Trends in the Chinese Education Industry
In her address at the Australia Week in China, Charlotte Lu, Deloitte China Education Industry Leader shared her insights on China’s education industry with the International Educational program.
Lu speculated that the size of the industry would double, from 1.6 trillion yuan as it was in 2015, to 2.9 trillion yuan by 2020. She identified booming trends in all ecosystems of Chinese education, including private education, study abroad, training and online education.
Outbound international students from China have grown from 280,000 in 2010 to 520,000 in 2015, with further potential for growth. Major destinations of outbound international students include the US, UK, Australia and Canada.
Training is also identified as the newest hotspot in the market, with the support of both traditional education and non-educational institutions, emerging vocational training enterprises and internet giants. Major trends in the online sector include the integration of online and offline platforms, the growth in mobile-end users and expansion into new cities and businesses.
According to Wu, the education industry is also likely to see increasing trends of VC/PE investment value and volume, with M&A deals at record levels.
Challenges in entering the Chinese Education Market
Two of the greatest business challenges posed to the foreign education industry include inconsistent and unclear laws and regulations, along with the difficulty of obtaining required licences. These issues are followed closely by bureaucracy and industry overcapacity concerns. Foreign companies in the education industry report they have a competitive advantage over domestic competitors in technology, intellectual property and development and innovation. However, industry respondents feel they have a strong disadvantage in their supply chain and logistics.
Rising salary and wage expenses, along with visa and immigration issues are typically found to be the top two human resources challenges for education industry respondents. Roughly 14% of Australian companies in the education industry reported high profitability in 2018, with 28% reporting profitability and another 28% reporting to have broken even.
Growth and Opportunity in Australian International Education
Commissioning Deloitte Access Economics and EduWorld to explore future possibilities for the international education industry, Austrade found a significant potential for growth in Australia’s in-market and online education.
Australia’s onshore international education sector is forecasted to grow from 650,000 enrolments today to 940,000 by 2025, equivalent to a compounding growth rate of 3.8%. The international education sector’s contribution to export earnings is expected to almost double in excess of $33 billion by the same year. The highest growth sectors in onshore international education are expected to be higher education and VET, forecasted to a combined 72% of all onshore international learner enrolments.
The report identifies Asia as a driving force behind onshore international learner enrolments, particularly China, India, Nepal, Vietnam and Thailand. China is set to remain Australia’s largest source for onshore enrolments and expected to occupy the largest number of higher education, schooling and ELICOS enrolments.
The Financial Review identifies Brazil, Australia’s fourth major contributor for international students, as a growing opportunity, as well as its neighbour Colombia. With more than 17,000 Brazilian tertiary students studying annually, Brazil has had a 6% increase since 2018 and a 35% increase on 2017 numbers. Colombia’s numbers are now above 12,000, representing a 20% rise on 2018 and 56% on 2017, climbing from 11th to 9th position as a contributor for Australia’s international students. Chile’s year-on-year enrolments have also climbed 33%, Argentina is up by a similar proportion and Mexico is up by 9%, as Australia’s international market diversifies. However, instead of university courses, the vast majority of students from Latin American countries are heading into the vocational education sector or into English language intensive study before returning home.