Branching out: why universities open international campuses despite little reward

The Conversation’s international teams are collaborating on a series of articles about the Globalisation of Higher Education, examining how universities are changing in an increasingly globalised world. This is the first article in the series.

International branch campuses are one of the biggest reputational and financial risks universities take. They are typically established distant from the home campus’ supervision, in an environment as well as a country that is foreign, and they rarely repatriate great financial or academic riches to their home campus.

At least 31 international branch campuses have failed. Some have failed spectacularly, financially, academically or both, often to the considerable embarrassment of their sponsoring university.

Yet there are around 233 international branch campuses. Universities have established an average of 13 international branch campuses annually over the last few years and there are plans for at least 23 more.

This is not counting the operations of private for-profit institutions. There are, for example, 80 Laureate international universities in 28 countries and 54 campuses of the SAE Institute in 26 countries.

Why are universities establishing more international branch campuses and what are their prospects for success?

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An obvious motive for establishing an international branch campus is to increase revenue. In a 2012 report on data and developments of international branch campuses, about 60 campuses – 30% of the 200 surveyed – received some financial support from their host country.

Such support may be in the form of a substantial grant of cash or land, or tax breaks.

At least 31 international branch campuses have failed.AAP

Even so, some universities that received grants of tens of millions of dollars have closed their international branch campuses after a few years because they could not attract enough students to cover their running costs, among other reasons.

Of the 233 operating international branch campuses listed on the website of the Cross-Border Education Research Team of the State University of New York at Albany, the team was able to collect enrolment figures for 94 campuses.

The median enrolment of these campuses was only 500 students, despite the fact that their median age is 10 years. Campuses with such modest enrolments are unlikely to generate much revenue, let alone a surplus to repatriate to their home campus.

A report on the value of transnational education estimated that in 2012-13 the total gross revenue for UK international branch campuses was approximately £140 million (US$219 million). This was roughly only 3% of universities’ revenue from all international education.

The report said only relatively small sums are remitted to UK universities from their international branch campuses. This may be because these campuses generate little surplus, are established with partners that absorb much of any surplus, or because of host governments’ restrictions on repatriating profits.

Internationalisation

Many universities establish branch campuses as an extension of their internationalisation strategy. They perhaps started by enrolling international students on their home campus, perhaps initially to increase revenue as much as for any other reason.

But as these enrolments grow and the university becomes more familiar with international education and its multiple benefits, some universities extend their international engagement to offer programs jointly with international partners, and then offer programs abroad in their own right, although often still in partnership with an international institution.

Prestige

Non-profit universities are status-seeking organisations and another motive for establishing international branch campuses is to enhance their prestige.

International campuses enhance prestige.Shutterstock

In a survey of universities with international branch campuses, one of the “main drivers” was “prestige: visibility as an international institution with global ambitions”. Perhaps some senior university staff also seek to emulate multinational corporations.

Prospects

Reports about international branch campuses alternate between boom and bust, often in the same year. One reason may be that such campuses take a long time to plan and establish and often longer to build their success.

Much scholarly writing and analysis is sceptical, if not critical, of these branch campuses. One study observes:

Branch campuses are sprouting around the world, like mushrooms after a heavy rain.

However, the author argues:

Many of the growing mushrooms may only hold a limited life span and a few might be poisonous.

Another paper examines the reasons international branch campuses fail. It notes low student enrolments are often due to wrong assumptions about the host market’s student demand, its amount and level of secondary education, proficiency in English and capacity or willingness to pay high fees.

Some branch campuses failed because they did not adapt their curriculum to local conditions, or because home campus staff weren’t sufficiently adaptable. Others enter markets as they reach saturation and some planners’ cash-flow projections weren’t robust.

International campuses can fail due to incorrect assumptions about the host country.AAP

The authors also note a tension over the branch campus identity. In the host country, prospective students, their parents, governments and other interest groups expect a branch campus that carries the name of the home university to have many of that university’s characteristics.

Yet this contrasts with the need for the branch campus to adapt to local conditions and the often much lower revenue available to branch campuses from tuition fees, government funding, research grants, industry support, consultancies and other sources.

This is related to the core issue of the extent to which the branch campus should be integrated with the home campus or have devolved core functions such as staffing, finance, quality assurance, electronic communications and the library.

Universities with strong international campuses are the University of Nottingham whose Ningbo campus has 5,500 students and whose Malaysia campus has 4,500 students, the University of Liverpool whose joint campus with Xi’an Jiaotong University has 7,400 students, RMIT University whose Vietnam campus has 6,838 students and Monash University whose Malaysia campus has 6,757 students.

Each of these universities has a high proportion of international students enrolled at their home campus and has had a long, deep, broad and well-informed internationalisation strategy.

Missed opportunity?

Most international branch campuses are established in low-wage countries by universities in high-wage countries. There therefore seem to be opportunities to extend internationalisation and at least cover, if not save, costs by transferring labour-intensive central services to branch campuses.

But I have found no report of this being tried by a university, despite offshoring being common in many sophisticated services such as law.

Many branch campuses are in a different time zone from the home campus, so establishing help desks in both the home and offshore campus would enable a university to offer students and staff support over extended hours.

Gavin Moodie is an adjunct professor at RMIT University which has two campuses in Vietnam, a centre in Spain and which closed a campus in Malaysia.