Many educational organizations are leaving their homelands and bringing the value of education, tradition, and innovation in learning to emerging markets in need of these services. China, with its ever-growing middle class, newly approved 3 child policy and cultural expectations of educational excellence, is the perfect market for many schools that offer education to children as young as 3 years old.
Harrow, Wellington College, Dulwich, Duke, NYU, and many more have already taken advantage of favorable market conditions and have established their campuses either in the form of joint ventures or franchise models.
Are you considering entering the Chinese market and are curious about what benefits it can bring to you? To get started, take a look at the advice from Education Consultant and Entrepreneur Nicolas Labatut, previously regional CFO of Nord Anglia Education, who has more recently co-founded a consulting company Export2China with his wife. Nicolas deals with education organization design for all ages, from early childhood education to university applicants.
Q1: International Education industry in China: Why are companies interested in entering this market?
A: In 3 to 5 years from now, we expect to see an increase in birth rates in China, thanks to the government’s change in policy. At the same time, we expect to see more government restrictions on education, creating more entry barriers. However, this market reform will create opportunities for education groups with core education values, who see China as a strategic long-term investment.
Specifically regarding kindergarten, those run locally tend to fill up very quickly and do not have the means to support the current rapid increases in population. With this in mind, the bilingual kindergartens offer a very attractive alternative to parents. With a higher price tag comes a notable difference in the services these schools can offer. Bilingual and even trilingual kindergartens are enjoying considerable growth as China’s middle class continues to expand.
Q: What are the laws and regulations in China regarding starting a school as a foreign company?
A: At Present, foreign operators cannot own bilingual schools in China for Grades 1-9, which cover compulsory education. Regulation has been reinforced even further this year, which has created unease among many foreign international education organizations.
The market is therefore shifting to a franchising / licensing model: Reputable foreign educational organizations are able to enter the market by franchising their school brand to local partners. For example, Harrow, Wellington or Wycombe Abbey rely on Chinese partners to operate their schools.
Despite the tight regulations, education presents a significant investment opportunity in China. Many middle to upper class as well as returning ethnically Chinese parents would like their children to pursue their education at the top universities abroad. One of the best ways to make this happen is for children to attend an international or bilingual school in China and take a diploma recognized worldwide such as the IBDP, the AP or the A-level. As a result, the demand is very high, the market is growing rapidly and the opportunities are huge for reputable school organizations.
Q: How much influence does the international brand have on the management of a school in China?
A: To be able to run a bilingual school in the name of the franchisor, the Chinese operator or franchisee must respect and adhere to many aspects previously agreed upon (school design, safeguarding policies, certain roles etc…) as well as quality standards. However, the school will always be run by a local operator.
In addition, teaching staff must meet all the specific requirements, which include experience and certifications as well as endorsement from the franchisor. As mentioned previously, foreign operators cannot own bilingual schools, so business calls will be made by the franchisee in cooperation with the board of directors and the senior stakeholders of the company.
Q: What are the differences between local, bilingual, and international education institutions in China?
A: Local education can be very effective, but it is designed for children who will eventually take the local high school exam called the Gaokao and continue their educational journey at local universities. Foreign language programs do not feature greatly in these establishments.
International schools can also be a good choice, but they are reserved solely for foreign passport holders. These schools are usually the most expensive and are generally located far from the city center.
Bilingual and trilingual schools arguably offer the best alternative as they combine the best of both worlds: Chinese students can benefit from Chinese educational core values, while at the same time study in an international environment and learn foreign languages more comprehensively.
Wrapping up: Franchising a school brand in China with a local partner
Do not underestimate the value of the local partner in China, as they are the ones who can help you, not only to recruit suitable students for your school, but also to…
- Find appropriate real estate, land and other resources to support your project.
- Develop the right connections with various local authorities.
- Access potential investors to fund the project.
The partners can be real estate companies as well as local schools who want to internationalize. We have a vast network of partners and this is the reason various education organizations trust us to help them set up schools in China.
Want to learn more about how to sell a franchise to Chinese partners?