Fact Checker Exclusive: How the Fuqua dean exaggerated Kunshan’s commitment to Duke

✔ FC here. Good day, fellow Dukies.

Our recent series of Special Reports on the Brodhead Administration's plans for Kunshan relied in large measure on internal documents prepared by Blair Sheppard, dean of the Fuqua School of Business, that we received from Loyal Readers. As we noted in the Reports, Sheppard did not respond in any way to our repeated requests for an interview so we could further glean his perspective.

But Sheppard may be smarting from that terrible, discourteous decision, for he has just emerged, breaking silence, sending out a list of questions he himself formulated, along with his own answers.

We will go carefully through most of Sheppard's presentation, although not in his order. We start with the dean asking if Kunshan is a "backwater," and we wonder where he got that term from!

In the following, which includes the full text of Sheppard's answer, we use capital letters for material that can be found in Wikipedia for Kunshan and its provincial sister city Suzhou. And we use [[ brackets ]] for material that can be found easily at two well-trafficked websites:



OK here goes:

KUNSHAN IS PART OF THE CITY OF SUZHOU, A CITY OF GREAT HISTORY. [[ Suzhou was the ninth largest city in the world in 100 AD, ]] and HAS A POPULATION OF 6.3 MILLION PEOPLE.



[[ Downtown Suzhou is 34 kilometers from downtown Kunshan and Suzhou industrial park 20 minutes by car. ]]

Roads are very good.

Nightlife and restaurants are starting to come to Kunshan as are five star hotels.

Over 1,500 foreign firms have activities in Kunshan, ranging from manufacturing to services. GDP GREW FROM 20 BILLION TO 200 BILLION YUAN FROM 2000 TO 2010. KUNSHAN'S PRIMARY ADVANTAGE IS THAT IT IS PART OF JIANGSU PROVINCE THAT ABUTS SHANGHAI.

✔✔✔ FC comment: Quite frankly, Dean Sheppard, we expect more from you than an unattributed regurgitation of Wikipedia!

Why don't you tell us about Kunshan from your perspective as a visitor. Here are initial questions, we reserve the right to ask more.

Date (dates) of visit
Flight itinerary. Please note any stopovers
Class of service

What hotel did you stay at, in what city?
How did you get from the airport to the hotel?
From the hotel to Kunshan?

Within Kunshan, how did you get around, walk, bus, cab, private car? Did you try to get a cab?

Did you ride the subway from the Bund in Shanghai (the cultural, historical, financial and architectural heart) to the high speed train station, and then change to the high speed train? Tell us, please about your experience.

You stated this train ride is 9 minutes. Not on timetables FC can find. You state from the Bund to the bullet train, it's a 25 minute subway ride. Not on timetables that FC can find.

You said the drive into the Bund from Kunshan is an hour. That would be amazing, going through a teeming city estimated now to have 22 million people. Did you make this trip?

What examples of culture did you see in Kunshan?

Did you visit the factories of any company like FoxComm, the giant computer assembler?
Can you describe workers' conditions there?

As for your noting that nightlife and five star hotels have started to come to Kunshan, we agree they are not there now. Can you be specific on what you know about the future?

If Kunshan is so hot, so dynamic, and so close, why are you clandestinely trying to start another Duke campus in Shanghai for the premiere Fuqua programs? The Cross-Continent MBA. The MMS in finance. You said they would not "work" in Kunshan. Why?

Can you please provide us with same information, as appropriate, about other official Duke visits. President Brodhead, Vice President Jones.


✔✔✔ We will return in a few moments to Sheppard's self-described Q and A, some of it more original than what we have just gone through.

Like settlers moving through the Great Plains under attack by Indians, the Brodhead Administration has circled its wagons and is hoping to ward off all stakeholders who want to examine its aureate, simultaneous expansion into at least nine cities around the globe, including most notably and grandly, Kunshan, China.

Increasingly, there are arrows flying, in the form of pointed questions, demands for answers, challenges to rationale and confrontations over decisions.

Increasingly, as FC has documented in recent Special Reports, the trickle of information being given stakeholders is incomplete if not misleading. One notorious example: the Academic Council got only 23 of 47 pages of the "Duke-Kunshan Planning Guide."

✔✔✔✔✔ FC can state flatly that the 23 pages include only one of three financial models, the rosiest. And buried in the 23 pages is a warning from a consultant that Duke hired, that our likely tuition is too high for the Chinese to bear. (Remember, please, this new university is designed to educate Chinese; it is not a satellite enriching the experience at Duke in Durham.)

A consistently reliable source says the missing pages also explore cities beyond Kunshan (albeit for smaller Duke adventures), and the Administration does not want this information in the hands of stakeholders who could then see in one place how absurdly grandiose our strategic thinking is. Correct that. There is no strategy that we can discern. Just opportunism.

The hiding of the scope of things is said to be the reason too, why the administration has refused a specific request for a website laying out in full detail all of our international aspirations

As any attempts to gain more information are rebuffed -- as FC has also documented -- a very serious question arises: how do Duke's leaders determine what to share with stakeholders, and how do they decide what to keep secret? Is this done for Duke or for their own hides? We fear the ultimate answer is not going to be charitable.

President Brodhead did answer questions at a recent meeting of the Academic Council. They were solid questions, incisive, informed, and he looked uncomfortable.

But Brodhead shuns such sessions. An appearance last month before alumni in Boston was structured. After brief remarks from the President, the alumni office shifted the focus to an discussion of world health problems with Medical Chancellor Victor Dzau.

In Miami, the focus was shifted to the local art scene; upcoming in New York, Brodhead will speak briefly, and then engage a behavioral scientist in wide-ranging conversation.

For alumni returning for reunions this week, Brodhead is scheduled for one hour -- most taken up by presentation of reunion gifts. He will offer "Issues and Answers" about Duke -- Issues that he himself raises, not to be confused with Questions and Answers.

✔✔✔✔ With the faculty stirring, we asked a professor for confidential guidance for our reporting: how much collaboration he or she has seen between the administration and stakeholders -- particularly faculty -- over Kunshan:

"You've hit the crux of the problem -- there was never any broad discussion with the faculty (or even faculty leaders) to design a strategy before-the-fact for Asia: Should we? Why or why not?

"What elements of a partner are we looking for? Under what circumstances would we just say 'no'?

"How does any program in Asia impact (positively) the overall Duke portfolio, now and in the future? How does it help differentiate Duke from our peers/competitors? And, specifically, what's the value added for the real 'crown jewel' of the brand -- Duke (that is, Duke in Durham ) and undergraduates?

"I can't remember a single discussion of that sort with the faculty.

"Oddly, this contrasts quite a bit with every other major initiative that Duke's considered during the last decade, where fairly large and 'heavy' task forces were put together to study an idea, and address the questions put forward above over a 6-12 month period, with significant buy-in by faculty all around.

"Very little strategic involvement that I can detect at the broad faculty level regarding China (or Asia more globally)."

We are indebted for the generous time the above faculty member put into his/her e-mail to Fact Checker, which includes far more than we excerpted.


✔✔✔ Back to Sheppard. Many of the Q and A's that Sheppard himself prepared are benign. But his account of the land and buildings is not.

In a Power Point presentation in November, 2009, Sheppard noted the city will "provide" 200 acres, which happens to be the precise size of East Campus. He said this was in "the most attractive part of Kunshan, valued at $2.4 million per acre." And he continued, "We could never acquire land of this caliber so close to Shanghai." Note, please, the word "acquire."

That paragraph is replete with problems.

First, it turns out the "most attractive part of Kunshan" is well south of the center city, part of a 1,700 acre industrial park that is just being carved out of rice paddies. One of the less developed areas, Brodhead told the Academic Council. And as Sheppard stated, when he asked himself if students and faculty on campus would have any inter-reaction with locals, a major "very expensive" housing development will be going up on the shores of a lake right next door.

In other words, more vacant land next door. Fact Checker has been tracing this up-scale residential development and while our work is not complete yet, we believe this development won't be for locals at all, but for Taiwanese.

The city of Kunshan owes its development as a low-level, labor intensive repetitive assembly point for computers and other goods to sharks in Taiwan. They recognized they could hire in Kunshan for one tenth -- yes one tenth -- the salary in Taiwan. Managers came from Taiwan, and there are about 20,000 Taiwanese now in enclaves in Kunshan.

The point is, with all this vacant land, how is it that we are so darn lucky to be this close to Shanghai.

Sheppard also valued the land at $2.4 million per acre -- $480 million for the land alone. We are watching to see how much other parcels in the industrial park fetch. He said Kunshan would "provide" this land, and called it a "gift."

So Duke's PR department promptly added $480 million to the inflated costs of construction that the city was going to pay for -- and voila, as we say -- we have a news release talking about Duke's $835 million dollar campus in China!

Problem is there was no "gift" of the land. And its sales value should not have been included -- because Duke did not take title at all.

We only got a "free lease." that has much less value than the numbers the Fuqua Dean used.

In November, 2009 Sheppard said the lease was for a "minimum 20 years free, with free utilities for five years, probably free in perpetuity." At another point, he said 12 years. And most recently, he said it was for ten years which, as any major developer in the United States could tell you, is not much assurance. As for the electricity, a short-circuit seems to have enveloped the deal, and this is now included in general operating costs that Duke and Kunshan will split.

We do not know what will happen after ten years: Kunshan may demand rent. It may demand to be bought out. And worse, it may not help Duke expand Duke Kunshan University to its intended size, leaving us to provide all the capital for new construction.

This of course would add horrendously to the cost of operating the joint venture. GO DKU!!! (DKU - the abbreviation being pushed for Duke Kunshan University.)

✔ Moreover, while originally the city was to pick up all operating losses -- Duke would "get started for free" were Sheppard's precise words -- the commitment has devolved so Kunshan will absorb only 45 percent for six years, possibly leaving Duke holding the bag after that.

✔✔ The most recent Chronicle editorial on financial details hit the nail on the head: Brodhead and his fellow travelers are "hazy at best" in describing Kunshan finances. Put another way: the newspaper found "constantly shifting statements coming from Duke administrators (that) do little to engender confidence."

With specific reference to the repressive Chinese regime's stranglehold on the intellectual life of the country and academic freedom, Brodhead has "done little to pierce the cloud of obfuscation hanging over Kunshan."

✔✔ Last week, a lone student voice quixotically expressed support for Kunshan. But the freshman columnist Scott Briggs was also compelled to note "surmounting evidence" to challenge the initiative.

✔✔ Finally, in his self-described Q and A, Sheppard comes to the defense of Wuhan University as our partner.

Loyal Readers will recall how a Deputy Fact Checker reported we were in a pickle and had to find a last minute marriage (as required by Chinese law) after our first sponsor, Shanghai Jiao Tong University, backed out after a year of dickering.

Sheppard describes Wuhan as "highly ranked," without attribution. The Times of London list of the 400 best universities in the world, and US News and World Report's rankings too, do not include Wuhan.

All we want to know is whether Global Vice President Greg Jones meant Wuhan when he told the Academic Council that one potential partner was "weak." By process of elimination, we believe he did.

✔✔✔ Thank you for reading Fact Checker. And thank you for making our essays possible with your tips, your purloined documents and your encouragement.