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The growth of international branch campuses set up by universities in other countries is the most concrete evidence of how higher education has become a global business.
As of August 2015, there were 229 international branch campuses around the world with another 22 in development, according to the Cross-Border Education Research Team (C-BERT) at SUNY Albany, which monitors their spread. The US and the UK are the largest “exporters” of international branch campuses, with 50 and 27 respectively. But Russia, with 13 campuses in countries such as Belarus, Albania and Azerbaijan, has now overtaken Australia’s 11.
Some developing countries, notably India, have also entered the market – SP Jain has campuses in Dubai, Singapore and Sydney – while Malaysia’s Limkokwing University has opened in London.
It is tempting to see these branch campuses as the educational equivalent of the globalisation of business, with powerful universities establishing networks of subsidiary campuses. Given the growing demand for higher education, which has seen global enrolments quadruple from 50m to 198m since 1980, the implication is that the number of these campuses will continue to climb.
How the business works
Before jumping to this conclusion, it is helpful to understand how international branch campuses are set up and the alignment of interests that are driving their growth. These campuses generally have two defining characteristics: they trade under the “brand name” of the home university (University of Wollongong in Dubai or UNLV Singapore); and they teach and award the qualifications of the home university.
But there are some secondary characteristics which are less well-known. They are incorporated as private education companies, in which the home university has an equity stake. Branch campuses also normally have local partners, often commercial property companies (in China, for example, a local majority partner is mandated by legislation), and they are registered as private education providers under the jurisdiction of the host ministry of education.
Branch campuses overseas have been often derided as colonial outposts of the home university, representing the “McDonaldization of higher education”. But the reality is that most campuses are legally established as private universities in the host countries, controlled by local majority shareholders. Most of the staff are employed by the local entity, not the home university, and are hired locally.
The campus functions under the watchful eye of the host ministry of education, which can variously require the teaching of specific courses (such as cultural courses in China) and set tuition fees and enrolment quotas, such as in Malaysia.
No cash cow
For the home university, the cost of setting up an international branch campus is generally much lower than commonly supposed. This is partly because the university has local joint venture partners to share setup costs, but mainly because the campus is incorporated as a legal entity. With the backing of its local shareholders, the campus can raise capital on its own account to buy land, build the campus and fund its operating costs until it breaks even.
On the downside, these financial arrangements mean that there is no “pot of gold” for the home university. It may take a number of years for enrolments to build to the level where the campus is breaking even and, thereafter, the bulk of any profits will go to servicing the campus’s debt. Any residual profit will be split between the shareholders, with capital controls and other restrictions often limiting the ability of the home university to repatriate their minority share.
All this begs the obvious question: why have so many universities opened campuses overseas? Making easy money is not the motivation. In general, the growth has been driven by universities seeking to build their global brands, and so attracting international students and staff. But the more important player in the mix is the host government.
Friends in high places
Higher education remains a highly regulated, politicised sector and international branch campuses exist because they serve the interests of the host governments. In some countries, notably the United Arab Emirates, branch campuses provide education to the children of a majority expatriate population barred from tuition-free Emirati universities. In China, branch campuses transfer educational technology and teaching skills to the Chinese higher education system, which the government hopes will help to improve quality overall.
Seen in this light, branch campuses are not a manifestation of a relentless globalisation of higher education, but a transitory alignment of motivations: universities seeking to build their brands by extending their global reach and host governments seeking to accelerate the development of their higher education systems.
It is difficult to predict how long this trend will continue, but the experience of the British Commonwealth suggests a downturn will come as the higher education systems of host countries mature. Remember, the Universities of the West Indies, Colombo and Zimbabwe all began life as remote branches of the University of London, teaching an academic syllabus devised and examined in Russell Square. They subsequently developed their own identities and academic cultures, cutting the ties with London as they grew up to become proud, autonomous institutions of higher learning.