Custom-designed MBA programmes are nothing new - multinational companies have long invested heavily in executive training. Now, however, the mainland's legion of state-owned enterprises (SOEs) are recognising the value of such tailor-made courses, reflecting the growing trend towards management training to revitalise China's ailing state firms. In such a climate, the inauguration of an International MBA (IMBA) in Shanghai last week by the Industrial and Commercial Bank of China (ICBC) in partnership with the University of Hong Kong and Shanghai's Fudan University may not have been unexpected, but it was still the first of its kind. SOEs may have encouraged their executives to take MBAs in recent years, but never before has one taken the giant step of having one custom-made. ICBC executives were invited to apply for the programme, the bank vetted the applications and the universities made the final selection. Fifty-two employees were chosen for the two-year, part-time course. The new joint IMBA between HKU and Fudan University has a sister programme intended for open recruitment that was launched at the same time and will run alongside the ICBC programme. Both will lead to the same IMBA qualification. The trend towards MBAs by SOEs could not have come at a better time, but the companies still have some important lessons to learn if they are to avoid a massive brain drain. State-owned enterprises faced tough foreign competition, and this would only intensify with China's long-awaited entry into the World Trade Organisation in November, said Maurice Tse Kwok-sheng, associate dean in the Faculty of Business and Economics at the University of Hong Kong (HKU) and director of the MBA course. 'Giving staff MBA training will stand them in better stead for the fierce competition - it is a matter of survival of the fittest,' he said. The Chinese Government has been gradually privatising SOEs over the last 10 years, and encouraging both the newly-listed and others to become more efficient and profitable. A three-year drive to improve management and efficiency is said to have been successful. This month Xinhua announced that 70 per cent of the mainland's 6,599 major SOEs were making a profit, an increase of 185 per cent over 1997. A new state policy of disinvestment in SOEs is expected to be announced in the coming weeks. Although the tailor-made ICBC MBA is a new step, state-owned enterprises have been buying into management training programmes for more than five years, according to Mr Tse. HKU began talks with Fudan University in 1995 and two years later launched a joint MBA course. Competition for places on the programme is tough, with at least three people applying for every seat. About 30 per cent of participants on the programme work for SOEs. 'Many people who work for SOEs have not had the opportunity to learn about modern finance. An MBA introduces them to corporate finance, accounting and marketing,' said Professor Jerry Han Chi-ying, a lecturer in accounting at HKU with a special interest in the reform of SOEs. Part-time MBA students from SOEs tended to be older than those from joint ventures and multinational companies, said Professor Han. 'Most of the ICBC students and others from SOEs are in their mid-30s to mid-40s, whereas the others are in their late 20s or early 30s,' he said. The age difference reflects a common trend among SOEs to recognise and reward employees according to seniority. Professor Eric Chang, chair of finance at HKU's School of Business, said the increase in SOE executives taking MBAs was a move in the right direction and he saw the relative older age of the participants as inevitable. 'Our ICBC students might be 10 years older than those from multinationals, but this is to be expected. When they graduate they will have decision-making power granted by their seniority as well as the financial and management skills gained through the MBA,' Dr Chang said. But at a ceremony for MBA graduates from the open-market HKU-Fudan programme in Shanghai last week, a number of graduates working for SOEs complained about the practice of rewarding age over ability. Ying Chau, a 33-year-old software engineer at Jiaotung University, said he had regularly seen promotions based on seniority and guanxi - the familiar concept of preferment through contacts or connections. Mr Chau covered his own costs during the two-year programme in order to boost his chances of being employed by a multinational company. Dai Lai is another recent graduate who works for a SOE and funded himself through his MBA. Given the opportunity, he said, he would move to a multinational, and hoped that China's entry into the WTO would boost his job opportunities. The financial rewards of working for a multinational company are an obvious draw card. While an MBA graduate working for a SOE in Shanghai might earn HK$5,000 to HK$6,000 a month, at a multinational firm their salary would be boosted to about HK$10,000. And a multinational would also offer the possibility of overseas travel. But job-hopping is still not easy on the mainland and bureaucratic red tape often keeps people hemmed into one job for life. Changing jobs is a political process. Employees have to get permission from their current employer as well as the green light from their prospective employer. Almost every MBA graduate wanted to move to a multinational, said Professor Juan Antonio Fernandez, professor of management at China Europe International Business School (CEIBS), a Shanghai-based institute offering several MBAs as well as executive training programmes. Thirty per cent of the school's MBA students work for SOEs. But despite the fact that SOEs risk losing the cream of their crop to multinationals, the long-term solution was not to draw up tighter contracts to keep staff, he cautioned. 'The real issue is about human resources and planning. Training must be part of the long-term career path of each person. 'The feedback I am getting from [SOE] students is that they are frustrated. There is little point in doing an MBA if when you have finished you can't implement what you have learned,' said Professor Fernandez. The long-term solution, he said, was to separate politics from management, although he acknowledged that in some parts of the mainland this would be especially difficult. Richard Feng is typical of Shanghai's new breed of young professional. In his late 20s, he works as a marketing manager for one of the city's most visible multinationals, PepsiCo. The soft-drink manufacturer funded 80 per cent of his HKU-Fudan University MBA, from which he graduated last Thursday. 'SOEs show a lack of respect for young professionals. New graduates would much prefer to work for a multinational,' he said.