04 Nov The End of the Chinese Golden Goose – implications for international educators
There is an internationally renowned UK university, positioned high up the global rankings, that is today facing an income shortfall of over £50 million. Not because of financial mismanagement but simply become of Covid-19. And this university is not alone. Calculations of the financial position of all UK universities suggest that up to 50% are in ‘immediate danger of insolvency’ with only Oxford and Cambridge truly safe from financial disaster.
But at least UK universities are receiving some verbal support from politicians. Not so across the water, where American universities are facing a US$15 billion hit as Chinese students decide to stay away because of Covid-19, a problem exacerbated by the Trump administration’s apparent determination to stop most any Chinese students entering the country.
And it is not only universities which are suffering – independent schools and colleges are especially vulnerable, with some reports suggesting as many as 30% of UK private schools going out of business because of Covid-19, with St Mary’s independent school in the UK the latest to go into administration.
Across the Western world, schools, colleges and universities are confronting a dire situation. How many will still be around in a year’s time depends on one simple factor: Chinese student enrolments.
For nearly a decade now, Western education has benefited from an unexpected golden Chinese goose, and it has been laying its lucrative eggs every year, without fail. Until this year. When it has suddenly switched off production.
All those eggs, all that extra money, all those middle-class Chinese families desperate to have their sons and daughters studying in the West. Not surprising that a little complacency set in among Western university and school administrators.
I recall in 2012 a newly appointed UK university Vice Chancellor making one of his first tasks a trip to China, to glad-hand Chinese university leaders and politicians. He naively assumed that his top 50 UK university would be seen as a valuable and high-status link for the Chinese. He came home empty handed. The Chinese academics and politicians were by then already positioning themselves to aggressively compete with the West. Unbeknown to that UK VC, who incidentally only lasted a few years in the job, the world had changed: Western universities needed the Chinese universities, much more than the other way around.
Some UK universities did see the writing on the wall, and subsequently made great efforts to establish branch campuses in Asia; Nottingham, Liverpool, Heriot-Watt and Newcastle showing the most entrepreneurialism. UCLAN tried to open a branch campus in Bangkok, but came to grief over local partnerships and settled for Cyprus.
Overall, Western university leaders have shown themselves to be highly risk-averse and certainly lacking knowledge of the Asian market. Which could be why few if any US universities have branch campuses in East and South East Asia, and none apparently which are meeting their enrolment targets.
I have extensive personal experience of working with a leading UK university to establish semi-distance learning postgraduate programmes in South East Asia. I made incredible progress over a short period of time, but only because of my personal links, unremitting determination, and reputation with that university. But as so often happens with universities, key managers who were allies went on to pastures new, to be replaced by risk averse ‘time servers’. Within a year the project was retired. An opportunity lost which will never come around again.
Frequently, I attended university meetings eager to move the Asian project forward, only to hear the refrain “why risk going into Asia, when the Asians are coming to us in ever greater number?”
Unfortunately for that university and a great many others like it, the Chinese will no longer be arriving in ever greater number.
Arrogance, ignorance, complacency, assumptions of academic and cultural superiority, tardy responses, lazy thinking, constipated bureaucratic systems, unimaginative marketing, and layers upon layers of tenured middle managers and university professors, most of whom wanted only a quiet life, not least because they lacked any incentive to be even remotely entrepreneurial.
Not only did these university leaders not speak Chinese, they didn’t understand the Asian mentality and they severely underestimated the Chinese drive – they still do. Chinese students were simply viewed as a compliant and easily accessed cash cow, which university administrations became increasingly reliant on to balance their books.
So, don’t ask me to have a lot of sympathy for the current plight of Western universities. They assumed the Chinese Golden Goose would continuing laying. Big mistake. As a senior corporate leader once advised me many decades ago; “assuming anything makes asses out of u and me”.
The writing has been on the wall now for over a decade. It didn’t take a genius to see what was happening in the world of international education: the unprecedented expansion of international schooling; the emergence of the international school franchise (Harrow, Dulwich, Brighton, Shrewsbury, etc); the rise of the Asia middle classes (notably in China and India); the growing political clout of China; the growth of massive online courses, all topped off by the rise of the Asian university sector. Indeed, a decade ago, Professor Richard Levin, Yale University President, was warning that China’s top universities would come to rival Oxbridge and the American Ivy League. That reality is now with us.
Back in 2010, and long before Covid-19, the looming end of the Western educational hegemony was already apparent for those who chose to look.
What on earth made the strategic planners and leaders in Western schools, colleges and universities imagine that this century would simply be, for them, ‘business as usual”?
Covid-19 is not the cause of the problem – but it has accelerated the problem to the point that Western education now has little option but to reinvent itself if it is to continue to survive in anything like its present form. And that starts with accepting the Chinese Golden Goose isn’t going to be laying any more eggs.
The Winners – for now
Aside from Covid-19, there are a growing number of reasons why Asian, and especially Chinese families, are now less inclined to look upon the West as the go-to region for advancing their children’s education and career prospects; these include Western (Australian, American, UK, European) racism towards Asians/Chinese; lack of physical safety in the West; major health risks; visa problems; Western economic decline; drop in USA soft power rating; growing political tensions between US/UK/Australian governments and the Chinese; and the fact that Asian universities are now up there with the best in the world.
In a recent Persyou podcast, in which I discussed the ‘Rise of the Asian Century’, I made the point that those Western schools and universities with a physical presence in Asia are best placed to survive the turmoil which is now with us. By contrast, those Western schools, colleges and universities which are heavily financially reliant on thousands of Asian students physically travelling to the West to study at their institutions have a problem.
But don’t imagine the issue is simply lack of Asian interest in Western education. That hasn’t disappeared completely. Nor has the typical Chinese family’s interest in university education declined – that too is as strong as ever, as is the Chinese willingness to spend much of their disposable income on education (unlike most Western families, who expect to get it for free).
Harrow international School was one of the first UK independent school franchises to open up in Asia, initially in Bangkok – back in 1998. Since then, Harrow has expanded to four international schools across China and S E Asia, and over the next 12- 18 months is opening a further FIVE international schools in China. Other top UK independent school franchises in Asia, include Dulwich, London Collegiate, Brighton, Shrewsbury, Regents, Marlborough, Wellington. Covid-19 aside, many of these are expanding.
The continuing strength of the Western education brand (and profit-generating potential) is evidenced by the fact that China Maple Leaf, the largest private international school operator in China, is proposing not only to buy Canadian International School, the premium IS in Singapore, but also has plans to open many more new schools across S East Asia over the next five years, all under the Canadian IS brand. As part of this strategy, Maple Leaf recently acquired a 97% stake in Malaysia’s Kingsley International School.
So as far as the UK and Canadian international education brands are concerned, the future looks rosy, at least for those institutions with a branch in Asia and which market themselves as British or Canadian. However, Nick McKie, who interviewed me for the Persyou podcast, asked a pertinent question:
“We’ve seen the UK independent school brands grow in number over the past decade, but where are the American equivalent school brands?”
My answer: ‘there aren’t any”.
In fact, when it comes to American education as a brand, it might as well give up – there is no American international school brand name recognition.
The three big international school corporations are Cognita (British), Nord Anglia (British) and GEMS (Indian). There are no big USA companies established in the world of international schooling. Nor are any of the leading USA universities established in Asia.
They are visible only by their absence.
I don’t have ready answers as to why this is, but I do know that over the past few years, whenever I’ve been talking to wealthy school owners and Asian entrepreneurs about the possibilities of opening an international school, none have been interested in the American brand. They all, without exception, wanted association with the British independent school brands.
Is it too late?
Yes, it is certainly too late for American education to turn the tide now sweeping against it across the world. American Int schools located in Asia will no doubt survive and continue to benefit from China’s continuing economic growth, albeit at a much weaker rate than experienced over the past few decades, and the American Ivy League will thrive in the USA. But other forces and considerations are now in play which all global educationalists need be cognisant of:
- The first Chinese curriculum school to offer full time K-12 education outside China will open in Dubai in September of this year. This will be staffed by teachers from China and Dubai. In effect, this school signals the start of what I believe will be a concerted effort by the Chinese government to create ‘Chinese international schools’ around the world.
- China is now rebranding hundreds of Confucius Institutes established around the world over the past few years. Mostly this is in response to Western governments closing such institutes, seeing them as ‘disseminating Chinese communist propaganda’ though ‘only the most naïve would believe that the British Council and so on do not engage in some form of propaganda to promote their countries.’
- While Trump continues to spout the rhetoric of ‘America First’, China is busy buying friends in the USA backyard. It recently announced a $1 billion loan to Latin America for Covid-19 vaccine access. This is all part of China’s strategy to distinguish itself from the USA and push its globalisation agenda while promoting Chinese influence.
- UK and Canadian international schools, and their franchises, will continue to thrive in China, but the China Maple Leaf development gives a clue as to what might happen next. These private operations will increasingly be taken over by Chinese companies. As with Canadian int. School, the Western brand will remain but the owners will be Chinese mainland business people.
- One point that I see Westerners constantly fail to recognise when looking at China through a Western lens, is the powerful and undiminished loyalty of the average Chinese citizen towards China, and, de-facto, to the Chinese government. Many Westerners seem under the impression that China under Xi Jinping is some sort of equivalent to the Russian Soviet Empire Gulag under Stalin. The Uighur situation aside, this is complete nonsense. When the Chinese government closed the Chengdu US consulate on 24th July, retaliation for the US closing the Chinese mission in Houston, large crowds gathered outside the US consulate applauding the closure. And don’t imagine they were pressured to do so by the state. Just hours after Beijing ordered the closure, state broadcaster CCTV set up a live stream from outside the consulate. Within hours it had been viewed 45 million times, garnered 4 million likes, and 451,000 comments.
- China will not close its Western international schools, but it most certainly will exert more control over them. It will do this by encouraging Chinese corporations to buy out these schools (e.g. China Maple Leaf) and by issuing instructions over ‘sensitive’ classroom topics, insisting on political conformity for all foreign teachers, requiring foreign teachers undergo instruction in Chinese laws and constitution, punishing foreign teachers who step out of line, while rewarding those school teachers and leaders who ‘perform well’ and display ‘admirable ethics’. In the end, the Chinese government can make international schooling so unprofitable in China that such schools have little choice but to localize their ownership and operation. All this suggests that the days of lucrative franchising and lots of latitude over curriculum, etc are effectively over for international schools in China.
- Demographics: China’s population is in decline and may well peak in three years’ time. This trend is unstoppable. Across Asia, the same demographics are apparent – a population decline of up to 50% by 2100. The one variable that can offset the negative impact of this demographic on education is if the Chinese finally eradicate poverty and increase the number of middle-class families.
- And finally, there is Hong Kong. Whatever concern Westerners like myself may have about recent events, the reality is HK is changed forever. This long-time Western outpost (whether of Western colonialism or democracy, is for you to decide), will now be pulled fully into the Chinese cultural, economic and political orbit. In a few years, HK will have become nothing more or less than an integral part of the Pearl River Delta Region of mainland China. What it will no longer be is a powerful and persuasive globalised Asian hub promoting Western education, culture and values to the Asian masses.
The End Game
Western education is today squeezed in a vice between the impact of Covid-19 and rise of China. The Chinese Golden Goose period lasted over a decade, during which Western universities and independent schools and colleges became richer thanks to the aspirations of a burgeoning Asian, and especially Chinese, middle class. We’ve seen top UK independent schools open lucrative money-making franchises across the region and we’ve seen risk-averse Western universities indulge their complacency, preferring instead to sit back and allow the Chinese masses come to them rather than make the effort to reach out those same masses in their home regions.
But Covid-19 marks the end of all that.
Over the past decade, some Western educational operators, notably top UK independent schools, did astutely exploit the opportunity for growth in Asia, but most have squandered it, especially the universities.
For sure, there is still impressive growth potential in education provision in China, at least over the next few decades, and indeed in many South East and East Asian countries, notably Vietnam, but the game has changed. And it won’t make much difference who enters the White House in January because the truth is, China has arrived in force.
From here-on, China sees itself as a global player in education, not the recipient of Western intellectual largesse. China is firmly set on establishing its soft power credentials and the Chinese leadership are astute enough to realise that education plays a key role in that process.
Nor does it matter how critical Western politicians are about the Chinese government, because the Chinese people know their government better than does any Western politician. And when it comes to which country they will support when the chips are down, you can be 100% sure the Chinese will back China.
Yes, there was perhaps an opportunity during the past decade when the West could reach into the hearts and minds of the Chinese middle classes, and inculcate into them, through Western curricula and student-centred learning, a desire for Western culture, critical thinking and an appreciation of Western-framed global citizenship. But that moment has passed.
One can blame pernicious and racist Western politicians, one can blame several hundred years of colonialist practice, policies and attitudes, one can blame complacent educational leadership, or one can blame a nasty little virus.
But the truth is, it is too late to blame anything or anyone because as far as the West is concerned, the end game is here.
In terms of education, what is required now is a complete reappraisal of the East-West relationship, at government, institutional, and individual levels.
This will be a painful process for many Westerners because they must start by recognising their reduced if not inferior relationship to Asia, and to the Chinese. They must accept that due to a whole bunch of reasons, they are now the poor relations, not the other way around.
- UK independent schools must change their marketing strategy to one which will rebrand them in the Covid-19 age and reach deep into the Chinese and Asian markets. Only digital marketing can achieve this. (EDDi will be publishing a themed edition on marketing in Asia in the near future).
- Those Western independent schools and colleges which need funds to survive must seek out financial partners and co-owners, especially Asians but ideally Chinese because Chinese love education almost as much as they love business.
- Online learning is here to stay. That is one of the key outcomes of Covid-19. So any educational institution that is not skilled in delivering online lessons, and has those lessons already packaged, is very much at risk.
- UK universities are about to go through a cull. The top few will remain as they always have, protected by virtue of status, prestige, funds and quality. The remainder will need to trim their sails and reinvent themselves for a world with fewer home students, few overseas students, fewer jobs for graduates, and fewer face-to-face classes.
- The days of unbridled international school growth may well be over, at least in those countries now facing years of low growth or recession. Any astute IS franchise operator or UK independent school will now be looking to Africa. Especially Nigeria.
- And finally, any Western educational establishment which is serious about ensuring it continues to benefit from China growth needs to have a China specialist on the payroll, a person fluent in Mandarin and who fully understands the emergent geopolitical order.
This article was first published in EDDi: Educational Digest International (September, 2020)