The business of education

Posted on February 13, 2017 by ATB Chartered Accountants

While education is already a big business in Australia, it is about to get bigger with the industry forecasted to grow to 1 billion students worldwide by 2025. Can our universities keep up with this growing market?

Australia’s education industry has embraced globalization, with international students making up for a greater proportion of the tertiary student population. At 18% of students being from outside of Australia, this is the largest proportion than in any major economy. The international tertiary education industry contribute approximately $20 billion to the Australian economy annually.

Given the large income stream of the global classroom to Australia, it plays a key role in our ongoing posterity, and it holds a key role in our economy’s future growth. Given the rapid growth of this industry however, the Australian market faces new challenges. A number of highly rated Asian universities are now entering the market for international education. Our Australian counterparts need to tap into Asian markets for the growth potential, but also to develop partnerships which will allow the industry to continue its growth and meet future demands.

LEARNING FROM THE STUDENTS

In the first half of 2016, over 602,000 international students enrolled in Australian university courses. Most of our international students come from Asian countries, with reports from 2015 highlighting that majority of these students came from China, India and Malaysia.

In the past, attempts to export Australian education have failed. A key example of this was when the University of New South Wales (UNSW) closed its Singapore campus after only one semester, costing more than A$17 million in 2007 due to low enrolments. Since then, Australian universities have become better equipped to attract and retain international students, as opposed to opening overseas campuses. Australia is currently ranked as the world’s third largest international education exporter, with the US and UK leading.

Despite this, the reasons for Asian students travelling to Australia is changing. While once the main reasons included receiving a Western education as they didn’t have access to sufficient opportunities in their home countries, the overall quality of education has improved dramatically as a result of policy changes and national funding. Many Australian universities are moving away from this mindset, towards one which encourages a transformative relationship where we are also learning from the students, based on their expertise of their home country.

EDUCATIONAL PARTNERSHIPS

There are already countless strong educational institutions throughout Asia, with three Chinese universities ranked in the top 100 worldwide, as well as countless universities throughout other Asian countries moving up. Given the growing strengths of these institutions, it makes more sense to establish partnerships as opposed to exporting our own universities. These partnerships allow an Australian presence within Asian universities which not only increases the number of students whom may study in Australia, but also encourages a knowledge transfer, allowing greater engagement for both domestic and international students.

In 2016, Victoria University partnered with the University of International Business and Economics in Beijing to establish the Victoria Business Confucius Institute (VBCI), located in Melbourne. The VBCI offers an array of business courses, including courses specific to the Chinese business culture and language.

Universities such as the VBCI allow Australian universities to develop and maintain a presence in various countries, and allow them to cater for students who want an international experience without travelling, or whom want it but not for their whole degree. Transnational university partnerships create long term relationships, and opportunities for both domestic and international students.

A 2015 survey by Deloitte indicated that a forecast GDP growth of around 6% in China and India is set to increase middle class income, which will create a huge demand for education. Their forecast also predicts the global market will reach 1 billion potential students by 2025. Given these numbers, if Australia was able to capture even 1% of this market share, that is an extra 10 million students. This is a huge opportunity for Australia, and partnerships will allow for our universities to increase in capacity. Continuing at the current rate, we are on track to host 940,000 students by 2025, so more work is to be done.