Underlying Factors in the Trend of Chinese Overseas Study
Published April 2021
In 2020 the UK surpassed the US for the first time as Chinese students’ most preferred study destination. Asian countries, Canada and some small European countries have also gained market share through the pandemic-led reshuffling of study destinations.
According to BONARD’s 2020 Survey of its database of 1,500+ agents in China, 1/3rd of agents did not receive new applications for studying abroad for the Fall intake of 2020, another 1/3rd experienced a significant business decline, while only the remaining 1/3rd of agents were in a relatively stable position from their steady pool of applicants.
Is the pandemic the only cause for the pause of the normal 700,000 Chinese (2019 figure) who study abroad? Or was there some undercurrent quietly emerging before the pandemic tidal wave?
Seven years ago (2013-14), when the annual figure of Chinese studying abroad was nearing 500,000, a huge rise from 150,000 in 2007, various industry players confidently agreed on an optimistic projection: China would reach one million students studying abroad in the foreseeable future. This forecast was based on an annual increase of 20+% since 2007.
CHEN Zhiwen, Chief Editor of EOL, the largest online Chinese education content service provider, believes the current low growth period will last for another ten years before its eventual tip into decline. However, CHEN did not predict the range that this sort of growth figure might fall within. The EIC Survey in June 2020 indicated a 1-2% growth for studying abroad across K-12 to Undergraduate (UG) and Postgraduate (PG) levels. The reason for this overall stagnant growth is complex: the younger generation live in a relatively comfortable physical environment, feeling less urge to change their standard of living through a challenging study journey; the stronger patriotic atmosphere in China today has created a higher level of satisfaction among students and families with their surroundings compared to a decade ago; the growth of joint institutes and China campuses has opened a window of “studying abroad experiences” within China; students have unprecedented opportunities to experience shorter periods abroad through exchange and holiday programs. One could say that the COVID pandemic merely turned these undercurrents into visibly breaking waves.
The vast majority of Chinese studying abroad in recent years no longer come from “prestigious” family backgrounds – their parents are often normal salary earners or small business operators. The families accumulate funds from their decades of savings, selling real estate, or asking for financial support from grandparents to send their children abroad. The projection of reaching one million students took financial affordability into account; far more than one million Chinese families can meet the financial threshold required to send their children abroad.
The question today is how many Chinese students with sufficient financial backing are willing to study abroad? Before the pandemic struck, the annual growth rate had already halved from 20+% since 2007 to an average of 10% annual growth for the last 6-7 years of pre-pandemic. Historically, after any such crisis, it would take at least a couple of years for the industry to regain its ground. There is little doubt that China’s studying abroad level won’t automatically recover to its past trajectory even in a post-pandemic era. Can the one million figure still be reached? The short answer is yes.
Korea, a country with a population of 52m, and an average salary of US$40K+, has 220,000 to 260,000 students studying abroad each year, approx. 4-5‰ of its student population. Vietnam, with a population of 96m, an average salary similar to Mainland China and a large diversity in wealth, sends 130,000+ to study abroad each year, 1.4‰ of the student population.
Before COVID, only 0.5‰ of the student population out of China’s 1.4 billion population were studying abroad, approx. 1/3rd of the ratio of Vietnam and just 1/10th of the ratio of Korea and Hong Kong SAR. One million Chinese studying abroad is still very feasible. Before COVID, Sohu Education projected a 7% compound growth in study abroad numbers. Factoring in the effects of COVID, even a 5% growth will still allow for the one million abroad number. China’s uneven wealth distribution, low domestic tuition fees, inward-looking economy and the changing perception of China vs. the West may cause its study abroad / population ratio to stay significantly lower than its neighbouring countries.
More and more students studying abroad come from inland China, 2nd, 3rd and even 4th tier cities. Compared to students from the east coast and tier-one cities, the overseas experience and access to information of this group are notably low. A New Oriental survey showed that 58% of students had no overseas experience before they actually arrived at their study abroad destinations. When it comes to making study abroad choices, most Chinese families are very much risk-averse. According to an interview with the head of the Agents Association in Shanghai, at least 60% of Chinese students in Shanghai choose to study abroad through some level of agency support. But this figure is much higher in 2nd and 3rd cities, with more reliance on agents.
Following the deregulation of student recruiting agencies in China in 2017, thousands of new agents register each year and thousands close down. Since the beginning of the pandemic, over 5,000 Chinese agents officially closed their operations. According to New Oriental, approx. 50% of agents today have less than five years of operating history – that makes understanding the changing dynamic of student recruiting agencies essential for anyone who plans to navigate the complex terrain of recruiting from China in the coming years.