Dean Xiang Bing recently conducted an interview with Jinseo Cho for the Dong-A Business Review, Korea’s influential business magazine for C-level executives and business leaders. The interview was held on March 26, 2013 prior to his speech at the fourth Asian Leadership Conference on March 27.
The article that came out of this interview was published in the June issue of the magazine. In it, Dean Xiang discusses CKGSB’s EMBA program and its competitiveness with western business schools, as well as his insightful comments on the business management environment in China. A transcript is below.
[MBA Education: Interview with Dean Xiang Bing of CKGSB]
“The Great Wall of China, once regarded as inefficient, has become the symbol of China! Look at business management and political systems from a long-term perspective.”
CKGSB, Cheung Kong Graduate School of Business, known for offering the best Executive MBA (EMBA) in China, was founded by a Hong Kong business magnate, Li Ka-shing. Including Jack Ma, founder of Alibaba Group, the world’s largest e-commerce company, numerous founders and CEOs of leading Chinese companies such as Sinopec and Tsingtao attended the school. Companies with CKGSB alumni as CEOs or Chairmen generated more than USD 1 trillion in revenue in 2011, according to the school’s estimation. This figure represents about 13.7 percent of China’s GDP.
We interviewed CKGSB Dean Xiang Bing in Seoul to ask about international business management environment and philosophy of CKGSB.
What is the unique competitiveness of CKGSB’s EMBA program compared to those of Western business schools?
Diverse China-related topics were greatly examined for the past ten years. First is the way to do business in China. While Western schools are unfamiliar with Chinese enterprises managed by families or the state, we are very much aware of them. The second topic is about the ripple effect that China’s transformation will bring to the world. It is important because even companies who are not doing business in China are highly interested in how China will change the industrial environment. Discussing these topics alone is, however, not enough. In order to become the world’s most influential business school, we have to look at larger topics beyond China. One of the topics is inclusive growth (embracing diverse social classes). Sustainable growth is also one of the topics we are interested in. In the traditional Confucian ideas, man and the universe are together as one, but in the original Western ideas from Ancient Greece, man is the center of the universe. In the West, people mainly consume resources, and therefore there is a problem with economic sustainability. It is, therefore, necessary to redefine the relationship between human and nature.
These topics were discussed in economics or humanities rather than business management.
We try to make companies contribute to comprehensive growth by having global competitiveness and social responsibility at the same time. I already established humanities courses at CKGSB in 2005. Perhaps it was the world’s first humanities courses for a business school. There are reasons why the humanities are important. First, the ability to view business management and political system together in the long term is necessary. The current capitalist system is too short-sighted. Let’s take a look at Chinese history as an example. Qin Shin Huang mobilized hundreds of millions of people every year for ten years to build the Great Wall of China, but the wall was, in fact, useless for national security. So we can say the project of building the Great Wall of China was a waste of money. However, in today’s perspective, the Great Wall of China is the symbol of the Chinese civilization. It means that building the great wall was not a bad idea after all. Ceding Hong Kong to Britain is another good example. As a result of loss in the Opium War, Hong Kong was ceded to Britain in the 1840s. Hong Kong, however, played an essential role in China’s reforms, and will keep playing a major role in China’s future transformation as the center of global finance and distribution channel of information. Therefore, now looking back, ceding Hong Kong to Britain was not a bad thing at all.
China can get lessons from its old history. While China has experienced several cycles of ups and downs throughout three hundred dynasties, the United States is now only going through its first cycle. CKGSB wants its students to have a long-term perspective beyond pursuing initial benefits, not only in making business decisions, but also in making political decisions. This is why I put humanities courses in the curriculum. Harvard Business School also included humanities in MBA courses this year.
By looking at the cases of Geely and Volvo, and Lenovo and IBM, Chinese companies are successfully managing international mergers and acquisitions.
It is too early to discuss whether the merger between Geely and Volvo was successful. In the case of Lenovo, its achievement exceeded my expectations. Lenovo is one of the exemplary companies in China for successful business management. Having gone through multiple economic cycles, it has shown great achievements even during hard times. It successfully integrates the Asian ideas, which set importance on people, with the key performance indicator (KPI) of the West. However, the emphasis should not be placed on the nationality of companies in acquisition but the company’s ability to leverage necessary resources from everywhere in the world in order to compete at the international level. It is now important to utilize global management resources not only for global competition but for domestic. Let’s take a look at the case of Yunnan, a bandage manufacturer in China. To compete against a global company Johnson & Johnson, the company bought packaging materials from a German company, learned packaging technology from a Japanese company, and conducted research in the United States. As a result, it currently dominates 80 percent of the local market share. This example shows management resources can be utilized globally even if the company competes in the domestic market.
When signing partnerships with Chinese companies, Korean companies are concerned about whether Chinese companies will only take technology from them.
This kind of concern applies not only to Korean companies, but also to everyone who invests in China. However, foreign companies have been successful in China. Have you heard about a foreign company who is successful in India? Try to find at least one. Investments of foreign companies are focused on China because it is the most globalized country regarding foreign investment. China is the only country that is not dominated by one particular management model. In Korea, a Korean style of management is dominant; Japan, the United States, and Germany are the same. In China, however, Samsung, Toyota, Volkswagen, and General Motors are functioning well according to their own business models. If you go to Walmart in China, there are few Chinese products.
The openness of China is underestimated by the Western media, which is dominating the world. Even Chinese people underestimate China’s openness. Chinese companies are just quietly making money without explaining about it.
What role did public companies play in China’s economy? What can be lessons for Korean public companies who dream of globalization and innovation?
The West considers China as a state capitalist country, but if you look deeper, the core factor of China’s economic success is non-state capitalism. 80 percent of jobs are in the private sector, and more than 90 percent of new jobs are generated from the private sector. The private sector’s contribution to GDP exceeded 70 percent last year. It is therefore better to say China is successful not because of state capitalism but in spite of it. China has prioritized public companies and foreign investors, and discriminated against local companies. As a result, local companies have had to come up with better strategies to overcome discrimination from the state. I believe that China’s economic success is not from the state’s grand plan, but from the entrepreneurship of Chinese people who desire to make money.