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How Indian B-schools can compete with China

MBA: How India can compete with China
The education ministry in China is on an ambitious plan to attract 500,000 international students every year, of which 150,000 will be for higher education.

To meet this number, the government has already set about improving the quality of faculty, designing more international education programs and increasing services for foreign students.

Little wonder then that China has able to attract far more number of students of international ethnicity than India. But what makes China a more viable option for higher education for international students when compared to India and what is it that India needs to do to get into the international league?

PaGaLGuY spoke to two important people from the Shanghai-based China Europe International Business School (CEIBS) on the subject.

The first is Dr Ramakrishna Velamuri, Professor of Entrepreneurship Academic Director - International EMBA Program and the second person is MBA Programme Academic Director Lydia Price. Incidentally CEIBS has recently entered a coalition with three other Asian schools, including Indian School of Business (ISB), Hyderabad, to rope in students from the Western world in a joint operation.

Dr Ramakrishna Velamuri, who was previously on the faculty of IESE Business School as Academic Director of the Global Executive MBA and the Inside India programs and has taught as a Visiting Professor at the ISB says that India needs to not only attract international faculty but also provide MBA degrees more widely.

What do you think Indian b-schools who are looking to get in international students could do to be more attractive to prospective students internationally?

There are several barriers that we need to overcome. One barrier is our own government policy. You may know that the best Indian business schools are not university-affiliated, which means that they cannot call their degrees 'MBA". They have to call them PGDM (in the case of schools such as IIMs) and PGP in the case of ISB. Those of us who have lived in India know very well that these certificates are the equivalent of MBAs, but this is a much harder sell to prospective foreign students. This same problem exists for the 'Fellows" of IIMs. At CEIBS, we once received an application for a faculty position from a candidate who had a Fellow certificate from one of the IIMs. I struggled to convince my faculty colleagues that a Fellowship was equivalent to a doctoral degree. Sometimes, we Indians are our own worst enemies.

How should b-schools look at growing their faculty with the goal of attracting international students?

We need to attract good internationally-trained faculty. Despite the improvement in faculty compensation resulting from the 6th Pay Commission"s recommendations, Indian b-school faculty salaries (based on UGC scales) are not at all competitive. ISB is the only b-school in India that has faculty compensation that is somewhat comparable to international standards. The faculty members in the leading Indian business schools are excellent teachers, because teaching is what has been historically rewarded. Nowadays, business schools need to be active knowledge generators, in addition to being knowledge disseminators. However, the incentive structures in Indian business schools still do not emphasize research (with some exceptions like ISB). What needs to be done is to attract internationally competitive faculty and then give them light teaching loads so that they can dedicate a significant portion of their time to doing research with a view to publishing in international peer reviewed journals. This is very, very expensive and must be addressed through a sound economic model.

Indian pockets are not generally deep when it comes to education. How could Indian b-schools handle the financial load of paying such salaries?

The experience of CEIBS in China and ISB in India shows that there are enough students in both countries who will pay a premium for a high quality education. A high quality educational experience means excellent faculty members, excellent facilities (CEIBS and ISB are good examples of this) and an intelligent, diverse student body. The leading Indian b-schools have always been able to attract exceptionally talented Indian students. Unless they move away from government subsidized higher education, I am afraid this will be difficult to sustain in the future and their ability to attract talented international students will remain low.

India does not really have an 'international" reputation in the world education market.

International reputation is an important issue. Both CEIBS and ISB have done very well in the Global MBA rankings published by the Financial Times. CEIBS built a strong reputation through its early mover advantage in China, strong support from the EU and the Chinese government, high quality faculty coming from more than a dozen countries and other factors. Similarly, ISB built an excellent reputation in its very short history thanks to top tier partner schools (Wharton, Kellogg, LBS, and now MIT for the Mohali campus) and some of the best visiting professors. ISB has now started to attract a number of foreign students (many of Indian ethnicity but several others as well) and will continue to do so in growing numbers. My understanding is that the IIMs will soon be eligible to participate in the FT Global MBA rankings through their PGPX programs. I would expect several of them to be in the top 50, based on the quality of their students and alumni. If they could address some of the other issues (international faculty, international students, state-of-the-art facilities etc), there is no reason why several of them cannot be in the top 20. As the Indian growth story continues, there will be more and more people who will want to study in India, and this will also help Indian b-schools attract international students.

Should India"s larger English-speaking base not work in its favour, and against China?

I have answered this question earlier that some of the best Indian b-schools cannot offer an 'MBA" degree and that could be one of the reasons why students look at China over India. One factor favouring CEIBS is the China/Shanghai location. China is much more connected internationally than India, both in terms of trade and investment. China"s exports in 2009 exceeded $1.2 trillion compared to India"s $164 billion. China"s imports in 2009 were $954 billion versus India"s $268 billion. In terms of inward stock of Foreign Direct Investment (FDI), China had $456 billion as of 2009 versus India"s only $158 billion.

PaGaLGuY then spoke to Lydia Price, MBA Programme Academic Director, CEIBS. She says that the internationalisation of a student pool goes a long way in creating an 'international" image for the b-school.

How many international students does your B school have at this moment and from which nationalities?

We now have 65 international students in 2010 class, accounting for 36.1% of the student body. They are from 19 countries, spreading across North America, South America, Europe and Asia.

What in your opinion is the reason that b-schools in China are able to attract more international students than those in India?

China is the most dynamic and fastest growing economy in the world. Nowadays, over 60% of Fortune 500 enterprises have operations in China while 43 Chinese enterprises are among the top 500 list. With the deepening and extension of China"s economic growth, graduates with aspiration, managerial potential and international orientation are in high demand, that"s the most important reason that international students want to come and explore China. And with China"s growing impact around the globe, particularly since the recent global financial crisis, the China experience has become many international students" competitive edge even if they work in other countries. That"s a factor they use to differentiate themselves.

Yours is an an English-medium  B-school in what is largely a non-English-speaking country. Do you see any kind of hesitance from the local student population to join CEIBS?

The CEIBS MBA marketing and admission teams work hard to build awareness that we are an international program with a high standard of required English competency. Over the years we have applied a strong English competency screening criterion in the admissions process, often rejecting applicants with the advice that they study English intensively for a year before reapplying. At this point, there is an efficient self selection process at work. Those who are weak in English know that they should improve their ability before applying. Most of our current students have extensive experience working in a multinational environment, both in China and abroad. Through this persistent effort we have been able to attract the right students for our learning environment in sufficient quantities to meet our overall program objectives.

What do you think Indian b-schools can learn from how you market your b-school to international students?

Our marketing is very clear about our market positioning: specifically that we are an international program with a strong China focus. We deliver this idea in many formats (words, pictures, numbers) and through many media (brochures, brief teaching demonstrations, student ambassador outreach, etc). We try to include people - students, faculty and staff - in our marketing as much as possible. All of these people embody the brand - we live and work in a very multicultural world that reaches the highest levels of international capability while retaining a strong Chinese flavor. This clarity of our positioning and the ways we portray it to the market and seek it in the members of our learning community delivers a very powerful image to the market. So our advice to other schools is to clarify your positioning and then be fully consistent in portraying it externally.

Do you think the British history and cosmopolitan nature of Hong Kong indirectly add to the flow of international students and corporates to China?

Business and economic connections between Hong Kong and mainland China increase continuously over time. As a result, many multinationals have operations in both locations, much as companies operating in Europe or North America might establish presence in multiple cities. Many years ago, foreign businesses entered China through Hong Kong. But today, China is very well developed in terms of the factors that support international trade and investment. Anyone who researches the China market as a destination for business expansion will quickly realize this. Therefore, it is fair to say that Hong Kong helped to boost international interest in China business many years ago. But the effect is much more limited today.

Any suggestions that can make Indian B-schools compete effectively in the international market?

We have found that internationalization of student pool greatly boosted our worldwide image and credibility. Hence, we would advise Indian schools to consider that route. They must keep in mind, however, that this is a complex process that requires big adjustments to all aspects of admissions, academics and operations. So schools should not embark on that path blindly. We suggest that they establish clear goals and priorities for the internationalization process, and then pursue those goals aggressively.

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