GLOBAL CAPITAL
Talent shortage makes MBAs feel like MVPs in China
By Evelyn Iritani, Times Staff Writer
April 28, 2007

BEIJING — Four years into a job at a giant state-owned engineering firm in central China, Jennifer Liu asked her boss for permission to return to graduate school. She was refused.

Liu, a civil engineer with big ambitions, didn't give up. During a holiday in Beijing, she toured a handful of graduate schools and MBA programs. After returning, she persuaded her boss to allow her to apply to Tsinghua University, one of China's most prestigious universities.

"I think some people thought I wouldn't pass the test," said the slender 30-year-old, sipping a cup of chicken soup at a swanky downtown Beijing restaurant.

They were wrong.

Two years after completing her master's degree in business administration at Tsinghua, Liu is living a life many of her former colleagues could only dream of. The management consultant flies around the country helping foreign companies develop strategies for expanding their businesses. She drives a shiny new sedan and lives in a high-rise condominium in Beijing with her husband, a telecom salesman.

Liu and her MBA classmates are highly sought after in China, whose scorching growth has left companies scrambling to fill management positions. Foreign firms complain of high turnover and poaching wars in their executive suites.

"China has a real leadership development crisis right now, mostly because of the unique circumstances of the Cultural Revolution," said Doug Guthrie, a China business expert at New York University.

Guthrie was referring to the period from 1966 to 1976, when Communist leader Mao Tse-tung closed the universities and sent the country's brightest young people to the countryside to be "reeducated." Instead of managing companies, these now 50- and 60-year-olds are toiling in factories and driving taxis.

When Rafael Pastor, chief executive of Vistage International Inc., an organization of CEOs, interviewed people to run his new office in Shanghai, he was shocked at their youth. His top candidate for the managing director's job is 39 years old.

"He's great," said Pastor, a former investment banker and executive at News Corp. "But he's only got as much experience as a 39-year-old person can have. There's no way I can find a more seasoned person."

In an effort to close this experience gap, Chinese universities such as Tsinghua are reaching out to U.S. institutions such as MIT's Sloan School of Management and USC's Marshall School of Business for help establishing programs to teach China's first generation of professionally trained business leaders. Universities have formed transpacific partnerships, sharing professors, students and curriculum.

That infusion of foreign assistance has helped boost the number of Chinese MBA programs from nine in 1991 to more than 100 today. In 2004, China graduated about 10,000 MBAs, compared with 139,000 such degrees in the U.S.

But Chinese universities, like the companies they are serving, can't expand fast enough because of a shortage of teachers, Pastor said.

"There are very few people between ages 45 and 65 who can tell you what they learned in business school," he said. "The ones who do know something about it are so involved in the private sector earning money that they don't want to take the time to teach."

Young Chinese are willing to spend huge sums of money to improve their professional opportunities, a testament to China's fierce competitive pressures and reverence for education, said Lucille Wu, managing director of the China-Taiwan division of employment services firm Manpower Inc.

"People are scared that if they stand still, someone will overtake them," she said. "If they don't improve themselves every day, they don't feel secure."

Having an MBA from a good school is a plus, but companies are also looking for managers with work experience, practical skills and leadership qualities, Wu said. She said many of the MBA programs in China were of questionable quality.

Not so at Tsinghua, whose alumni include Chinese President Hu Jintao and four Cabinet members. Last week, its MBA program became the first in China to be accredited by the Tampa, Fla.-based Assn. to Advance Collegiate Schools of Business, the world's leading business school accreditation organization. Fewer than 10% of the world's business schools have earned that rating.

Graduates of Tsinghua, who pay as much as $16,500 for their MBA, find many doors open, said Pearl Donghui Mao, director of the university's international MBA program, which works closely with MIT's Sloan School. She said her graduates received an average of three job offers and earned double the salaries they made before entering the program.

Last year, the average annual per capita income in Beijing was $2,263, according to the state-run New China News Agency. The average annual salary for Tsinghua's MBA class of 2006 was $26,000, Mao said.

Tsinghua graduate Liu said she took a job with Accenture, the management consulting firm, because she could work with different types of companies, including foreign firms seeking a localization strategy and state-owned companies interested in going private. "I want to start my own business and I've got lots of ideas," she said. "But I'm still investigating."

Despite Mao's declaration that under communism women should be equal, the business world in China is still male-dominated. About one-third of MBA students are women, though their numbers are increasing.

Although Liu is often away for three or four months at a time, she said, she hoped to start a family within the next few years. She knows that juggling a career and a home life won't be easy. But because she and her husband were born during China's one-child population control program, neither has siblings. They expect help with finances and child rearing from their parents, who won't have to divide their attention among multiple sets of grandchildren. And it is relatively cheap to hire a nanny, a housekeeper and a cook.

"We'll have help," she said.

Corporate recruiters aren't the only ones interested in the aspirations of Liu and her cohorts. These new MBAs have captured the attention of a New York-based consulting firm, Katzenbach Partners, which has launched a 20-year project to chronicle how China's intellectual cream of the crop is coping with career and family life issues. They plan to follow 115 graduates of the class of 2004.

"For this generation of young Chinese, the world is their playground," said Stacy Palestrant, executive director of the China 2024 project. "There are so many things they feel they can do. They have this education, an economy that's booming, a country that's on the forefront of change."