- For years, China has played hard to get for international school operators, but now the world’s biggest education market is opening for business.
Successive reforms of strict prohibitions on foreign-owned schools has seen the number of students enrolled in international schools rise, with the Chinese market now the largest in the world. And the most lucrative end of the market is in line for a significant fillip in 2018 following changes introduced this year.
Suspicion of western influence has been behind a historical reluctance on the part of the Chinese authorities to allow international schools to gain anything more than a toe-hold in the country. Access was generally denied to Chinese passport holders, while financial regulations deterred capital investment.
But the last decade has seen a gradual whittling away of restrictions, as the Chinese government has increasingly not only allowed but encouraged its citizens to take up private education. As a result, there are now more international schools in China than in any other country in the world.
Growth has been steep, with 807 English-medium international schools representing an annual increase of 10.6% since 2012, according to the China International Schools Market Intelligence Report, published by analysts ISC Research next month.
These schools cater for 312,000 students aged three to 18, the equivalent of an annual growth rate in student numbers of 12.7% since 2012. Demand is almost entirely from Chinese nationals seeking a more Western-style of education to prepare their children for university in the U.S. or U.K., according to ISC Research. And it is this end of the market that stands to benefit the most from the latest changes, introduced in September this year.
This allows investors to benefit from the proceeds of for-profit schools outside the government-funded nine years of compulsory education. This usually ends at age 15, meaning it is perfectly timed for schools focusing on preparation for university.
The changes also allow providers to set tuition fees without government approval, and apply to Chinese-owned international private schools, which are able to enrol Chinese nationals. Taken together, these modifications have potentially far-reaching significance in opening up the premium end of the market and providing an attractive opportunity for investors and foreign partners. The changes suggest a growing recognition on the part of the Chinese government of the role played by education in China’s economic and social progress, according to ISC Research. And it is driven by an increasingly wealthy middle class who are keen to embrace a Western education for their children, and have the spare cash to pay for it.
The result is likely to be continued rapid growth for international Chinese-owned private schools for the foreseeable future, according to ISC Research, as more operators follow the lead of established U.K. schools such as Dulwich and Wellington College in opening up campuses in China. And with average tuition fees ranging from $14,751 to $19,949, this is potentially a highly-lucrative market. Like many of capitalism’s inroads into China, the arrival of private education has been a piecemeal affair, but as it gathers momentum 2018 could turn out to be a pivotal year.