Are Asia's business schools a threat to the West?

Professor Rolf Cremer, the dean of the China Europe International Business School (CEIBS), likes to say the Shanghai business school started with a big bang. By this the German economist means there was no gradual transition for the start-up: from day one CEIBS was equipped to compete at world level.

"As a joint venture between the EU and the Chinese government, we had the highest levels of financial, institutional and educational support from the very start," says Cremer. "We never went through the toddler stage."

From a standing start a decade ago, CEIBS has made impressive progress. This year it ranked twenty-first in the FT's global listings and first in Asia. Forbes ranks the school number one in China.

CEIBS is not the only Chinese business school to be making its mark internationally: the Beijing International MBA at Peking University and the School of Economics & Management at Tsinghua University consistently rank highly in the regional listings of Forbes and Fortune magazines.

"We expect a smallish group of internationally well-regarded business schools to emerge in China in the next five to 10 years but CEIBS will continue to set the pace," says Cremer, acknowledging the constraints under which some of his state-run competitors operate.

China's staggering economic growth means there is huge demand for professional managers who can meet the expectations of the global corporates now pouring millions of dollars into the country. The MBA is seen as a passport to these new and exciting career opportunities. But Chinese students who once sought to study in the US or Europe now have the option of boosting their careers by staying at home.

These are the same students that have long buoyed the incomes of business schools in the West. According to data from GMAC, which runs the graduate management admission tests, the Chinese market is in decline in the UK with the numbers sitting the GMAT almost half the peak of 2002/3. Warwick Business School recruitment manager Rachel Killian says this is confirmed by the sharp drop in applications from Chinese students. "This suggests that more of the Chinese GMAT takers are either choosing other international destinations over the UK or staying at home to study," Killian says. But she refuses to blame visa problems for the fall: students from emerging markets in India, Pakistan and Nigeria are getting through.

This is backed up by other business schools in Europe, such as UCD Michael Smurfit School of Business in Dublin which has also seen a drop-off in Chinese applicants.

More positively, applications from students in India, another country where business schools are flourishing to meet the demands of a fast-growing economy, are on the rise. It seems demand for a business education is outstripping home supply despite the rise of business schools such as the Management Development Institute, recently accredited by AMBA, and the Indian School of Business (ISB).

ISB's deputy dean Ajit Rangnekar believes his school offers a unique education for those planning to work in the world's future economic powerhouses: "To work in these fast-developing economies, our students need to understand world best practice but also be real about the situation on the ground. They need to have one foot in developing economies and one foot in the developed economy. They will not learn this in business schools in Europe and North America - they can only do this on the ground here."

Not everyone would agree, but employers are certainly taking ISB seriously. Five years ago 90 per cent of ISB graduates joined Indian firms but today most of its students work in international positions, and global companies, among them BP and Novartis, have started to recruit from the Hyderabad campus.

As yet the school has been slow to attract international students. CEIBS, however, is ahead of the curve. It's not just home students that are keen to study with world-class faculty in the heart of China's economic revolution: 20 per cent of the student body is international.

For top business schools in the West, this isn't a threat but an opportunity. The world's leading business schools aren't interested in growing their numbers but in attracting the brightest talent. "These new business schools increase awareness of the MBA and its value proposition," says Paul Danos, dean of Tuck School of Business at Dartmouth. "That's an opportunity for the top business schools to draw on the very best people from around the world."

Even so, Western business schools are keen to foster alliances with their Asian counterparts and many are opening campuses in the region: Singapore, for example, now hosts ESSEC, Chicago and INSEAD. This invasion from the West and the rise of domestic schools could put pressure on business schools in the Asia Pacific region.

"If I was managing a business school in Hong Kong, Singapore or Sydney, I would be afraid," says Jean-Paul Larcon of HEC, which has links with China's Tsinghua University. "If I was planning to do an MBA in Asia, I'd pick a school in Shanghai rather than Sydney."

But leading Western business schools can't afford to be complacent: the competition for world-class faculty looks set to heat up as leading scholars seek exposure to these future economic powerhouses.

Professor Cremer of CEIBS agrees it is getting easier to attract world-class faculty to China. "There are now many outstanding faculty who believe it looks very good to have CEIBS on their CV."

'China appealed to me because everything is happening here'

Antonio Benedetto, a former management consultant from Milan, is currently studying for an MBA at CEIBS in Shanghai

China appealed to me because everything is happening here. I suppose it's a kind of gamble about the future. My friends who have done MBAs in North America and Europe told me not to come to China but now they have changed their minds. The opportunities are so different here. There are people who know about finance or strategy all over the world but there are not a lot of people who can understand Chinese culture and business. This is the great added value of this experience.

Shanghai is huge and very exciting but also like a small village at times. The costs of living are a lot lower than the US or Milan and I'm learning to speak Chinese, which is absolutely fundamental to survive. I would definitely recommend this. The cultural differences are huge but you make a lot of friends and learn how to work with people who have been educated in a completely different way. But the real proof of this experience will come when I graduate.