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Business trends

Japanese MBA students plummet in US as companies skimp on tuition

Corporations fear employees will go work elsewhere upon receiving degrees

There are fewer Japanese MBA students at top American schools like Stanford University.   © Reuters

TOKYO -- The number of Japanese students obtaining master of business administration degrees at elite U.S. universities has dropped by roughly half in the past decade as corporations grow reluctant to finance employees' education for fear of them quitting upon graduation.

Only 59 Japanese students graduated from the top 10 MBA programs in the U.S. this year, including those offered at Harvard, Dartmouth and Stanford, according to Axiom, a Tokyo-based staffing agency. That is down from 104 graduates in 2009.

A big factor driving this trend is businesses are less willing to sponsor MBA students since many bolt for other employers once they return home. As Japanese corporations try to remain competitive by having employees trained at top business schools, they may have to rethink the way they finance such programs.

"Being able to speak without hesitation during discussions is an enormous asset," said a recent Harvard Business School graduate in his 30s. Before going to Harvard, he had worked for a large Japanese trading house. Now he is employed at a major U.S. investment group.

"What appealed to me is the environment where I can be deeply involved in management and business strategy while putting to use what I learned in my MBA courses," he said.

The majority of Japanese MBA holders have tuitions paid by employers. But between 2009 and 2019, that number tumbled to 33 people from 61. Meanwhile, the number of students paying out of pocket fell to 26 from 43.

Businesses normally require sponsored MBA employees to pay back tuition fees if they choose to leave the company within a few years. However, employees frequently do not have to reimburse living expenses that were comped.

The cost of attending an MBA program in the U.S. can run between $140,000 to $260,000 a year. Some companies "have switched to domestic schooling where costs are cheaper," said a source at a major Japanese financial group.

There is a vibrant market for MBA holders looking to switch jobs. Registrations at job sites targeting MBA holders aged 35 or older have shot up 74% this year compared with 2015, according to HR company En-Japan. Those who successfully signed contracts at new employers ballooned more than six times.

"There is high demand from companies looking to strengthen management, such as for creating new businesses," said Hirofumi Amano at En-Japan.

MBA returnees could feel out of place in Japan's staid corporate culture. One graduate in his 30s ultimately left his job at a bank to work at a consulting agency.

"At first, I had no intention to leave the company, but after returning to this country I felt gaps in the traditional organizational structure, which prevented me from landing a management position for a long time," he said.

Lately, some students whose tuitions are covered by employers are switching jobs before they have completed their MBAs. Startups and non-Japanese companies recruit these students, often through social media.

Partly driving this attrition is difficulty in envisioning a career path at their old employers. Big corporations often tell students where they are expected to work a week before graduation.

While the enrollment of Japanese students declines, applicants from India and China are flocking to U.S. MBA programs.   © Reuters

Meanwhile, Chinese and Indian students have asserted themselves in numbers at U.S. schools. There are about 10 Japanese among the roughly 950 people who enter into one top MBA program each year. Indian students, however, number approximately 50.

"I want to get an MBA [in the U.S.], perhaps on a scholarship, so that I can increase my yearly pay 100-fold," said a university student studying in India.

"Corporate-sponsored university education is a unique feature of Japan that does not conform with the times," said Axiom CEO Mitsuaki Watanabe. For one, the average ages of Japanese MBA graduates are between 32 and 38, well above the international average of 28.

At Japanese corporations that operate on the seniority system, MBA training "tends to be given as a reward to productive employees that have worked several years," Watanabe added.

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