As one of the most dynamic regions of the world, Asia’s demand for MBA qualifications is driven by the economic renaissance of the region. If you follow Reuters, Bloomberg or the Economist, you will know that the biggest challenge to American and European global economic supremacy is the migration of capital towards the East.
Numerous Asian countries have become major powers and western governments take their behaviour into account in their economic policy and regulatory decisions. Attempts to impose tighter global financial rules have been postponed, if not forgotten, partly due to fears that stiffer restrictions may lead to the relocation of a large chunk of the financial sector to Asia. As coordinated global economic policy agreements on a G20 level are difficult to achieve, national governments have the biggest say in this respect. On the other hand, they are limited in their plans by the lack of reciprocity in measures being taken around the world. The influx of investments towards Asia has gradually become a sensitive topic for the West, as it is often linked to the outsourcing of attractive jobs. The economic boom of the region creates a need for business leaders familiar with the specifics of local cultures in Asia and the ways to achieve success there.
“Companies with a profound knowledge of their local market will benefit from developing regional variations of standard products and services. Looking ahead, more multinationals will operate with dual headquarters, one in the West and one in Asia,” writes Kenneth Mikkelsen in his article “Leadership at a crossroads” for Global Focus. As business administration is a dynamic and continually evolving discipline, the traditional focus on management as the absolute centre of knowhow is now being redefined:
“…Top-down leadership, in which heroic individuals or charismatic icons play the dominant role in shaping an organization, is no longer adequate or suitable. Instead of acting as the captain of a ship, leaders must serve as the designers of the ship. This also involves recognizing that a leader does not always have all the answers,” continues Mikkelsen.
Asian business schools offer global business perspectives on management but it is the regional experience of Asia that contributes to their uniqueness. A review of the political economy of some Asian countries and some of the MBA courses offered there are set out below. The countries can be divided into two groups: developing economies (India and China) and developed economies (Korea, Singapore and Japan). The intention of this article is not to list or rank all the good courses and schools, but to shed light on the prospects for the region and for the MBA graduates in it.
India is the biggest democracy in the world, a federal republic with 28 states and seven union territories. The two main political parties in the country are the centre-left Indian National Congress and the conservative Bharatiya Janata Party. India’s GDP for 2010 (at the official exchange rate) was 1 430 trillion US dollars*, showing an annual growth rate of 8.3%. The biggest challenge for India is feeding its population: a 2010 survey suggests that 37% of Indians live below the poverty line and critics are voicing concerns that the real figure is much higher.
The need for quality business education to prepare new leaders for the economy was felt many years ago. In 1959, the Indian government decided to set up the All India Institute of Management Studies. Two business school institutions opened their doors in 1961 and 1962 respectively: the Indian Institute of Management (IIM) Calcutta and IIM Ahmedabad. The most obvious difference between then and now is probably that the economy of the 1950s, 1960s and 1970s needed managers for government- owned companies, whereas today’s demand comes predominantly from the private sector. During the intervening years, nine more IIMs were established around the country. IIM Ranchi was launched in 2010, IIM Tiruchirappalli (also known as IIM Trichy) starts its MBA course in 2011 and IIM Kashipur is planned to begin functioning in 2012.
The Indian Institute of Management Ahmedabad is recognized as one of the best business schools both in Asia and worldwide. It is the 2011 star in the Financial Times rankings, debuting at number 11. The admission process is highly competitive, with less than 1 % of candidates actually becoming students.
Despite the low purchasing power of Indians, whose annual GDP per capita (PPP) is $3400, the country is perceived by investors as an exceptionally vibrant and promising place. There are many reasons for this. In 1947, when it declared independence from Britain, India's population was 350 million, as opposed to the current figure of 1 173 billion. The average age is 25.9 years, making the country extremely attractive to international business from a demographic point of view. The incentives for operating in such a vast market, albeit not populated by affluent consumers, are huge. The low cost of labour is another factor attracting foreign capital.
A curious feature of globalization in India is that nearly 42% of foreign direct investments (FDI) in the country for the period between April 2000 and December 2010 entered the country through the Republic of Mauritius. The second biggest investor in the country, with a 9.21% share in the FDI, is Singapore. The USA is next with 7.39% and the United Kingdom ranks fourth with 5.03%. The sector which benefited most from the influx of FDI during this period is the financial and nonfinancial services sector (20.94%), followed by computer software and hardware (8.39%), telecommunications (8.12%), housing and real estate (7.43%), and construction (7.10%).
In relative terms, high-profile Indian business schools have insufficient capacity to educate a significant share of talented candidates. A government report on higher education reads:
“The IIMs (like much of Indian Higher Education) have come in for criticism for not having periodically increased their capacity for admission to MBA courses despite the growth of the Indian economy and the demand for admissions. Arguably the need for substantial expansion was not an important requirement till the late 1980s because of the relatively slow growth of the economy. This changed in the 1990s and there was also a dramatic worldwide explosion in demand for MBA graduates.”
A further general problem in Indian business education is that not all MBA schools are sufficiently internationalised. Due to the abundance of highly qualified and skilled local students, they are usually given preference in terms of admission. The Indian School of Business (ISB) based in Hyderabad is one of the best schools in the country. It was launched in 1999 and formed an association with the Kellogg School of Management, Wharton and the London Business School. The former Buddhist priest Keisuke Matsumoto from Japan was an MBA student at ISB. In an interview for pagalguy.com he says: “The only thing that differs between a corporation and a temple is the objective. For corporations it is profit and for temples it is the happiness of its followers…Temples need management too.” Keisuke plans to join the management of the main temple in Kyoto after his graduation.
With a 10.3% rise in its 2010 GDP, China has asserted its place as the fastest developing economy. Last year the country surpassed Germany and became the biggest world exporter and the second largest economy after the USA. The 2010 GDP (at the official exchange rate) was 5.745 trillion with GDP per capita (PPP) being $7400. China has an unorthodox political and economic system from a western point of view. The single-party rule of the Communist Party coexists with the presence of multi-national corporations and huge investment flows into the economy. Initially, investors were attracted by the cheap labour and the low production costs. However, it seems that a qualitative change in the business profile of the country has gradually taken place. It remains to be seen whether China will realize its potential and turn into a centre of know-how and technical excellence and whether it will start to consume more of the production it currently exports. This structural transformation will probably take place in the next 10 or 20 years and is probably amongst the major challenges which prospective MBA graduates residing in the country will have to deal with. Shifting between the various stages of a maturing economy requires strong business acumen and increased adaptability among managers. Another test, not just for the country but also for the whole world, is supplying China with the commodities it needs for its expanding industries. The explosion in demand for resources has contributed to sky-rocketing prices of goods worldwide. In an attempt to deal with inflationary pressures and increasing asset prices, the People’s Bank of China raised interest rates in October and December 2010 and once again in February 2011.
The Chinese industrial boom has taken a heavy toll on the environment. The air and water are heavily polluted, causing the deaths of hundreds of thousands of Chinese people. Although little attention is currently paid to the green sectors and environmentally friendly technologies, they are very likely to play an increasing role in the years and decades to come. This is one of the fields where specialist knowledge and business leadership will be in great demand. Chinese MBA schools currently produce about 20 000 graduates annually, but the country needs a qualified workforce and leaders for almost every sector. The following description from the article “Who is China’s best MBA” in the Manager magazine clearly depicts the MBA boom in China: “in October 1990, The Ministry of Education approved nine universities to pilot MBA education in 1991, which started the era of MBA education in China in September 2010… the number of institutes with MBA degree programmes increased from nine to 192 as the annual intake of students increased from 94 to over 30, 000.”
The China Europe International Business School was established in Shanghai in 1994. According to the Forbes rankings, CEIBS is the fourth best non- US two-year business school in the world. The medium annual pre-MBA salary of the 2004 intake was $13 000; in 2008 it had already reached $67 000. The Hong Kong UST Business School emphasises internationalisation. 93% of its MBA students from the 2010 intake come from outside China. The weighted salary of its alumni, according to the Financial Times 2011 rankings, is $133 334 annually. Probably as a result of the crisis, there is also a considerable drop in the percentage of graduates in employment three months after graduation. In 2010, 54% of HKUST MBA alumni were working in Hong Kong; 29% of them were working overseas and 17% in China. Another MBA opportunity in China is provided by Hult International Business School. Hult is one of the schools with a campus in Shanghai, where it offers its one-year full-time MBA course. The country offers many other options for a quality MBA degree.
The Lion City’s huge leap
The island state of Singapore gained independence from the United Kingdom in 1963. It has one of highest GDP per capita in the region and in the world at $62 200 (PPP). In 2010, its GDP rebounded impressively by 14.6%, after contracting 1.3% in the previous year. 72.8% of the workforce of the 4.7 million-strong population of the island are employed in the services sector and the remaining 27.2% work in industry. In the World Economic Forum ranking, Singapore is the most competitive economy in Asia and the third-most competitive in the world, surpassed only by Switzerland and Sweden.
Despite its small size, Singapore is a centre for prestigious MBA education in the region. Foreigners have traditionally formed a major share of the student community in business schools and the MBA profile of the country was further boosted in 2000 when INSEAD Singapore started its one-year course. Nowadays Western students increasingly consider moving to Singapore for a degree, attracted by the growth potential of the country and the region. There are opportunities for international MBA graduates from Singapore b-schools to work in the country, but these depend on a number of factors including the state of the economy. According to government statistics, a large proportion of Singapore’s workforce is made up of non-residents: 1 088 600 people out of the total population of 3 135 900. With almost a third of the residents possessing a degree in Business & Administration, international MBA graduates face serious competition. This further highlights the importance of quality in their education.
The School of Business at the National University of Singapore is another excellent school in this city-state. 92% of its MBA students are of international origin. Other outstanding schools with MBA courses include the Nanyang Business School and the SP Jain centre of Management. ESSEC Business School also has a campus in Singapore. According to the school's 2009 survey, 49% of its recent graduates work in the financial and consulting sectors.
Officially Singapore is a democracy, but in practice since the end of the 1950’s, the People’s Action Party has been the only ruling party in the country. In the last election in 2006 it won 82 of the 84 seats in Parliament. This democratic deficit is tolerated due to the country's brilliant economic performance. The city-state is largely perceived as one of the positive faces of globalization in Asia.
MBA in the region
As more Asian business schools are being established and earning accreditation, local candidates no longer need to leave Asia to get a good MBA. Although 10 or 15 years ago they had to go abroad to pursue their business degrees due to the limited capacity of Asian courses, the current trend is quite different. Americans and Europeans increasingly look towards schools in the region. It is not only the quality of education that attracts attention, but also the opportunity to experience and participate in the rise of Asia. With multinamultinationals increasingly wanting a share in the growing Asian market, the prospects for graduates with good MBAs are likely to improve with time. The value of the MBA qualification in the region is appreciated by both local companies and international business and the development of business education in Asia to a large extent reflects the development of the region itself.
The difference in tuition fees and the cost of living are additional factors attracting western students to Chinese and Indian MBA education. As mentioned above, unlike in the developed Asian economies reviewed, not all of the best schools in these two countries are sufficiently exposed to international students. The relative rigidity of the local job markets here could also make professional realization for expatriates harder than anticipated.
In order to understand Asia, you have to keep your finger on the pulse of the times. Despite some signs of overheating, the Asian success story is much more than another gold rush in the history of humanity. With Asia's geopolitical strength on the rise and the fact that lucrative local markets still have a long way in front of them before reaching their maturity and full potential, the region is booming with opportunities. The investor Jim Rogers, a former partner of George Soros in the Quantum Fund and chairman of Roger Holdings, gave the following explanation for his relocation from New York City to Singapore: "If you were smart in 1807 you moved to London, If you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia."