Pullback from China

"I think we did anticipate some problems, but not as severe as the ones that emerged," said Steve Haberman, Deputy Dean of the Cass Business School in London. The school, which had offered an MBA program since 2004 with the Shanghai University of Finance and Economics ended operations in China in February. The halt was attributed to the lengthy government approval process required for each new class of students. In addition, the school was frustrated by the effort it took to bring home the money they were making. In China, all foreign schools have to collaborate with a Chinese university and contend with the local education authority and the Education Ministry, which exercise tight control over joint ventures.

But the biggest problem is that relatively few Chinese have the requisite language skills to handle an all-English curriculum. “It’s a really small market," says Patrick Moreton, Managing Director of the program offered by Fudan University and the Olin School of Business of Washington University in St. Louis. The five top programs in Shanghai together have only 230 students enrolled.

Several schools have therefore scaled back their programs or ended their partnerships with Chinese universities. The University of Maryland's Robert H. Smith School of Business has suspended its five-year-old Beijing operations. Even the State University of New York (SUNY) in Buffalo, which worked with Renmin University of China to launch the country's first executive MBA program in 1998, had enrollment troubles and ended the joint venture in 2004.

Another challenge has also arisen recently for the foreign schools: a growing number of sophisticated programs taught in Mandarin and Cantonese. Thirty Chinese universities are now authorized by Beijing to provide Executive MBA programs. And they are not necessarily worse.

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