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Rapprochement in Duke China Policy

December 2, 2011

Duke University’s Academic Council on Thursday approved a scaled-back version of the first proposed program for a controversial new campus the university is developing in Kunshan, China. The vote comes several months after business school faculty members shot down a more ambitious version of the program, demonstrating considerable concern about the China campus and potentially upsetting plans to open the campus by fall 2012.

Instead of a China-based master in management studies program, which the business faculty voted against in June, students in the program approved Thursday would spend three six-week sessions at the university’s campus in Durham before finishing their program with two sessions in China. Pending approval by the university’s Board of Trustees Saturday, the program is slated to start enrolling students for the 2012-13 school year, with students attending the China campus for the spring 2013 semester. Instead of getting degrees from the new Duke Kunshan University, students in the program will receive traditional Duke degrees.

The scaled-back program, approved by a vote of 44 to 8, with four abstentions, better reflects market research the university commissioned earlier this year that questioned whether Chinese students would pay U.S. prices for a program based predominantly in China with little interaction with Americans, as well as whether enough students would be interested in the China-based M.M.S. program. The revised program also responded to faculty concerns about rushing too quickly into China without faculty input, and gives life to a project that faced serious resistance a few months ago.

“One of the questions we’ve looked at is, does there appear to be the relevant faculty interest to do this? Back in middle of summer, the answer probably would have been no,” said Paul Haagen, a law professor and chairman of the China Faculty Council, one of the advisory boards that reviewed the proposal last month. “But this is a different program entirely, one that is substantially more modest.”

While the revised program might be more palatable for faculty members, reducing the program’s size – and holding it there for three or four years – will make it more difficult for the Kunshan campus to generate revenue, meaning more money could come out of the university’s overall budget to support the endeavors in China. That has upset some faculty members at the university’s campus in Durham. The proposal also notes that serious questions linger about the financial viability of the program and whether it can attract enough students, and the right kind of students, to make it worthwhile.

The deliberative process Duke has taken over the past few months has also exposed some of the potential pitfalls of establishing branch campuses abroad and bucked some conventional wisdom about the profitability of building a campus in China.

University administrators declined to comment on the proposal until after the Board of Trustees has had a chance to review it. Administrators have made it clear for months that the university will not go back on its commitment to build a campus in Kunshan. While projections for the campus were based on the original program designs, administrations have said in the past that they never intended for the original plans to be implemented without faculty input.

Faculty members approved development of the Kunshan campus about two years ago. To build a university in China, Duke had to partner with a Chinese institution. While the original partner withdrew, Duke found a replacement in Wuhan University. The city of Kunshan is providing the land and building the physical campus, but Duke has made some financial commitments and is projected to spend a total of $37 million on the campus in the first six years.

While the campus has been in the works for several years, many faculty members said they only started getting details about it, including cost estimates, this spring. That disconnect has led to several confrontations between administrators, who said they have been inclusive and transparent about the process since the beginning, and faculty members, some of who felt like the administration was pressing ahead without faculty input.

The discussion came to a head in June when the business school’s faculty rejected the initial design for the M.M.S. program, as well as an executive master of business administration. The committee tasked with evaluating the program, recommended that more time be taken to evaluate potential alternatives, including the current design. In rejecting the design of the program, which would have placed students in China for most, if not all, of the program, the faculty questioned assumptions about how many students the program could attract and how much they would be willing to pay, given that the program would be almost entirely in China and would not have a huge international component, but would still cost several times more than a traditional Chinese degree. They also questioned whether enough faculty members would be willing to relocate to China to teach the program.

“Given the apparent lack of interest in this program among potential students, the lack of enthusiasm among faculty for teaching in Kunshan for extended periods, the concerns about quality of the program, and the high cost of offering this program (particularly in light of Fuqua's uncertain financial position), we cannot recommend offering such a program at this time,” the faculty wrote in a report on the feasibility of the M.M.S. program. “However, given our uncertainty about some key issues – in particular, our ability to staff the courses and the implications of pursuing other alternatives (other program designs or doing nothing) – we do not recommend closing the door on the possibility of offering a full-year M.M.S. program based in Kunshan at this time.”

As a result, the program was sent back to the drawing board. The same committee, with some minor changes that resulted from the retirement of the business school's dean, evaluated the options. The university learned that Duke’s partners in China – Kunshan and Wuhan University -- would approve a format that did not require students to be in residence at the Kunshan campus during the entire school year, which led to the recommendation of the “3 + 2” design that business school administrators presented to the faculty council earlier this month.

At that meeting, faculty members questioned the financing of the program. “I absolutely believe that we would have to have much more information about the financial underpinnings,” said Susan Lozier, the chair of the faculty body. “We will need to have much more deliberation.”

That stance was echoed at Thursday’s meeting. The original plan called for 60 students in the program’s first year, growing to 170 within five years. Under the revised plan, the program will serve 30-40 students for the first three years in a pilot mode. Planners said they will not be sure of student demand until the program is in place, nor can they be sure what tuition price the Chinese Ministry of Education will be willing to approve.

Because of these factors, the program could be pulled after a short time. “It is important to remember, however, that if student demand is not enough to support a viable section in Kunshan (less than, say, 20 students), the tuition level approved by the Chinese Ministry of Education is too low to make the program viable, or anticipated funding does not materialize, we could choose not to launch the program or choose to cancel the program after one or two years,” the report states.

Faculty members said the small size is one of the steps the business school took to make the program less risky, and that it would require less commitment from faculty.

Because the program is so small, and will likely only be joined by a global health program of about 10 students for the first few semesters, some professors questioned why it’s necessary to build a campus designed to serve 600 students, particularly when the operating costs for the new university could harm the bottom line at the Durham campus.

“Leaving aside optimistic and speculative projections of eventual enrollment numbers (which, like all such projections, are naturally cost-free), is it not unwise to construct an entire campus prior to establishing clear facts — specifically as regards programs to be offered (now approved in drastically scaled-back fashion), tuition to be charged, as well as student enrollment and faculty commitment to teaching?” two faculty members wrote in a series of questions they posted for the provost.

They have already complained that costs are escalating more quickly than expected. In December, the Board of Trustees voted to spend $5.5 million on supervision and oversight costs for the facility’s construction, even though Duke was originally not going to have to spend anything on construction.

But the business school’s proposal notes that the burden for making the Kunshan campus should not fall squarely on the shoulders of the M.M.S. program. “Duke is committed to building a facility in Kunshan and this facility will exist with or without this program,” the report states. “Therefore, the financial success of this program should not be judged on the program’s ability to cover these fixed costs.”

While the plan still faced questions from faculty members at Thursday’s meeting about academic freedom and the campus and M.M.S. program’s long-term financial viability, the revised program seems to have broad support among the faculty. The business school faculty voted 50-8 in favor of the program earlier this month. Several faculty groups have also endorsed the program, including the Academic Program Council, a group that advises the provost on academic issues, and the Global Priorities Committee, which focuses on all international efforts.

In a letter to the provost, the China Faculty Committee -- a group that advises the administration on efforts in China, and that was convened after faculty members with a focus on China complained about not being included in the process -- said the proposal “constitutes a prudent approach, given the inevitable uncertainties, to development of an M.M.S. program with a focus on doing business in East Asia. In particular, the proposal demonstrates concern to ensure this program will not jeopardize the strengths of existing programs, or distort or otherwise weaken research activity of the faculty.”

 

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