If You Build It, They Might Not Come

The demand for Western university campuses in China might not be as high as administrators expect, according to a report commissioned by Duke University. The finding could give pause to colleges wanting to jump into the region to make a quick buck.

The report, conducted by the China Market Research Group, a Shanghai-based consulting firm, is a rare empirical look at the market for Western education provided in China (as opposed to the demand to attend Western universities), and it raises questions about some of the assumptions universities make when exploring development. In addition to the issue of price, the report also found that students are skeptical about the quality of education at branch campuses and would only pay a premium price for an education if it came with the opportunity to travel abroad.

These findings could challenge the view of some educators that a degree's value -- and the tuition that can be charged for it -- can be promoted based on the sponsoring institution, not whether the degree is offered on the original campus.

Duke is one of several colleges currently establishing partnership or branch campuses abroad. Other high-profile examples include New York University, which recently developed a campus in Abu Dhabi and is planning one in Shanghai, and Yale University, which is developing a liberal arts college with the National University of Singapore.

Duke recently partnered with the city of Kunshan in China and Wuhan University, a Chinese institution, to develop a full-fledged university in China that would grant Duke degrees. The report was one of several proprietary studies Duke conducted to help plan the campus. Duke faculty members critical of the plans to build a campus in China sent the study to Inside Higher Ed.

The Chinese Market Research Group interviewed 50 undergraduate students at four different Chinese universities about Duke, its China campus, and a graduate program in management studies, which would be the campus’s first degree program. The company also spoke with parents and potential employers.

It found that only 10 percent of students surveyed said they would consider the management studies program at Duke’s China campus directly after college, citing the lack of an international component and a perceived difference in quality between programs based in the U.S. and in China. Sixteen percent said they would consider the program if it offered the chance to study in the U.S. for at least two months, and 30 percent said they would consider it if half the program took place in the U.S.

“While most families have the means to pay $41,000 USD [annually] for a graduate degree and would be willing to do so for a degree earned from a prestigious university in the U.S., none are willing to pay that much for a China-based Duke MMS degree,” the report states.

The report illuminates a fallacy to which many universities could be susceptible, some experts say. It could also help explain why some efforts to establish branch campuses in the past have failed. Just because there’s demand among the residents of another country for a university’s services doesn’t mean a university should necessarily bring those services to them. Most students, the report states, want the cultural, linguistic, and social experiences of attending a Western university in the West.

"Education markets tend to be local," said Jason Lane, a professor at the State University of New York at Albany who studies international higher education. He said students generally make the decision to go abroad early in the college-selection process for cultural reasons and that domestic universities rarely compete against foreign universities. “The environment is very important to students. Even though the quality of education and curriculum might be the same, students are missing out on the American experience."

Duke’s campus in Kunshan is scheduled to open in fall 2012. In addition to the graduate Masters in Management Studies program, it will also offer some undergraduate non-credit programs to students from China and other surrounding countries. According to the university's planning document, the Kunshan campus would grow to about 700 students within six years. Long-term goals, which are in no way set in stone, administrators say, call for the development of a full university.

Faculty members have recently raised some concerns about the China campus. In addition to questions about Internet access and academic freedom, they worry that the China program will siphon off resources from the Durham campus. While Kunshan is providing the land and building the physical campus, Duke has made some financial commitments and is projected to spend $37 million on the campus in the first six years.

While the university has not provided details about how much the MMS program would cost, the report asked students whether they would be willing to pay $41,000 a year, which is about how much the college charges for the same program in Durham. That would be about 40 times higher than a graduate program at a Chinese institution.

Lane said how much a campus can charge depends on its mission. Some programs, such as New York University’s campus in Abu Dhabi, can charge higher prices because they are not aimed at attracting local students. Instead, they focus on providing a cultural experience for an international group of students. A different model is the University of Nottingham's campus in Ningbo, China. The campus established its tuition rate based on the Chinese market, and while its tuition is more expensive than Chinese universities, it is still significantly less than the cost of education in the U.S. and in Britain. The student body is mostly Chinese, but the campus is designed to attract students from all over Asia and the world. (Note: This paragraph is corrected from an earlier version to clarify the mission of the University of Nottingham in Ningbo.)

The faculty members who sent the study point to it as an example of the unrealistic expectations of the university's administration. They say the university's ability to recoup its investment is tied to high tuition.

In earlier interviews, administrators said the planned revenue stream for the Kunshan campus is complex. They also have repeatedly said that their plans in China are not about making money for the university, but are rather about establishing an international presence.

"Our main motive is to improve and increase the education we're able to give our students and do our research," said Duke President Richard Brodhead at a forum for faculty and staff members in April.

Aside from the price issue, the report noted Chinese students' concerns about how the quality of instruction offered at the China campus would compare to that of the same program in North Carolina.

“The majority of students and many employers perceive foreign university programs in China as being diluted versions of the programs they offer in their home countries and that most foreign universities' motives for being in China are to 'cash in' on local demand,” the report states.

While the report says that students think the quality of education that a brand such as Duke or Yale offers would be superior to what is available in China, “The top reason students want to study at international universities – and are willing to pay up to 30 times the cost of tuition at a Chinese graduate school to do so – is to experience life in a foreign country.”

A spokesman for Duke said the report is simply one of many that the university reviewed while planning the China campus and that many of the concerns have been addressed. He said the report serves only as a snapshot of the planning process, not a road map for development.

Lane said the Chinese responses in the Duke study are similar to the responses he received when he conducted research on the education market in the Middle East. "Global recognition doesn't translate into local reputation," he said. "Students recognize the difference between local and branch campuses."

Philip G. Altbach, director of the center for international higher education at Boston College, said the competition to establish new campuses abroad, as well as the deals made with foreign governments that often provide the campus, can sometimes lead to universities rushing into foreign countries blindly, and he commended Duke on doing its due diligence. He said problems with branch campuses sometimes emerge when administrators see them as a money-making proposition.

“How they can make money at it if they’re really doing a high-quality job?” he said, noting that universities might compromise their academic standards to make money. “You run the risk of sullying the brand. For institutions that really care about that, it is significant.”