Chinese challenge rocks ratings

By Della Bradshaw

Published: January 28 2008 06:08 | Last updated: January 28 2008 06:08

When the Financial Times published its first global rankings in 1999 there was uproar in the popular American online MBA forums that a European business school -London Business School - ranked at number eight.

Among abuse posted was the suggestion the editor of Business Education was "a coke-head".Two years later, comments were more tempered.In 2001 two European schools - London Business School and Insead - were in the top 10, but that no longer bothered the aspiring US MBA population. "So what?" noted one forum participant. "Everybody knows that."

This rapid change of view among American would-be MBA students bore out their growing realisation that a handful of world-class business schools in Europe could compete with the big brand-name US schools.

But these days European schools are facing a similar challenge from business schools in other regions.The 1999 Financial Times rankings of 50 global business schools included 31 schools from the US and 16 from Europe. In this year's ranking just 57 of the top 100 schools are still in the US but, more significantly, only 28 are in Europe.

While schools such as LBS and Insead have retained their star ratings, lesser European schools and their US counterparts have fallen victim to a growing number of ever-improving Asian, South American and Australian schools.

This year sees three Chinese schools and one Indian one in the rankings.Last year when Ceibs, the China-European business school based in Shanghai, jumped 10 places to number 11, the outrage sounded similar to that expressed by those US students back in the early days of FT rankings.

The main complaint was that a school with such a short history could not possibly be so highly ranked.But this year, the top 20 schools include four programmes that barely existed, if at all, a decade ago.

These are the one-year MBAs at the University of Cambridge's Judge Business School and the Saïd school at the University of Oxford, Ceibs and the Indian School of Business, in Hyderabad. This year Ceibs consolidated its number 11 position.

This suggests that with appropriate support and branding, the time it takes to set up a world-class business school is not the decades many academics would like to believe.It also proves you need one of two things to to make it to the top.

The first is a strong university brand such as Oxford or Cambridge. Two other elite universities hoping to pull off the same trick are Hong Kong University - which has barely started its MBA programme but already has alliances with London Business School and Columbia in New York - and Johns Hopkins University in Maryland, which boasts a world-famous medical school.

The second is a strong programme in a region of the world where there is a shortage of highly-trained managers, such as China or India.

Ceibs, for example, graduates close to 200 full-time MBA students a year, almost all of whom are fluent in both English and Chinese.

For corporations, banks and consultancies hoping to do business in China, this is a winning package - hence the high salaries they are prepared to pay to recruit and retain these talented individuals.The Skolkovo school in Moscow will be hoping for similar recognition.

Perhaps the other most significant trend to emerge over the past decade relates is the regional variation in the salaries paid to alumni three years after graduation.

In 1999, the highest salaries were commanded by alumni from the top US schools, with Harvard topping the list.

The difference between the top US salary - Harvard at more than $170,000 - and the top European salary - IMD with just under $130,000 - was 30 per cent.

Today the top US salaries are earned by Stanford graduates, with more than $175,000.

This is just 19 per cent more than the top European salaries earned by graduates from Insead and IMD.

Moreover, alumni surveyed from the six European schools ranked in the top 20 in both 1999 and 2008, earn 28.5 per cent more on average than their peers who responded for the 1999 ranking.

Comparing the data for the nine US schools who, again, appeared in all 10 years of rankings, shows that alumni there had seen a comparative increase of just 13.7 per cent.

Moreover, Harvard alumni have seen a decrease in salaries. Those who graduated in 1995 (and responded to the FT 1999 survey) earned an average $170,346 three years after graduation, but those responding today earn just $163,493 three years after graduation. Harvard is the only top 20 school to see this decrease.

It is also notable that the salary premium an MBA graduate can attract is dropping.In 1999, alumni from three of the top 20 schools reported their salaries three years after graduation were more than three times what they had earned before the programme. Alumni of only five of the top 20 schools 10 years ago reported salary increases less than 158 per cent - the highest salary increase reported in the 2008 report. And that was reported by a European school.