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We saw the crash coming – so why didn’t we prepare?

Bob O’Keefe reflects on university business schools’ reliance on Chinese students, and the sector’s wider reliance on the income they have provided.
This article is more than 3 years old

Bob O'Keefe is Vice Principal for Student Experience at Royal Holloway University of London. 

When I first took over the running of a Business School, in 2002, I went to a British Council event on the recruitment of Chinese students.

We were told that the growing number of Chinese arrivals to the UK system would be buoyant until at least 2010, but we should plan for an eventual downturn. A few years later I attended an event where the then Chinese ambassador to the UK talked; he similarly told us to plan for a downturn.

Business Schools have for many years had a “sudden downturn in overseas recruitment” as the key item on their risk register, as have many universities – but few of us have done much about it. Predictions of downturns have come and gone. Some have launched in-country ventures, to varying degrees of success, and some have expanded into or grown on-line provision. But it’s fair to say that the seemingly endless supply of Chinese students has made us lazy.

Now, in 2020, we will have the downturn, and in all likelihood a major crash. Our risk mitigation strategies have proved to be either useless, or unworkable in the few months afforded to us. And the knock-on for our universities will be considerable, as some Business Schools account for over 50% of a university’s overseas students, often providing a 60% contribution of total school income to run central services and/or cross-subsidise activity elsewhere.

I do not think we can ride out the current market conditions. I think, going forward, there will be changes in how Business Schools, and universities, behave in relation to Chinese students and the income they deliver.

The rise and fall

To understand where we are today it is useful to understand the recruitment of, and growth, in Chinese students. In 2002 the crash had a devastating impact on MBA programmes, with applications well down. Those at the top of the food chain reacted by lowering entry standards, ensuring their financial stability. Those of us further down the food chain saw MBA enrolments plummet.

The reaction was to launch and grow specialist Masters programmes, ranging from Finance to Human Resources, through to more specialist programmes such as Tourism Management. These programmes meshed well with demand in China, where young graduates did not have the commercial experience to enter an MBA programme, but wanted to expand their international knowledge and to improve their English.

Many of them, due to the perverse system that allocated students in China to degree programmes, had completed degrees in subjects they had little interest in or where the job market was not expanding – Chemical Engineering being a typical example. A conversion Masters allowed them to shift direction.

Some Russell Group universities, who had almost turned their back on Business and Management education, suddenly became owners of new “Business Schools” (often rebranding current activity in, say, Economics or Accounting) that could tap into this market. As competition increased, almost everyone launched a generic Masters in “International Business” to mop up applicants who were not quite good enough for a specialist degree.

Faster and smarter

Alongside this, universities became better and smarter at overseas undergraduate recruitment. Despite a strong desire to grow overseas numbers in, say, Maths or Physics or History, channels to market (especially the use of agents) resulted in a disproportionate number of applicants from China and for undergraduate Business programmes. Articulation agreements (mainly for 2+2 programmes) almost always had to include Business students. So Business Schools saw substantial growth at the undergraduate level as well.

Despite buoyant numbers, there has been evidence in recent years that this model of provision is cracking. I think there are three reasons for this:

First, our Masters’ portfolio is stale. We have been able to launch “hot topic” degrees and then replace them with new “hot topics” (the MSc in Marketing becomes an MSc in Digital Marketing, becomes an MSc in Social Media Marketing, for example) but this model has run out of steam. It has been reliant upon us having something new to say to Chinese students; now that Tencent and Alibaba are as big as Google and Facebook (for example), it’s not clear that we have anything different to say.

And as Chinese universities now teach more than Marxist Economics, our Finance and Economics programmes don’t look so different. Coupled with this, undergraduate provision in China is now more flexible – there are less Chemical Engineers looking to switch topic.

Second, at the undergraduate level, articulation agreements are breaking down. Many Chinese universities used these as a way to overcome their own government imposed student number constraints. Again, there is now more flexibility, particularly at the better known Universities, and a strong desire to engage with who they see as “global players”, freezing out lower ranked institutions.

The increase in the number of Chinese universities that are globally excellent, as evidenced by the numbers in various rankings, also provide growing in country options.

Third, we have a structural problem. The one-year full-time Masters serves us well (versus American two year programmes), but has never been ideal for Chinese students. Their local job market starts up just after the Chinese New Year in early February, and they are not at home to engage with it.

Despite lamenting that many Chinese students leave after their exams in June to complete their dissertation back in China, we likely would see far less students if we did not allow this.


Beyond all this, we need to admit that we have been teaching a strata of society that can afford to send their (one) child overseas for a full year (or at least nine months). For many undergraduate parents, the 2+2 model is too expensive; a 3+1 arrangement or even just a semester abroad is easier to finance. And the market is changing: the generation who lived through the cultural revolution desperately wanted to see their children in gainful employment.

Year on year, having seen an economic “miracle” unfold, parents are also becoming more flexible, allowing children to study Arts and Humanities, not just Engineering, Business and Medicine. Witness the University of the Arts as one of the UK’s most successful recruiter of Chinese students to the UK and provider of programmes in China.

The future

So what does this mean for the future post Coronavirus? I think we need to be cognisant of three key messages.

First, our model of creating and delivering full-time programmes that attract Chinese students, both postgraduate and undergraduate, has been cracking for a few years. Flexible structures, maybe running from one Chinese New Year to the next, might help. Blended delivery where students can study in the UK for as little or as much as they like, but complete a degree at their own pace at a distance, could become the norm.

Second, universities have to attract Chinese students to Arts, Social Science and Humanities programmes – not just lazily recruit yet more Business students. The market is small but growing fast.

Third, we must review our stale portfolio and content. China had growing concerns around the environment, health care and effective public management even before the pandemic.

The future may be one for programmes where students learn together to face and manage difficult and complex problems, not simply put a marketing plan together or calculate a return on investment (and, yes, this does sound more like an MBA).

While some of the above can be argued with, I think we can agree on one thing. We must never again rely so heavily on one market, and make such continual optimistic growth projections about that market. We knew this day would come, but most of us did little about it.


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