China’s international, private schools face closure amid regulatory changes

China’s privately run bilingual schools, which had rapidly expanded pre-COVID-19, faced challenges in 2021 when Beijing introduced stricter regulations and cracked down on private tutoring, aiming to reduce academic pressure on students and lower family expenses.

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Numerous international and private schools in China are facing closures or mergers due to a combination of factors, including stricter regulatory measures, a decelerating economy, and a decline in the number of foreign students.

China’s privately run bilingual schools, which had rapidly expanded before COVID-19, faced challenges in 2021 when Beijing introduced stricter regulations and cracked down on private tutoring, aiming to reduce academic pressure on students and lower family expenses.

In a context of three years of pandemic and decelerating economic growth, Julian Fisher, managing director of Venture Education, a Beijing-based education sector market intelligence consultancy, pointed out that the challenges have become more pronounced.

“The cynic would say the sector is in terminal decline, the average Chinese investor simply that it’s going through growing pains,” said Fisher.

Situation at Dulwich College International

Certain shareholders of Dulwich College International are engaged in discussions regarding the potential sale of the institution’s operations in Asia, which have a significant presence in China. This development reflects the ongoing challenges and changes within China’s education sector, which has been experiencing significant disruptions and transformations.

Dulwich College International oversees nine schools in China, with a particular focus on bilingual institutions for Chinese nationals, which have felt the most impact from regulatory shifts. Beyond China, Dulwich International maintains schools in Singapore and South Korea.

Dulwich, in its 2022 annual report, noted that it  “scaled back in light of changing government regulations”.

In response to Reuters’ inquiries regarding a possible sale of its Asia business, Education in Motion (EiM), the entity responsible for the management of Dulwich College International schools and high schools in China, South Korea, and Singapore, revealed it is currently in the midst of securing a new strategic financial partner.

This process will also provide existing partners with an avenue to divest their investments in the group.

EiM clarified that this was a deliberate refinancing initiative and emphasized that it was unrelated to regulatory alterations in any specific market.

Challenges for international and private schools in China

China’s educational landscape is divided into distinct categories, including public, private, and institutions catering to foreign passport holders. These schools play a pivotal role in President Xi Jinping’s broader strategy to enhance national self-sufficiency in science and technology and promote the comprehensive revitalization of the Chinese nation on all fronts.

As of 2020, China boasted approximately 180,000 private educational institutions, constituting over a third of all educational institutions in the country. These institutions served a student population of 55.6 million, as reported by the British Council.

Nonetheless, international schools, limited to admitting students with foreign passports, have predominantly witnessed a decrease in student enrollment. This decline has been attributed to expatriates from countries such as the US, Britain, and Canada departing amidst the pandemic and escalating geopolitical tensions. Beijing’s regulatory actions have further compounded the challenges faced by these schools.

This mandate required that private schools in China align their curriculum more closely with that of public schools, especially in the realm of compulsory education.

Consequently, parents have started to question the necessity of paying private school fees when their children have access to free government schools. In Shanghai, for instance, annual tuition fees at international schools can surpass 300,000 yuan (about $41,195).

In addition, government authorities have taken measures to regulate the proliferation of private schools. Notably, China’s legislature recently passed a law aimed at enhancing patriotic education in schools, which is slated to come into effect on January 1, 2024.

Challenges and closures

Frank Feng, deputy principal at Lucton, an international high school in Shanghai, noted that “For private primary and high schools, there is tighter regulation. It’s also very difficult for some schools to get their licenses due to tighter control.”

Over the past two years, dozens of schools, spanning from kindergartens to high schools, have either closed their doors or faced delays in operation. Notable closures in the southern Greater Bay Area of China include the Dulwich International Early Years Centre in Shenzhen, the EtonHouse international kindergarten, and Victoria Kid House in Guangzhou. Requests for comments from the respective companies have yet to receive a response.

Private education firms, including bilingual and international schools, are exploring the sale of their assets in China, according to Jimmy Chin, Director at Everpine Capital, an education-focused buyout fund.

“There are likely more sellers than buyers of education assets in China right now.”

Geopolitical tensions

Universities are easing English language requirements, reducing the reliance on foreign talent to advance President Xi’s goal of transforming China into a science and technology leader.

In September, Xi’an Jiaotong University announced that it would no longer consider English proficiency test results as a graduation requirement. Likewise, the University of Science and Technology of China in Anhui eliminated six undergraduate majors, including English, starting in October.

Geopolitical tensions have compounded worries about a potential English language deficit, contributing to a more inward-looking China. US Ambassador to China Nicholas Burns noted in an October 11 town hall that the number of American students in China had declined dramatically, dropping to as low as 350 from 15,000 in 2015, though there was a slight increase this year.

On a more encouraging note, there has been a notable increase in the enrollment of students from Belt and Road countries, as highlighted by Mathias Boyer, the chief financial officer at the International School of Beijing. The school is enhancing its facilities to accommodate diverse needs, including the addition of amenities like a multi-faith prayer room.

Nathan Yasis

Nathan Yasis

Nathan studied information technology and secondary education in college. He dabbled in and taught creative writing and research to high school students for three years before settling in as a digital journalist.

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Nathan Yasis

Nathan Yasis

Nathan studied information technology and secondary education in college. He dabbled in and taught creative writing and research to high school students for three years before settling in as a digital journalist.

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