms also recruit at CEIBS, Chason says.
Emergence of Chinese brands combined with growing consumption, along with rapid development of the country’s interior, large investments in the tech sector, and a highly diversified economy are promoting job growth in the country for MBAs, Chason says, while China’s massively increasing outward investment and hunger for natural resources provides out-of-country opportunities in Chinese firms—and in companies in joint ventures with Chinese companies or trading with China, which in 2013 surpassed the U.S. as the world’s biggest trading nation.
Boot campers visit McKinsey in Shanghai
On a visit to global consulting firm McKinsey & Company in Shanghai, boot campers hear from associate Jerry Ding that the Chinese tech market is expanding massively, as are internet-delivered financial services. Also, a widespread problem in industry with waste—of time, inventory, labor, and emissions—provides a great deal of work for consulting companies in China, Ding says. And the country’s emerging middle class presents a massive target for companies operating in the country, Ding says. “We see that they have sufficient share, they have sufficient disposable income,” Ding says. “What is the best way to capture them is really a big question mark for our clients.”
In hiring international MBAs, including CEIBS graduates, McKinsey in China heavily weights problem-solving ability, along with leadership experience, applicants’ personal impacts, and applicants’ history of “driving and achieving,” McKinsey’s Greater China Office recruiting manager Mike Wang says during the company visit. “Problem solving is really the foundation of everything we’re looking for,” Wang says, adding that with that ability, a dearth of leadership experience or lower marks in other parameters may be overlooked, but without it, any chance for a job evaporates. “McKinsey’s way of solving problems will not only make you survive within the company, but give you the edge, the competitive edge, when working in other companies,” Wang says.
CEIBS professor David Gosset lectures to boot campers.
Photo by Ethan Baron
Back at the school, CEIBS alumnus and school career development consultant Jeff Pi addresses the recent abrupt fall in China’s stock market, and urges boot campers to look beyond specific events to “overall megatrends” in the country. “We lost 10 Greek economies. You can be a pessimist and say, ‘Ah look, the bubble’s bursting,’ or you can look at it from an opportunistic point of view,” Pi says.
Among the megatrends are the urbanization of a billion people; huge manufacturing scale; the rising consumer class; large amounts of money and brainpower among the population and industries; and internet commerce, Pi says. Pi notes that Facebook took a decade to reach the billion-user mark, while Chinese mobile-communication app startup WeChat hit 600 million after only four years. “This is the kind of explosive growth that we’re talking about,” Pi says.
Pi points to the health care sector—“a lot of people smoke, (there’s) a lot of diabetes, everybody’s aging”—as an area of major opportunity, particularly with regard to e-commerce, in which health care companies are setting up new digital strategy departments. “There’s a huge market potential,” Pi says. “These are things that are happening for the first time. These are things where nobody around you is an expert. That could be you guys. Nobody is going to say, ‘I’m an expert in e-commerce health,’ because there is nobody.”
Investment products, data analytics needed, alumnus says
Also, the population’s large cash reserves—average savings rate among citizens is 50%—raise a dire need for investment opportunities, Pi says. “There’s very few products in which people can invest,” Pi says, adding that swelling e-commerce produces strong consumer data, boosting the need for experts in data analytics.
Risk management is also a growing field, with companies needing to carefully manage growth, Pi says. “Real CFOs are going to be in demand,” Pi says.
The new Asia Infrastructure Investment Bank, which aims to rival the IMF and World Bank, and to connect 17 Asian countries with a high-speed rail network, will start hiring in September, and need many public relations and government relations experts, Pi says. “For Chinese people with international exposure, or for international people with China exposure, this is where you have your advantage,” Pi says.
While CEIBS pitches opportunity to the boot campers, it also puts forward some of the challenging realities facing international MBAs, even graduates of respected Chinese schools, should they wish to work in China.
Number one, it can be hard to find a job. “You really have to demonstrate you can bring (more) unique value to an organization than Chinese students,” says MBA director Chen. “It takes much more effort to find appropriate positions.”
Most want to stay, half succeed
Eighty per cent of CEIBS’ international grads express interest in working in China after graduating, but, says MBA director of Admissions and Career Services Yvonne Li, “the successful staying rate is 50%.” Sometimes a job goes to a Chinese-speaking applicant, or expectations between the applicant and employer don’t fit, or the foreign MBA isn’t attracted by the salary, Li says. Most of the international students who do find work in China end up in jobs not requiring Mandarin, Chason notes.
International MBAs, particularly Americans, tend to have stronger soft skills—in communications, teamwork, and dealing with people—than Chinese students, which can provide an edge, Chen says. “If you can convince these companies these qualities, plus your China experience, brings them value, I think they will hire you,” Chen says.
CEIBS students study in the library.
Photo by Ethan Baron
In 2014, 43% of CEIBS’ 189 MBA graduates were from overseas, including Hong Kong and Taiwan, with 10 students from the U.S. and two from Canada. Nearly 80% of international MBA graduates go on to work in Asia, MBA director Chen says. CEIBS’ 2014 MBA Career Report shows that while the median salary for foreign grads working in mainland China topped that of the median for Mainland Chinese grads—$57,600—it was only $61,600. Median salaries for graduates working outside Mainland China were much higher, at $100,000 for Mainland Chinese grads and $86,500 for overseas grads.
According to global consulting firm Mercer’s 2015 cost of living ranking, Shanghai has the sixth-highest cost of living in the world this year, up four places from last year; Beijing has the seventh-highest, also up four places, and Shenzhen and Guangzhou are at 14th and 15th most expensive, both up a number of places from 2014—making all those cities more expensive than New York City.
Ethnic Chinese from U.S. have an edge
Half of CEIBS U.S. students are ethnic Chinese, an asset for obtaining jobs in China, Li notes. “They have that international perspective and they speak the local language. They will bring more value even than local Chinese,” Li says.
International students are offered Chinese language classes in their first year. Language poses a hurdle for foreign MBA job seekers in China who don’t speak good Chinese, Li says. “China is no longer the market of 10 years ago, (in which) expats were so popular, and easily find a job,” Li says. Most of the hiring, including that by multinationals, is for local operations, and even if Mandarin fluency isn’t overtly required, speakers have a decided advantage, Li says.
But the school’s career services staff devotedly pursue job opportunities all over the world for CEIBS MBAs, Li says. More than half of international grads find work via the careers department, Li says. “CEIBS, the school, is like nurturing a fishing pool,” Li says. “Fish are career opportunities, screened by career services. For our international students there are other fish through other channels.”
Channels provided by the school include mentorship, help from faculty, and job fairs, but for MBA students, making connections among faculty, peers, and industry representatives is vital, Li says. “To find opportunities you have to start networking from day one and use all the resources that we have,” Li says. “You have to build the relationships. This is true globally but I would say more so in China, so they can trust you.
“Some of our international students, if they’re not aggressively reaching out and building that network and exposing to the business community, and only leveraging very narrow resources, they might lose their dream.”
CEIBS grad networks her way into multinational
Indian graduate Ranjeeta Rai’s post-education career result shows the benefit of networking. A former banker, she’s now regional category manager in the Shanghai office of Henkel, a German multinational company whose products include Loctite adhesive, Dial soap, and Right Guard antiperspirant. “If you look at the outcome of the MBAs, for most of us it means a good job,” Rai tells boot campers on their visit to the Henkel office. “I just met somebody from Henkel at a networking event at CEIBS. I said I was looking for a job and he said he was looking for somebody. Some of you could be apprehensive. Will you get a job, will you get an internship? I got both.”
Career services director Li says that for overseas students, understanding the ways of China is also key to finding a job there. “They need to keep an open mind, with eagerness to learn new things and understand this culture … be open to everything, the food, the culture, the people, and to try their best to learn and to understand. Sometimes I do find there are different ways of communication and people may misunderstand each other.”
CEIBS entrepreneurship professor Rama Velamuri
Photo by Ethan Baron
While local hiring by multinationals has been flat, companies’ hiring under leadership development programs in China is is increasing, Li says. “They recruit MBA students or graduates from all the top business schools. They need talents who can understand this market,” Li says.
China’s rapid growth carries perils for MBAs set on careers there. In his lecture to boot campers, Gosset highlights future risks that need to be carefully managed. “The price China is paying for a rapid economic rise is huge in terms of natural degradation,” Gosset says. A truly independent judicial system is also required for China fight corruption that endangers its advance, Gosset says. More investment in education and a social safety net are also required, Gosset says.
Big country, big population, big problems
And the health system costs related to smoking and diabetes are not the only problems that will affect China’s ability to maintain a healthy and productive population at an affordable cost. “How do you ensure that a health care system is going to handle 1.4 billion people when half the population is more than 50?” Ramasamy tells boot camp participants. “You can imagine how much that is going to cost.”
Although the government asserts that 90% of the population has health insurance, massive health problems loom. Bain & Company partner Norbert Hueltenschmidt told the BBC last year that China faces major health care issues with its aging population, environmental problems, levels of access to health care, and sedentary living—physical activity has dropped 45% since 1990. “Paradigm shifts” are required for the government to invest in preventative health care, and for people to take better care of themselves, Hueltenschmidt says. “Health has to become the new wealth,” he says. That shift in priorities would bring business opportunities for many sectors, within China and in international trade, Hueltenschmidt says.
The huge growth in wealth generated by China’s explosive progress also presents a risk that the country will go the way of Japan, which has suffered from a 40-year recession in which the economy has failed to grow even 1% over the past 20 years, Ramasamy tells boot camp participants. Japan’s massive economic growth and expanding wealth of the 1980s produced a new generation of Japanese who were more interested in holidays and air conditioning than working hard and coming up with new products, Ramasamy suggests. In China, the same energetic entrepreneurship is alive in China now as it was in Japan in the ‘80s, Ramasamy says.
CEIBS boot campers take photos of Shanghai from the McKinsey office.
Photo by Ethan Baron
“This spirit of entrepreneurship is burning,” Ramasamy says. “People don’t want to become poor again. The question is, will China be like Japan where the next-generation Chinese are going to be like this new-generation Japanese? With the new generation of Chinese, when you have kind of grown up in an environment where … life is easy, life is good, you get what you want, and you don’t have to work very hard, will this new generation of Chinese have this current level of entrepreneurship? This is going to be one of those challenges. Can China continue to grow? Will the spirit of entrepreneurship continue to burn in the next generation of Chinese, or will we follow this Japanese model and just take it easy?”
Ramasamy believes that because labor is no longer as cheap in China as it once was—hourly manufacturing wages have risen 12% a year since 2001, according to The Economist—productivity gains are China’s only hope for growth. “Productivity in China is still relatively low,” Ramasamy says.
Freedom to speak, on campusAt CEIBS, a non-profit joint venture between the Chinese government commerce department and the European Commission, professors and students have the liberty to speak their opinions in the classroom, says the marketing department’s Chason. “It’s quite separate from the other public universities,” Chason says. “Dialog is completely free within this campus. A lot of the Chinese professors tend to be sometimes more critical than the foreign professors.” Adds MBA director Chen: “You’re not supposed to say, ‘Overthrow the Communist government’ (but) you can criticize government policy without a question.”
Toward the end of the boot camp, participant Geena Maharaja, a 24-year-old product marketing specialist from Minnesota who’s planning an MBA, says she was hesitant to come to CEIBS, because she’s never been abroad for a long period. “I applied on a whim, and I looked more into it and I saw that this was a very serious program, a serious school,” Maharaja says. “Now I’m thinking of spreading my wings and going to do (an MBA) internationally. This program has shown me that’s an option.”
