Already big business, education is about to get bigger, with the market forecast to grow to one billion students worldwide by 2025. Can Australia’s universities evolve with the world’s fastest-growing education market?
No education industry in the developed world has embraced globalisation as enthusiastically as Australia’s. International students make up a higher proportion of the tertiary student population in Australia than in any other major economy – 18 per cent.
These education exports contribute almost A$20 billion a year to Australia’s economy, putting education just behind iron ore, coal and gas as an export earner.
That means international education plays a critical role in Australia’s ongoing economic prosperity, with the potential to be a key driver of future growth. As the global education market develops, however, Australian institutions face fresh challenges.
In particular, a number of highly rated Asian universities are now staking their claim for a greater share of the education pie. Their Australian counterparts need to not only find new ways to tap into the Asian market’s growth potential, but also form strategic alliances that will help them keep growing and equip them for future demand.
Learning from the learners
More than 602,000 international students enrolled in Australian courses in the first half of 2016. As with natural resources, Australia’s Asian neighbours are the biggest customers for its educational institutions – in 2015, the vast majority came from China, with India and Malaysia close behind.
Past attempts to export Australian education to Asia have not always been successful.
In 2007, the University of New South Wales (UNSW) was forced to close its much-lauded Singapore campus after just one semester, at a cost of more than A$17 million, when enrolments failed to meet their targets.
In the decade since then, Australian universities have become much more adept at attracting and retaining Asian students, although most are still educated in Australia, rather than at overseas campuses. Australia currently ranks third as an international education exporter, after the US and UK.
According to Professor Colin Clark, dean of Victoria University’s College of Business in Melbourne, Australia’s universities can’t simply assume that past approaches will continue to be successful.
“There’s been a change in motivation for international students in the past 20 years,” he says. “Once it may have been the case that there were insufficient educational opportunities in their home country and there was a real desire to have a Western education – but that is no longer the case.”
“People undertake education at different times and from different parts of the world, so flexibility is key.” Professor Julie Cogin, Australian Graduate School of Management
The quality of teaching and research in Asia has improved dramatically in recent years. Three Chinese universities are now ranked in the top 100 worldwide, and universities in South Korea, Japan, Taiwan, Singapore, Hong Kong and India are advancing up the education rankings, thanks to renewed policy focus and funding.
Asia’s top university, the National University of Singapore, is ranked 24th in the world – nine places above the highest-ranked Australian institution, the University of Melbourne.
The growing economic importance of Asia has also seen a change in attitudes, both among Asian students and Australian educators, says Professor Julie Cogin, director of the Australian Graduate School of Management (AGSM) at the UNSW Business School.
“For many years, there’s been the notion that Asian students come to our universities so we can teach them about best Western practices in business,” says Cogin.
“We’ve now moved to a position that we’ve got a lot to learn from the Asian students who come here, and a lot to leverage through their relationships and their expertise from their home countries. That’s been quite a large transformation.”
Taking a partnership approach to education
Tim Harcourt, J.W. Nevile fellow in economics at the UNSW Business School and author of The Airport Economist, says the objective is to develop long-term partnerships.
“We’ve moved away from the open-cut mining approach to education, in the sense that we saw it as ‘get them here, get them to pay, give them a degree and send them home’,” he says. “Increasingly, we’re seeing ourselves as students of the Asian century.”
“Our economic engagement with Asia is now closely tied to universities in the region.” Tim Harcourt, UNSW Business School
Harcourt adds that, with strong institutions already throughout Asia, it makes more sense to partner with them.
“Having a presence in Asia not only provides a source of undergraduate and post-graduate students for Australian institutions, it also facilitates a high degree of knowledge transfer,” he says.
Victoria University’s Clark agrees. “Our approach is to provide greater engagement: taking subjects focused on Asia and using Asian case studies and context in our curriculum.
“But we also offer reciprocal transnational exchange programs through partner institutions throughout Asia. These offer an exchange experience for Australian undergraduate students who want to get an experience of living and learning in Asia – and for Asian students who want to experience the West.”
In 2016, Victoria University and the University of International Business and Economics in Beijing jointly established the Victoria Business Confucius Institute (VBCI) in Melbourne.
“There are around 500 Confucius Institutes around the world, with the purpose of disseminating Chinese language and culture,” explains Clark. “But there are only 10 with a specific business orientation.”
The VBCI offers a range of business courses, including Chinese business culture and business language, with specially selected subjects delivered by visiting Chinese academics.
Clark says these types of partnerships provide a way for Australian universities to have a presence in China and other Asian countries so they can cater for students who don’t wish to travel overseas for study or who want an international experience, but not for the whole degree. The key is to choose the right partners, and then cultivate the relationship at a strategic level.
“The Swinburne sarawak board and council members … enable a good understanding of local needs.” Professor Keryn Chalmers, Swinburne business school
“To realise the opportunities of transnational education requires business partners who have a relationship of trust,” he says.
“You need to develop a common strategic approach – it’s not about a single product or program, but about creating the right long-term partnership.”
Swinburne University’s Sarawak campus in Malaysia is one example of such a partnership. In 2000, the Melbourne-based university partnered with the Sarawak State Government to create the offshore campus, with Sarawak retaining 75 per cent ownership.
Dean of the Swinburne Business School, Professor Keryn Chalmers, says the partnership is based on a shared vision and mission, plus engagement from both sides. “The Swinburne Sarawak board and council members represent both the State Government and Swinburne, enabling a good understanding of local needs.”
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Similarly, Melbourne’s RMIT University has opened RMIT Vietnam – Vietnam’s only fully foreign-owned university – with campuses in Hanoi and Ho Chi Minh City and more than 6000 students and staff.
According to UNSW’s Harcourt, this partnership approach also has important benefits for Australian businesses, creating a virtuous circle between “town and gown”.
“Our economic engagement with Asia is now closely tied to universities in the region,” he says. “Previously, our relationship was largely ‘rocks and crops’ – sending coal, iron ore and agriculture to Asia. We’re now seeing more services that support those industries being based in Asia – for example, agriculture research, environmental engineers, architects and the like.
“Having more Australian companies based in Asia means greater opportunities for internships and research, as these companies link up with home universities and their partners in the host countries.”
Flexibility in education
For the AGSM’s Cogin, attracting international students is about providing a truly global education that can be accessed from anywhere in the world. “Your competitive advantage is being known to be a peer in good standing globally. You can’t do that unless you have an international perspective,” she says.
To this end, the AGSM has embarked on partnerships and exchanges with top-ranked business schools in many countries.
Cogin says this approach has seen the AGSM evolve from being a national program provider, offering classes in capitals around Australia, to being a global provider – “and we have more alumni in Hong Kong than Melbourne”.
“We’ve got a lot to learn from the Asian students who come here.” Professor julie Cogin, Australian Graduate School of Management
“We’ve got a limited market here in Australia,” she adds, “so by developing our international perspective, ties and engagement, we can penetrate larger markets and be accessible to students located outside Australia.”
Cogin says that flexibility in learning is fundamental to the school’s approach.
“People undertake education at different times and from different parts of the world, so flexibility is key,” she notes.
Australia's natural advantages in international education
Cogin believes Australia has some natural advantages when it comes to securing a share of the international education market.
“We have a foot in the West and in the East – so in terms of agility, it’s a great place to be,” she says. “We have students from around the world come to the AGSM to understand about doing business in the Asia-Pacific region.”
Cogin believes this approach can also yield broader benefits for the country as a whole. “If we bring together the best and brightest people from around the world to work together,” she says, “we have the potential to make huge innovations globally, live better lives and leave the Earth in better shape.”
However, Cogin warns that Australia can’t afford to take its eye off the ball. “You have to continue to offer a superior service, continue to achieve career outcomes, stay ahead of the market and get better at everything you do.”
How big is the opportunity in the international education market?
According to a 2015 report by Deloitte Access Economics, the international education market is on the verge of an unprecedented boom, with key Asian economies leading the way.
Forecast GDP growth of around 6–7 per cent in China and India is set to fuel a surge in middle-class income, creating enormous demand for education and training. That demand will be accelerated by a technology-led industrial transformation, with a growing need for highly educated workers.
Deloitte’s modelling predicts this will lead to a global market of one billion potential students by 2025. If Australia was able to capture just 1 per cent of this market, it would equate to 10 million extra students, while 10 per cent of the market would be an extra 100 million students.
To tap into this opportunity, Australian universities would need to radically increase their capacity. Currently, Australia is on track to host just 940,000 students by 2025.
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