Dialogue @ZJU: With Joshua Kobb about delocalization of higher education

[Message from the Editor: Recently Joshua Kobb, Vice Dean of International Business School published an article in China Daily with the title ‘Delocalization could be future of higher education.' Global Communication contacted him and he shared some thoughts on trends and perspectives for higher education in the post-COVID-19 world.]

Q1: What are current trends in student mobility?

Kobb: Over the last several years trends in student mobility have been changing. The US, while still the largest destination for foreign students, has seen the rate of increase in foreign students fall since 2014. As a result, some institutions have seen tuition revenue drop by more than 25%. With the global rise of nationalism and protectionism, students have been adjusting their choice of destinations, favoring host countries with perceived greater safety and better post-study job opportunities. In a recent survey, 87% of high school college counselors in China reported students and parents are now reconsidering plans for studying in the US.

The COVID-19 crisis is exacerbating these trends globally. In the immediate-term, outbound students will experience difficulties in obtaining visas. In the medium-term, outbound students will explore destinations closer to home, as well as foreign collaborative programs in their home countries.

Q2: What’s delocalization？

Kobb: The term generally refers to moving resources overseas. Two different forces of delocalization can be identified: defensive and offensive. In the case of the former, a company moves resources overseas to benefit from lower production costs, typically serving markets beyond the one it was produced in. In many such cases lower production costs result from cheaper labor, materials, land and building costs. The automotive industry provides a classic example--twenty percent of Ford cars sold in the US in 2019 were produced outside of the US.

Q3: Could you explain more about offensive delocalization?

Kobb: In offensive delocalization, resources are moved overseas to better serve international markets. This may be due to reducing barriers to consumption or localization of the product or service to make it more attractive. An example of this strategy can be found in the Disney company. In the 1980s Disney realized that a sizable portion of their theme park revenue came from international visitors. While the American experience was certainly part of the draw, Disney gambled that there was a larger market interested in a Disney experience closer to their homes. Tokyo, Paris, Hong Kong and Shanghai now figure prominently in the offer, each one localized to some degree. More British visit Disneyland Paris than either of the Disney parks in the US.

Q4:What does offensive delocalization mean for higher education?

Kobb: The global higher education market was valued at USD 65.40 billion in 2019 and has been projected to reach USD 117.95 billion by 2027. International education represents a large part of learning activities and is a major source of tuition revenue from non-domestic students.In the US, there were 1.1 M foreign students studying in 2018. Of them, 34% came from China alone, representing approximately 11 B USD in fees.

In the new normal, institutions will be faced with looming structural declines in international student enrollments and subsequent loss of tuition revenue. The numbers above can be frightening for many universities who depend on international students for revenue.With this in mind, the pursuit of an offensive delocalization strategy makes sense for higher education.For universities, this translates into the establishment of overseas campuses, allowing institutions to attract and serve international students more effectively by creating market proximity and reducing barriers to a US education.This strategy is not new in higher education. INSEAD, the Sorbonne and HEC Paris operate international campuses, and NYU opened its third overseas campus in Shanghai in 2013. Of the 1,600 current students, 50% are from China. For NYU, delocalization draws not only a sizeable enrollment from China but also serves as a magnet for other international students.

Q5: What kind of roles do Chinese Universities play in this strategy？

Kobb: Chinese Universities provide important support for foreign collaboration in China. NYU Shanghai is established with East China Normal University and Duke Kunshan is a partnership with Wuhan University. As part of the Chinese government’s drive to internationalize the higher education offer, Zhejiang University established its international campus as a platform for cooperative partnerships. With an international business school and joint institutes with University of Illinois at Urbana-Champaign and University of Edinburgh, the new campus will host multiple foreign initiatives with facilities to house up to 5,000 students.

Q6:Which direction is the transnational education heading, and what does this mean for China?

Kobb: China is investing heavily in internationalization of its higher education. With close to 1,000,000 outbound students per year, it is the largest single source of international students in the world. At the same time, China has become the third largest destination for foreign students, thanks largely to the Belt and Road Initiative (BRI). China now sees a convergence of two directions—the largest exporter of international students and a quickly rising hosting country.Future development in transnational education will likely see an increase in the establishment of overseas campuses and university-level collaborative programs in China to serve outbound domestic students and international students looking for new destination opportunities. This is both in reaction to the COVID-19 crisis and a continuation of changes in student mobility preferences. For institutions relying on tuition revenue from international students, in particular from the US, offensive delocalization to China should be a strategy to consider.