As Australia grapples with the ramifications of the global financial crisis, one sector is showing no signs of slowing – the Chinese education market. Sophie Loras reports.

OPTIMISTIC OUTLOOK

As the global economy sinks deeper into recession and demand for Australia’s two biggest exports to China – iron ore and coal – continue to drop, one sector of the Australian economy remains unnervingly optimistic.
Australian Education International – the Australian government’s education export arm – has nothing but glowing predictions for the export of Australian education which saw enrolments for full fee-paying international students in January and February grow 21 percent on the same period in 2008.
"We are very confident that barring some calamitous event, the number of Chinese students in Australia will continue to increase over the next 18 months and beyond,” says Iain Watt, Australian Education International’s Minister Counsellor (Education) in Beijing.
"The demand from China as far as we can see should continue to increase for the next 10 years. Therefore so long as Australia maintains its reputation for academic quality and a good environment for studying there’s no reason that should not happen,” he says. The biggest risk will be numbers growing too quickly and outstripping Australia’s capacity to provide quality programs and support services. “The Chinese government is very focussed on quality of care and support students receive while studying overseas as well as the academic quality of the program they enrol in” says Watt. “We have to get the whole package right so that students enjoy and benefit from the whole experience.”

THE GLOBAL FINANCIAL CRISIS

The global financial crisis seems to have left little, if any, dents in the Australian education market in China. Chinese children who are sent overseas to study fall mostly into three specialised sub-groups which are largely unaffected by today’s current economic situation.
The first group are Chinese students with middle class parents who work for government departments or state owned companies and who earn enough to send their one child overseas. This group will invest in their child’s education over buying a car or investing in super. "If you’ve got the money to spend on a Mercedes or a house or on shares in China, you will first spend it on education for your child,” says Watt. “It’s your best investment in retirement because you only have the one child and you will rely on him or her to look after you.”
The second group are from families with their own businesses or SMEs. Some of these families may have been affected by the GFC if they were involved in the manufacturing sector – such as widgets for export – but domestic demand is still strong within China and many from this group continue to remain immune from the impact of the crisis. Even those most affected will already have funds set aside to cover the cost of educating their child.
The third group are young professionals who want to do a post graduate qualification to enhance their career prospects in China.
Slower promotions and fewer opportunities will see demand from this group increase as they elect to improve their prospects through postgraduate study while the economy is slower.
"The people who buy education in Australia are a sub-set of the Chinese economy – a very special subset and demand for education in Australia is unlikely to change,” says Watt. It’s a sentiment backed by agents on the ground in China.
Julie Luo, the Operations Manager for IDP Education in Beijing, says there is little evidence that the financial crisis is affecting Chinese parents’ decisions to send their children to study abroad.
"We have actually experienced an increase in inquiries for education in Australia,” says Luo.

Australia remains a favourite destination for Chinese students for many reasons.
"Australian education has a very good reputation in China, the Chinese students like the multi-cultural society and Australia is very good at welcoming its international students,” says Luo.
Australia’s transparent visa policy and the drop in the Australian dollar have also played their parts in enticing Chinese students to Australia although Luo stresses that while finances play a role to some degree in the final decision, the number one consideration for Chinese parents will always be quality.
There are also other factors at play when comparing China to other markets
in the Asia region.
"Whereas Hong Kong and Japan are developed economies with domestic education choices, in China there are still no extra places at the good universities,” says Watt. While there are more universities today in China, the newer universities are less recognised by employers and so in many cases it may still be better for parents to send their child to an international university. Chinese students also look to Australian study primarily for the educational aspect, while students from some other countries in the Asia region may look at studying in Australia primarily as a channel towards permanent residency. That means that if Australia was to tighten migration settings, demand from Chinese students would be less affected.

TRENDS

While higher education remains the top ranking sector by volume, Vocational and Education and Training (VET) is the fastest growing sector in terms of both enrolments (43 percent y-o-y Feb 2008/09) and commencements (35 percent) with 85 percent of those enrolments coming from Asia. Top fields of study were management and commerce and food, hospitality and personal services. China accounts for the largest number of enrolments (89,907) with India in second spot (68,854 enrolments). Management and commerce were the top fields, accounting for 47 percent of students. Today more than half of Chinese students at Australian universities are completing postgraduate studies while three to four years ago most of them undertook undergraduate courses. 2008 was also the first year more than 1000 Chinese students have undertaken PhDs in Australia. In addition to Chinese students studying in Australia, there are an estimated 30,000 to 40,000 students studying Australian programs in China. While this is not a rapidly growing market – it’s expensive to deliver Australian courses off campus, China sets price controls and the industry is heavily regulated – those Australian organisations which have established long-term, quality programs in China are reaping big benefits including positioning, enhancing strategic alliance relations (with government and industry), articulation (as a feeder to encourage students to complete their course in Australia) and leaving out agents.

POSITIVE OUTLOOK

"We feel very optimistic about demand from China,” says Watt. “China’s economy is still growing which means more and more Chinese are moving into the group where they can afford to send their child to Australia and Australia still has a place in the market as a safe and reliable destination.”
Figures released for February show little indication that the global financial crisis is having an affect on the Chinese education market. In February 2009, Chinese student visas to Australia were up between 10 and 20 percent on February 2008.
In the long-term, the markets where demand is going to hold up over the next two years and beyond will be China and South Asia, which will likely take up 50 percent of the Australian education export industry. “Therefore there will be less diversity, making it even more critical that measures are taken to maintain the long-term sustainability of these markets by ensuring key support services such as appropriate accommodation, student safety and transport.”

Quick Facts:

• In the 2007-2008 financial year,
education was Australia’s third largest
export after coal and iron ore, worth
A$14.2 billion (up 23.4% on the previous
year)
• As of February 2009 there were
374,451 enrolments of full fee
international students (a 21% increase
on the same period last year)
• China and India are Australia’s biggest
markets – China accounts for 23.6% of
enrolments and 22.3% of
commencements; India 19.6% of
enrolments and 16.3% of
commencements.
• China is Australia’s most valuable
education market; worth A$3.1 billion in
2007-2008
• The education industry supports an
estimated 80,000 jobs in Australia.
• Source AEI

Articulation case study: Victoria University

Victoria University first established relationships with a Chinese university 10 years ago and today boasts programs with several Chinese universities including Liaoning, Sichuan and Henan universities. Around 3000 Chinese students are completing Victoria University programs in China – around 10 percent of all students in Australian programs in China. Each year between 600 and 800 Chinese students transfer from Victoria University programs in China to the university’s Melbourne campus to complete their studies.

Andrew Holloway, Victoria University’s Vice President (International), credits the success of the university’s articulation program to its long-term strategy and the foresight to looking beyond China’s big tier-one cities.

"The population of centres outside cities like Beijing is still considerable and therefore Victoria University looked at developing relationships with interested parties who may not already have had relationships with other countries.”

In lieu of the global financial crisis, Holloway says the university has seen an increase in interest rather than any drop off. Many of its students come from Asian countries still experiencing positive growth – countries like China, Malaysia and India where GDP may have dropped but growth is nevertheless still positive.

"These parents have been saving for a long time,” says Holloway. “In addition the currency movement has been in favour of those families and so we are seeing more students transferring across.” 

* To read more about a Melbourne welcoming initiative for overseas students click here.

** To read a case study on the experience of Kaili Zhang, a Shanghai school boy who completed his last two years of high school in Australia click here.