As Duke Kunshan University moves forward, concerns about the risks involved with the endeavor continue to surface.
Construction on the campus has progressed in recent months, yet the lack of certain details about funding, the campus’ surrounding environment, Chinese local support and the value of expanding globally have caused some to question the plans.
Some faculty members are concerned about the magnitude of the anticipated multi-million dollar investment, but many recognize the benefit in establishing a global presence, said Craig Henriquez, Academic Council chair and a biomedical engineering professor. Until more faculty members are aware of the details of the endeavor—such as which professors will teach or research at DKU—many will remain skeptical of the project, he added.
“Everyone is trying to get a handle of what the costs are,” Henriquez said. “[Currently], only a handful of faculty are involved, and the rest are wondering if it’s a good investment until they see it in action.”
In a document released last month, administrators acknowledged the project’s potential financial risks, such as relying on philanthropic support, holding Kunshan accountable for its financial commitments and dealing with potential fluctuations in the size of Duke’s total investment.
“We believe we understand the principal strategic and operational risks, though we acknowledge that there is always the risk of the unknown and the unanticipated,” the document, which was produced by the Office of the Provost and the Office of Global Strategy and Programs, states.
Although the administration has put forth detailed investment plans, some aspects of long-term financing are still unclear to administrators themselves.
Details of DKU’s potential initial enrollment and tuition costs are not concrete, Executive Vice President Tallman Trask said. He believes it is too early to predict how soon DKU will become self-sufficient through revenue generated by tuition.
“The reality is, until [students] actually show up, if the numbers turn out to be more than expected, we’ll have to reconsider and go back to the faculty and Trustees with a different discussion,” Trask said.
Kunshan and Duke will split operational cost subsidies for the first six years—with Duke covering 52 percent—and Kunshan will rent the campus to the University at no cost for 10 years. These agreements are expected to be renewed in the future under their current conditions, Trask said.
The cost to the University throughout DKU’s first six years is expected to total $37 million in addition to the $5.5 million previously spent on design and construction oversight. The University will also draw a $13.3 million loan from central administrative funds for campus furnishings, Trask said.
Because the investment comes shortly after the University cut funding from the Durham campus in light of the economic downturn, questions have arisen about the upcoming spending in China.
“Over the last couple of years [the University has] had to cut $125 million, and now we are going to be sending a good amount of money to Duke Kunshan,” said political science professor Paula McClain at the March 24 Academic Council meeting. “But all of the money they take in will stay within that institution. Are we going to be squeezed even more?”
Henriquez said faculty tend to get anxious when the University “experiments.” He added, however, that he has observed significantly less excitement from his colleagues about DKU than he expected. Faculty are concerned that they will not be able to continue Durham initiatives because of the costs of projects in Kunshan.
“It’s hard to find people who are hyper-enthusiastic about this—that’s a little surprising to me,” he said. “[Enthusiasm is] not as evident as it should be at this point.”
‘Incalculable’ rewards
Few Dukies in Durham have seen the campus’ development first hand, but one Kunshan local has visited the site and expressed confidence in the project.
American investment company owner Virgil Adams has been investing in Kunshan for 15 years. He recently moved his company, New Frontier Investments, to the region because he believes it will eventually emerge as the “Chinese Silicon Valley.” Adams has been closely following DKU’s construction, occasionally tracking its progress in his blog, “My Kunshan.”
Based on his experience as a developer in the region, he believes Duke’s decision to build a campus in China will induce “incalculable” rewards. Adams acknowledged that the initial budget might seem steep but said a prediction of DKU’s value in 20 years could vastly exceed believable expectations.
“Any university that does not jump at an opportunity to be here is going to get left by the wayside of history,” he said in an interview. “I cannot imagine how Duke could make any money off this in the first five years, but in 20 years, this will have a phenomenal, immeasurable return on investment for Kunshan and Duke.... You can’t even imagine it—no one can.”
Provost Peter Lange echoed the importance of establishing a global presence. The advantages are hard to see when working in a nation with a “complicated political landscape” like China, he said.
“We need to remember this is a major strategic initiative for the University—it’s easy to lose sight in the thousands of details,” Lange said. “When one is evaluating risks, it’s always worthwhile to think about the risks of doing nothing.”
‘I’ll believe it when I see it’
In addition to observing DKU’s progress from afar, Adams was able to get a tour of the construction site last month—a privilege typically reserved for Duke administrators and Kunshan officials. When he first visited in late 2010, he said, there was almost no activity or indication that work was being done and he was skeptical that the project would be finished by its expected completion date of late 2012. When he visited again in March, his opinion changed. That time, construction crews had begun work on the school’s foundation and were constructing basements, he said.
“[Last year], I said it doesn’t look like anything is going to open in the next three years,” he said. “This time, it was obvious work was being done.”
When administrators first presented tentative plans for the Chinese campus, they anticipated that the first phase of construction would be completed sometime in 2011. Challenges such as finalizing agreements with a partner university contributed to the project’s delay. In January, the University established a partnership with Wuhan University, and if its appeal to the Chinese Ministry of Education to establish a campus is approved, DKU should be able to enroll students for Fall 2012 academic programs.
Although the campus is making obvious strides in construction, Adams said Kunshan locals remain largely unaware of the project. He believes the limited publicity can be attributed to the many other large and fast-paced developments happening throughout the city, causing Duke to get “lost in the shuffle.” A lack of significant Duke presence contributes to the minimal Chinese public response, he added.
“The credibility of the endeavor might get called into question, not in a negative way,” Adams said. “The Chinese are saying, ‘I’ll believe it when I see it.’”
Additionally, DKU is not readily visible to many Kunshan citizens. Located near the Suzhou Industrial Park, the campus is about a 20-minute drive from downtown Kunshan and is surrounded by vacant land with business complexes on the other side of the empty lots, he said. Although largely industrial, he believes that this area is a smart place for Duke to invest because of significant research taking place nearby.
“People are going to start up the future Google or Apple in Kunshan, and what’s the value of that investment?” Adams said.
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