International schools are moving to new markets after China’s boom

International schools are targeting the growing middle class in Asia, Africa and the Middle East as Covid-19 restrictions and restrictions on overseas education put a brake on China’s expansion boom.

UK institutions are at the forefront of moving to new markets in pursuit of stable revenue streams. In 2019, the consulting firm Cairneagle reported that 80 percent of the schools to be opened by UK institutions are in China. In January, it fell to 15 percent.

This shift is related to the growing demand for international private schools, with networks expanding in emerging economies with young populations and rising income levels such as India, Vietnam and Nigeria, as well as Japan and other more established markets. Companies that run foreign branches of old and prestigious schools also profit from this trend.

“All these different groups are taking advantage of the growing demand for private education,” said Jorge Amírola, a partner at Cairneagle. “Britain-born school groups are growing very rapidly, with other school groups popping up in different parts of the world.”

He added that the overseas campuses of UK independent schools are at the forefront of the growing international market for for-profit schools. Competitors include corporations backed by private equity, such as Inspired Education, which run more than 90 schools in dozens of countries, and established European or American brands, such as Madrid-based SEK Education Group.

“It’s like a ladder: at the bottom you have aspiring parents who choose private schools looking for a good education, some degree of English and, in some developing countries, a safer environment.” he said. Meanwhile, wealthier parents are looking for “big names and high-level facilities.”

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Global education providers have expanded in most regions in recent years. According to Cairneagle, the campuses of international school groups in Latin America have more than tripled since 2017, to 82 last year.

Analysts say providers will continue to shift their focus away from China after Beijing restricted education providers from 2021 when it introduced new regulatory terms for international schools.

The restrictions mean many schools have “completely halted” plans in China after a period of rampant expansion, Amírola said. Growth in China has led to a four-fold increase in fee revenue for UK private schools in the last decade, according to ISC Research.

While relocating from China offers fewer opportunities overall, education data provider ISC Research said 26 international schools are due to open next year, with 17 in the UK. These include the campuses of Brighton College, Uppingham and Reigate Grammar in Vietnam, The King’s School Canterbury in Cambodia and Malvern College in Barbados.

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In India, new campuses are being opened by Harrow International School in the southern technological center of Bengaluru and by Wellington College in Pune, near Mumbai. Murray Tod, head of the Pune campus, said Wellington was attracted to India’s “dynamic” economy. He added that the school is aimed at locals and expatriates who aspired to “intertwine” British and Indian cultures before applying to world universities.

The school will not be run directly by Wellington, but by Unison Group, an Indian partner that runs schools and universities as well as real estate.

This model is typical of overseas campuses of British private schools. A subsidiary of a UK institution typically collects 2-6 per cent of annual revenue from a licensed local operator and then donates it to a UK school which, as a registered charity, cannot generate profits. “Scholarship funding [for poorer UK students] is a real motivator to ride,” said Tod.

Ashwin Assomull, a partner at Boston-based consulting firm LEK, said the partnership was mutually beneficial. “The people making up these institutes want to point to a record of history, and independent schools are hungry for cash.”

Cairneagle suggested that around half of the companies running British schools around the world were originally developers, some of which incorporated campuses into wider projects. “They started out knowing nothing about schools, but British brands trained them,” said Amírola.

The home school may take a detached approach or exercise more oversight. Marya Akhtar, director of global partnerships at Downe House, said the school board is “very protective” of its brand. The girls’ school, which also has a campus in Saudi Arabia’s capital Riyadh, is reviewing proposals for six or seven schools in India. “Many investors are very interested,” said Akhtar.

This approach differs from corporate education providers such as Nord Anglia and International Schools Partnership, which grow through acquisitions or greenfield development and run schools directly. “Commercial operators know where M&A opportunities are,” said Assomull.

He added that although they were “playing a different game” and operating within a wider price range than UK schools, the two often targeted similar markets.

Sarah Furata

Sara Furata, starting at Rugby Tokyo in September © Emi Furata/Handout

High fees, similar to those in British schools – costs, including boarding, will be £12,000 a year in Wellington Pune and £19,000 a year at a new Rugby school in Japan – do not deter expectant parents.

Hiroshi Suzuki, a former education minister who now sits on Japan’s Rugby board, said the emergence of more international professionals along with “Japanese parents wanting more educational opportunities” is fueling demand.

Sara Furata, 11, who attended an international school in Japan from the age of four, starts Rugby Tokyo in September. Her mother Emi Furata chose the school after meeting its headmaster, Tony Darby, a former Rugby teacher in the UK. “We had a lot of conversations that helped us get to know the school better,” she said.

Sara is excited at the prospect of having more subjects to choose from, such as arts and sports, and says, “You can do whatever you want with more freedom than in Japanese schools.”

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