Australian universities got lazy. They enjoyed the seemingly endless flow of Chinese students who willingly paid top dollar to help prop up the finances of public institutions. Lazy, because it's surely Business 101 that you should not rely on one market or one revenue stream. And yet many universities seem to have ignored the warning signs for many years. They knew the risks: diversify or face that would make them so much more robust and able to sustain the ups and downs that are inevitable?
The Chinese market is unlikely to grow in the coming years the way it has in the last few decades. Local provision of quality education is starting to catch up with the demand. But that's not the case in large parts of the world, where a growing middle class with the associated ambition and hunger for learning is largely not being met. Hence the need and want to travel overseas for quality education.
Let's be clear: diversity is not easy. Firstly, China offers volumes of international students that no other single country can currently match. At about 38% of new students in 2019, it's a market that is just too big to ignore. All other markets, including India are significantly smaller in terms of volume of students coming to Australia. That will and must change. If Australia is to remain in the top three destinations for international students, we have to ensure that our value proposition and our marketing efforts are properly directed.
The Chinese market not only produces – or has produced – big numbers of students, but these are also students with big budgets. Chinese students (many, not all of course) will pay a premium for quality education. The Group of 8 are significant beneficiaries of the Chinese student and their willingness to pay top fees. But most students from other markets – if they can be attracted to Australia – are less willing to pay the same fees. Price sensitivity is more widespread in much of South Asia and South East Asia. Indeed, in the rest of the world.
The best hope that Australia has to support the largest export earning service industry is to diversify its source markets. And it needs to do it quickly. In the coming years India will overtake China to become the world’s largest source of international students. The other countries that make up the South Asian region are also growing. And then there are the Southeast Asian markets – made up of some mature markets and some emerging opportunities. Combined, South Asia and Southeast Asia already make up 50% of international university students in Australia. And all signs are that the proportion coming from those countries can only increase as China slows its growth and the sheer population of middle-class in Asia grows.
The challenge with diversifying is that all the countries that make up those regions are different. And each market requires significant investment and know-how. Therein lies the reason why diversity is often not pursued: it’s just too complicated and costly. For a university or other provider to crack a new market may take years. It may expose them to risk too. But the risk of not pursuing diversity is over-reliance on markets which may decline and will leave a university very exposed.
Ten years from now it’s likely that Africa and possibly South America and the Middle East will be emerging regions for Australian education. South Asia and Southeast Asia will probably be the core markets – accounting for 60% of students at a guess - but even those markets require a long-term strategy and investment. But the rewards are greater stability, sustainability and certainly a better student experience too.
Why is student diversity crucial? It bolsters learning beyond the confines of the classroom. It allows for exchange of ideas, breaks barriers and exposes students to other cultures and thought processes. And that kind of learning is invaluable as students come from all over the world seeking high quality education, looking to establish their careers in multi-cultural and dynamic work places.
At ECA, we’ve helped more than 50,000 students from around the world transform their lives through English language courses, undergraduate pathways, postgraduate degrees and targeted internships. Together with our partner universities and through our industry-focused, career-oriented higher education programs, we’re advocating diversity and welcoming international students from all over the world to join us. We’re helping them gain the confidence to face today’s job market where cultural intelligence is very much in demand.