Exam rules herald major shake-up of business education

Strict new rules were scheduled to come into force last week for business schools in China recruiting Chinese students for MBA and short Executive MBA courses, with institutions no longer allowed to set their own entrance exams – part of the country’s drive to root out substandard programmes with low or non-existent barriers to entry.

In particular, Executive MBA or EMBA courses in China typically attract top managers and CEOs, in part for the national and international networking opportunities they offer while on the course. Some have been described in official media as little more than ‘rich men’s clubs’ with high fees and minimal academic requirements.

Applicants for MBA and EMBA courses will have to sit an existing national exam for prospective MBA students, or in the case of EMBA applicants, a new, yet to be unveiled centrally set exam.

“The regulations are part of a move to make the recruitment and teaching of MBA programmes in China, especially the EMBA, more transparent and standardised,” the official China Daily said earlier this year.

Other graduate courses in China require students to sit the centralised National Graduate Examination, but the EMBA has been a significant anomaly with entrance exams set solely by the institutions themselves. Official newspapers reported that some EMBAs could be obtained simply in return for payment.

Many MBA programmes have also set entry requirements other than the official MBA entrance exam.

The old system of China’s business schools – many of them operating joint programmes and collaborations with foreign business schools – setting their own requirements for MBA and EMBA courses officially ends on 1 December, according to China’s Education Ministry.

The change in rules for EMBA recruitment was originally announced by China’s State Council in April, but even days before the December deadline, business schools in China said they were completely in the dark on when the new exams would be held, how they would be administered, and what subjects the exam would include.

Despite such a far reaching change, “we don’t even have any idea of the dates [of the proposed exam]”, said Michel Gutsatz, MBA director at Kedge Business School, a French institution with joint MBA degrees and collaborations with Shanghai Jiao Tong University in Shanghai and Renmin University in Suzhou in Jiangsu province.

Gutsatz said: “They want to regulate [the sector] to increase the quality of the students, but a national EMBA exam completely changes the system.”

The new exam will so radically change the formally freewheeling EMBA market by putting the main criteria for recruitment in government hands, that the top five Chinese institutions, including business schools at Tsinghua and Peking universities in Beijing, were reportedly lobbying the ministry to exempt them from the new centrally set exam, possibly allowing them to set their own.

Other business schools used the uncertainty around the changes to persuade students to enrol on MBA and EMBA courses in advance of the deadline . “Chinese business schools that had not filled their quota of students were inundated with applications,” Gutsatz said.

Another business school administrator said: “This was a bumper year for the EMBA.”

Sino-foreign degrees exempted

Sino-foreign business degrees taught in English or recruiting foreign students will not be subject to the new rules.

However, with the government clearly focused on standardising the way business degrees are approved, and stepping up on inspections, administrators at some Sino-foreign business schools in China believe the government will soon turn its sights on Sino-foreign programmes, some of them charging the highest fees in the lucrative sector.

Sino-foreign business schools are already subject to strict quotas on the number of Chinese students they can recruit, and these have been reduced in the past year. For example, Kedge Business School was previously allowed to recruit 100 students for its joint MBA with Shanghai Jiao Tong University but this was reduced to 70 last year.

“Of course, we would prefer more,” said Thomas Froehlicher, director general of Kedge Business School. “It is in our interest to get bigger quotas.”

In 2014, as part of the government’s anti corruption programme, officials and employees of state owned enterprises were forbidden to enrol in expensive EMBA programmes unless they paid for the courses themselves. Some of the lesser known business schools saw an almost immediate drop of around 30% after the announcement.

But there were other far reaching effects. "We have seen a change from public to private payments from one day to the next,” Gutsatz said. It may not be confined to EMBA courses. “It will have a long-term impact away from state funding to individual funding [of business education],” he said.

Gutsatz said one of the unintended consequences is that it will favour the MBA courses that teach in Chinese overseas such as Nanyang Technological University in Singapore which offers an EMBA taught wholly in Mandarin and can attract students from China without being subject to Chinese regulations.

The new rules will also not prevent universities, some based overseas, from recruiting Chinese students and flying professors in to teach short EMBA courses in hotel venues below the Chinese regulatory radar.

Universities in China began offering MBAs in 1991. Some 40,000 students are recruited by 230 institutions on MBA programmes each year, according to official figures.