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Leadership & Organisations

The long march to prosperity

Shellie Karabell |

Some 20 years ago, many upwardly mobile young men at China’s elite universities became members of the Communist Party. It was the thing to do, and Xiao Zhixing was no exception.

Today, Xiao is Associate Professor of Management at the China-Europe International Business School (Shanghai), with a PhD (2004) from INSEAD in Organisational Behaviour. In-between, the academic learned how to spot oxymorons, conundrums and dichotomies. And he’s found plenty of them in his native land.

Although one of the largest economies in the world, China “is still – in many senses - managed by the political system of another era,” he says. “On the one hand, you have this superficial market mechanism … but, on the other hand, the Party is a father figure, the decision-maker for almost all important issues in China.”

Xiao let his dues-paying status with the Party lapse some time ago when he joined the Nokia (China) Investment Company. He’s proud of the fact he’s the first Chinese graduate of INSEAD’s PhD programme. “Not the first Chinese student, but the first Chinese graduate.”

No slouch as a student, Xiao tried his hand at writing books during his five years at INSEAD, and told friends back home: “I live in an American colony in the middle of a French forest.” He took both the American and the European business models back to China with him, immediately after graduation, despite lucrative public speaking offers from abroad. But his plan was always to return home after his schooling, and return he did – seriously questioning what he calls ‘American hegemony’ in the business education field.

“I find it surprising how much you guys are still living under the shadow of American hegemony,” he told fellow PhD graduates at the 20th anniversary reunion at the school’s Europe campus in Fontainebleau recently. “How can you think, after the financial crisis, that this is the only game in town? America needs some restructuring socially; economically…It will be rebuilding its financial sector from the bottom up. At this point it is hard to see what the new shape will be. But at least we need to know there are other options out there.”

So is an Asian business model set to become predominant?

“Not yet,” Xiao replies. “In China and elsewhere, business people are talking about ‘Chinamerica’ – this new superforce, something to change the whole game of market economics. The ground rules for business schools will also find themselves undergoing change. That is not to say Asian schools will dominate the business education world, because China and Japan – they’re different. They have a different way of dealing with the market and with business education.”

The American model is used and respected in China, but with different results. “The problem is, while in the US this model is part of the economic structure there, and graduates can get jobs in consulting or in investment banking, China does not have this kind of placement structure for graduates. We do not have the consulting companies or the investment banks,” he says.

Xiao’s own school, CEIBS, is perhaps a harbinger of that new yet-to-be-defined shape of things to come. It started out in Beijing as a project between the European Union and the Chinese Government in 1984 (the year in which London and Beijing decided that Hong Kong would revert to Chinese rule in 1997), the initiative was summarily dropped in 1989 following the crushing of pro-democracy protests in Tiananmen Square. In 1994, the project was revived and the school was established in Shanghai, where it is preparing to celebrate its 15th anniversary.

In addition to teaching at CEIBS and conducting research on social capital, social networks, comparative management, and social cognition issues, Xiao is also responsible for the development of the Henry Mintzberg International Masters in Practising Management (IMPM) in China – an organisation for which he has raised quite a sum of money. “I helped to raise some five million yuan as an endowment from a rich family business,” he says.

This project and its funding methods appear outside the norm for Chinese education. “Business education is a monopoly. The Ministry of Education basically has so far given out only two licences for EMBA education outside of the old state university system: one to us and another to a school in Beijing. That is an important reason why we were able to grow very quickly.”

While benefiting himself from the State’s grip on education, Xiao worries about the rest of China’s monopolistic tendencies.

“The state-owned companies in China are very influential,” he says, “and they are growing very fast and this is beginning to have a negative effect on the private sector. They are basically taking up the development space from the private sector and even from the multinationals. It is hard to criticise them directly because they are so powerful – companies like China Mobile or China Life or most of the banks. They make hundreds of billions of Chinese yuan – so you must be very careful.”

Xiao faces this issue every day in his classes at CEIBS. “Our students are quite balanced, representing the three parts of the Chinese economy: one-third from the private sector, one-third from the multinationals, and one-third from the state companies,” he explains. “We need to be very careful to take care of each sector of the economy.”

One of the biggest benefits of the school is not its classroom training but its opportunity for networking. Here, students – most of whom are already in business – can meet people outside their vertically-integrated work environment. “After 50 years of Communist rule in China, there are almost no other horizontal liaison mechanisms. Nothing.” Except, it appears, in the business school classrooms. “The classrooms provide the perfect, legitimate horizontal mechanism for managers to share knowledge, practices, ideas. This is a big social function.”

This ‘approved’ social networking function is probably one of the reasons for the perpetually-long waiting list for many executive programmes in business schools, even though there is no degree at the end of it all. “After six months, students are supposed to graduate, but they continue to register for the next year. Sometimes they stick around for five or six years just to maintain their contacts,” he says. “This is really Chinese idiosyncratic stuff - different from Japan or Hong Kong.”

It’s this kind of different context that gives Xiao cause for concern as to the future of business and business education in China. “The system is starting to crack,” he says.

Sporadic outbursts of protest, reported in the international press, would seem to support this view.

“The whole system really needs a revamp; the educational monopoly will need to be changed. Educators think maybe this will be good news: deregulating education. But we will have a tough road ahead of us; China will have a big upheaval. Until we solve this odd dichotomy of Communist ideology and a market economy, it is hard to foresee an “Age of Asia.”

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