International schools shift to new markets after China boom stalls

International schools are targeting a growing middle-class in Asia, Africa and the Middle East after Covid-19 restrictions and clampdowns on foreign education stalled a boom in expansion in China.

UK institutions are leading the way in switching focus to new markets in pursuit of stable revenue streams. In 2019 education consultancy Cairneagle recorded that 80 per cent of schools set to be opened by British institutions were in China. In January, that had fallen to 15 per cent,

The shift taps into growing demand for international private schools, with chains 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 the overseas branches of old and prestigious schools are also cashing in on the trend.

“These different groups are all capitalising on increasing demand for private education,” said Jorge Amírola, partner at Cairneagle. “UK-born school groups are expanding very fast and other school groups are emerging in different parts of the world.”

Overseas campuses of British independent schools were at the premium end of a growing for-profit international school market, he added. Competitors include private-equity backed corporates, such as Inspired Education, which run more than 90 schools apiece across 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 opt for private schools looking for good education, some degree of English language learning and, in some developing countries, a safer environment.” he said. Wealthier parents, meanwhile, are looking for “big names and high-level facilities”.

Global education providers have expanded in most regions in recent years. Since 2017 campuses of international school groups in Latin America have increased more than threefold, to 82 last year, according to Cairneagle.

Providers will continue to shift their focus from China after Beijing’s clampdown on education providers since 2021, when it introduced new regulatory conditions on international schools, analysts said.

The curbs mean many schools have put plans “completely on hold” in China after a period of frenetic expansion, said Amírola. Growth in China drove a fourfold increase in fee income for UK private schools in the past decade, according to ISC Research.

Though the shift from China offers fewer opportunities overall, education data provider ISC Research said 26 international schools were set to open next year, of which 17 were British. They include campuses of Brighton College, Uppingham and Reigate Grammar in Vietnam, The King’s School Canterbury in Cambodia and Malvern College in Barbados.

In India, new campuses are being opened by Harrow International School in the southern tech hub of Bengaluru and by Wellington College in Pune, near Mumbai. Murray Tod, master of the Pune campus, said Wellington was attracted by India’s “dynamic” economy. The school is targeting locals and expatriates who aspired to an “interweaving” of British and Indian culture before applying for global universities, he added.

The school will not be run directly by Wellington but by Unison Group, an Indian partner that operates schools and universities, as well as a property business.

The model is typical for overseas campuses of British private schools. A subsidiary of the UK institution typically takes 2-6 per cent of annual revenues from the licensed local operator then donates this to the UK school, which as a registered charity cannot generate profit. “The funding of bursaries [for poorer UK students] is a real driving motivation,” said Tod.

Ashwin Assomull, a partner at Boston-based consultancy LEK, said partnerships were mutually beneficial. “The people setting up these institutes want to point to a record of history, and the independent schools are cash-starved.”

Cairneagle suggested about half of companies operating British schools worldwide were originally property developers, some of whom were incorporating campuses into wider projects. “They started off knowing nothing about schools, but the British brands trained them up,” said Amírola.

The parent school can take an arm’s-length approach or exercise more oversight. Marya Akhtar, global partnerships director at Downe House, said the school’s board was “very protective” of its brand. The girl’s school, which also has a campus in Riyadh, the Saudi Arabian capital, is reviewing proposals for six or seven schools in India. “A lot of investors are very keen,” said Akhtar.

The approach is distinct from corporate educational providers such as Nord Anglia and International Schools Partnership, which expand through acquisitions or greenfield development and run schools directly. “The commercial operators know where the opportunities are for mergers and acquisitions,” Assomull said.

While they were “playing a different game” and operated at a wider range of price points from British schools, the two often targeted similar markets, he added.

High fees similar to those at British schools — costs including boarding will be £12,000 a year at Wellington Pune and £19,000 a year at Rugby’s new school in Japan — are not deterring prospective parents.

Hiroshi Suzuki, a former education minister who now sits on Rugby’s Japanese board, said the arrival of more international professionals alongside “Japanese parents who want more education opportunities” was driving demand.

Sara Furata, 11, who attended an international school in Japan from the age of 4, is starting at Rugby Tokyo in September. Her mother Emi Furata chose the school after a meeting with its headteacher, Tony Darby, a former teacher at Rugby in the UK. “We had a lot of conversations to help us to get to know about the school,” she said.

Sara is excited at the prospect of having more choice in subjects such as arts or sport, saying: “You can do what you like more freely than in Japanese schools.”