And both China and India realise that private initiatives are needed to supplement existing state-led efforts to improve higher education facilities.
In this context, both have been trying hard to create an enabling environment for private education service providers, particularly foreign ones. China, in September 2003, invited foreign universities to set up campuses. India introduced a similar Bill in March 2010.
What are some of the problems facing foreign service providers seeking to invest in education in China and India?
First, both countries are used to seeing the public sector as the sole provider of education services. Their higher education architecture has evolved consistently with such a monopoly. Shaking off this legacy and shifting to a market-based system is not easy. China is, relatively speaking, better placed to manage this transition, since it begun reforming its education sector before India did.
Second, from the perspective of foreign education providers, China and India offer deep and wide markets. But while the size of the domestic market is the key determinant of their interest, there are many additional operational challenges for foreign providers.
Cultural dissimilarities, particularly language barriers and unfamiliarity with local market conditions, cause particular difficulty. These problems are neatly categorized as ‘information asymmetry,’ which is a problem that occurs when entities from entirely different markets interact with each other. This is a major issue.
Information asymmetry first became evident in the 1960s, following growing amounts of patented technology transfer from developed countries to developing countries. But the current asymmetry is more one-sided; education providers argue that recipients know more about their services than they do about the recipient market conditions.
This lack of information initially confined foreign education providers in China and India to distance education programmes and efforts to recruit students for home campuses. These latter efforts have been successful. China and India have become leading exporters of students to higher education institutions in the US, the UK, Canada, Australia and Europe. Lately, Singapore, Hong Kong and New Zealand have also become popular destinations for Chinese and Indian students. But as foreign providers have shifted to more ambitious models of service provision, including setting up campuses in host countries, problems have begun surfacing.
India’s latest initiative for attracting foreign universities may not receive a euphoric response. India’s cupboard for foreign campuses is almost empty, barring rare examples such as the Leeds Met in Bhopal or the forthcoming Georgia Tech in Hyderabad. And even after the latest Bill becomes an Act, information asymmetry will remain a problem.
In China, degree-granting foreign institutions need to collaborate with a local partner. In India, while the Bill allows for institutions to function ‘independently or in collaboration’, most providers will scout for partners for better management of local operations. Lack of adequate knowledge about varieties and systems of local educational institutions will make the search for the right partner a long and arduous one. Further, in India, worries will be significant on account of the limited outreach of the independent regulatory authority. Out of India’s 18,000 colleges affiliated to central and state universities, a little more than 6,000 are recognised by the University Grants Commission.
In addition, foreign providers also find the involvement of central and provincial authorities in managing education difficult to comprehend. This excessive involvement plagues both China and India.
Thus, as much as they understand the virtues of digging into the two countries, foreign higher education service providers are baffled by the complexities.
But there is a way out. Foreign providers must be patient and persuasive. The University of Nottingham in Ningbo, China, and the Xi’an Jiaotong Liverpool University, also in China, are good examples of fruitful investment projects. These investments are a useful guide for the Indian market. They show that, if foreign service providers are prepared to wait, and comply with the relevant regulations, they can achieve a profitable outcome that is good for all parties.
Amitendu Palit is a visiting senior research fellow at the Institute of South Asian Studies in the National University of Singapore.
An earlier version of this article was first posted here at The Financial Express.
Interesting insights.
The policy directions for engaging foreign education providers in India need to be defined more clearly and holistically. Here is the article published in University World News ( http://bit.ly/bG1lFi
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These five policy domains are: consumer protection; student decision-making; diversity of educational offerings; for-profit investment; and the profession of education. This will ensure all of the nation’s interests are served by this important opening up of an over-regulated, under-resourced sector of the economy to foreign education providers.
Currently the export market of students is so rich that universities would prefer students come to them. China, however, should not be a model of how to localise foreign universities, since neither of the two examples mentioned are impressive (students, faculty, etc.), highly profitable, or very old (just past the first matriculation of students).
One important question is why there are so few foreign universities onsite in China, considering the size of the market and income growth. There are more in the Middle East!
As the article only suggests, the Nottingham and Liverpool schools are legally joint ventures with private Chinese companies. This is not a question of ‘collaboration’; it requires that universities bend in their core competencies. JV’s are a complicated and compromise-prone model, which can only dilute the effectiveness of foreign institutions. The JV model made sense for Chinese businesses (if not for foreign firms), but do Chinese education managers need the benefits of working with foreign education managers? No, the JV model here is a crude means of controlling foreign universities and cutting into profits. It extracts and dilutes value. The PRC has no qualm extracting value from exporting students abroad, and it has no qualms raising the cost of foreign education in China.
A further issue, which the author ignored, is the Chinese regulators hostility to Western liberal arts programs. Does a university have to change its intellectual norms in order to do business in China? The answer is yes. These are not trivial matters and entirely under the control of policy makers.