CHINA: Students against US prices for 'branch' degrees

New overseas branch campuses being set up by US, British and other Western universities in China could flounder or rack up huge additional costs to the parent university because Chinese students are not willing to pay overseas levels of tuition fees for degrees obtained in their own country.

Many overseas institutions cite reports that for many Chinese families "high price equals quality".

But a recent study carried out by the Shanghai-based China Market Research (CMR) Group for Duke University in the US has questioned a push to charge tuition fees for postgraduate degrees that are even higher than those charged by the same institution the US, and has suggested that high fees could jeopardise the success of overseas ventures in China.

Concerns over the cost of a new branch campus for Duke University in Kunshan, near Shanghai, which is set to open in 2012, has led to vocal opposition from Duke faculty - a situation that has implications for other Western universities hoping to join the 'goldrush' into China.

It will be the first overseas campus granting Duke degrees. A Duke masters in management studies will be offered initially as it does not require a significant faculty presence, with other management degrees offered later.

Blair Shephard, dean of the Fuqua School of Business at Duke, told faculty members in February that "it should be possible within a fairly short period to be making money on our China activities".

But faculty members questioned the Duke administration's financial calculations at a recent academic council meeting, insisting that the China venture could become a drain on the US university's finances at a time when its own departments, particularly in the humanities, are facing budget cutbacks at home.

Thomas Pfau, a professor of English and German at Duke, told University World News that there had been a groundswell of opposition from academics. "There have been objections from faculty who are worried we are rushing in [to China] without clearly understanding whether it could be feasible.

"The entire budgetary projections are based on tuition fees of at least US$30,000 for a one-year [masters] course," said Pfau. "All the documents are very breezy and unclear when the questions arise of whether this is feasible let alone sustainable."

He added that the university was refusing to release to faculty members all the consultancy documents relating to the project, particularly those that show that Chinese students would be unwilling to pay high US-level fees.

While officially Duke's administration says fee levels for its China campus, which is already under construction, have not yet been set, some reports suggest that the university hopes to charge US$41,000 for a masters in management at the campus in Kunshan, compared to less than US$1,000 at one of China's top institutions and US$30,000 to $40,000 in the US.

After interviewing students from China's top universities CMS, which carried out one of several consultancy reports, said: "While most [Chinese] families have the means to pay US$41,000 for a graduate degree and would be willing to do so for a degree earned from a prestigious university in the US, none are willing to pay that much for a China-based Duke [masters] degree."

Those willing to fork out the high sums said they would have to sell significant assets such as an apartment or stocks to do so, and many others would have to make moderate sacrifices such as cutting back on household expenditure, but would only do this for a degree at a famous university that took place entirely abroad, CMS said in the still-confidential report seen by University World News.

Such parents said they would "find a way" to pay US$45,000 for a university such as Harvard or Princeton as it would benefit their offspring "for the rest of their life".

Around 40% of the students from top Chinese universities said they would consider a masters degree in management at Duke in the US, but that fell to just 16% who would consider doing the same degree in China, and then only if "cost concerns were addressed".

The proportion willing to undertake a degree at a prestigious university in China rose to 20% if the chance was offered to spend two months in the US as part of the degree. "The majority want at least half of the programme to take place in the United States, though a quarter of families would be willing to pay US$30,000 for a Duke [masters] programme in China with two months in the US," the report said.

"Students think Duke's campus in China would offer a superior education to domestic universities, but the vast majority see international experience as the main value driver for pursuing graduate degrees at foreign universities and worry that earning a Duke degree in China would not be worth the same in employers' eyes as doing so in the US," the consultants said.

"Most students think foreign universities often dilute the quality of instruction for China-based degree programmes and are concerned that the diploma will not be identical to one conferred in the US," said the report after interviewing students at China's top institutions including the universities of Fudan in Shanghai, Shanghai Jiao Tong, Zhongshan, Tsinghua and Peking.

It concluded that "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".

The Chinese side has provided more than 80 hectares of land and most of the construction costs, with the buildings leased to Duke for 10 years at no cost.

The municipality of Kunshan "was willing to donate and build the first phase at their expense so it was a financially viable proposition for us," Gregory Jones, Duke's Vice President and Vice Provost for global strategy and programmes, told University World News earlier this year before the faculty's opposition had really taken hold, adding that the Kunshan campus was part of the university's global strategy.

"Over the next 10 years we want to develop Duke as a globally networked university. The best researchers are connected globally."

Jones said: "We are not worried about some of the things other universities are worried about. We are not bothered about taking money out of China. We try not to loose money but we will reinvest money. More a matter for us is what are the conditions and whether we want to be present."

Duke president Richard Brodhead admitted to the academic council meeting that amid the excitement over the China venture there was also anxiety among Duke's trustees. "Why anxiety? Because we have never done anything like this. It's not a world we know."

"We always knew that we would need to work out an understanding with the city of Kunshan about who would bear the cost in the first several years of the programme when tuition from the programme was not sufficient to cover its costs. We have always made clear that Kunshan would have to bear some share of that cost in addition to the cost of the buildings and the land, or this venture would not go."

Brodhead characterised the venture as "an experiment".

"If we want to wait till it is a matter of certainty, we will never do it and we will run a different risk - the risk of having missed the chance to do something which might turn out to be important to the educational profile of the school at this moment of history.

"We have made estimates about tuition that can be charged. We have made estimates of the number of students who will enroll. How could these things not be estimates? What else could they be at this point?"

But Pfau argued: "The only rationale for doing this that they [Duke's management] are able to furnish is that other [universities] are doing this. But we are constructing bricks-and-mortar assets which is different because most other universities only collaborate."

The management also made bald assumptions about 'philanthropic donations' without any indications of where these might come from. And unlike some overseas campuses the new university will have no endowment to draw upon, Pfau pointed out.

"What we are not and what we should not pretend to be is some multinational corporation peddling an increasingly amorphous and empty commodity marketed as the 'Duke experience'," Pfau said.

He also said Duke should not rush into China without understanding the implications and likely drains on the university's budget. Duke is spending around US$37 million on a new campus in China when more than US$125 million has been lopped off its own budget in recent years, and arts and humanities are facing a $3 million budget deficit this year. Some $5.5 million is being spent by Duke to ensure the facility meets US standards.

Duke officials have said contingencies are in place in case the new university cannot attract enough students at the fees levels anticipated.

Craig Henriquez, chairman of the academic council, told faculty in March: "Clearly there is significant uncertainty to establishing a campus in China, for a host of reasons, but there is also potential for significant success. Part of our job as a community is to make sure we understand the risks of such a venture."

The building is going ahead with none of the concerns being addressed or resolved, Pfau said. Some believe that Duke management is pulling back slightly from their previous enthusiasm.

But another faculty member who would not be named said "part of the reason they are toning it down is not because of our concerns but a decision to go full blast into nine other international cities. It has become more important for them to conserve resources. But they don't like to talk about these other international projects."

A number of projects to establish new universities in China are underway including New York University in Shanghai. Nottingham University in the UK is hoping to set up a second branch campus in Shanghai while others such as Columbia and Cornell are studying opportunities.

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