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INTERNATIONAL HIGHER EDUCATION

Entering International Markets: New Zealand's Problems

Ma Xiaoying and Malcolm Abbott
Ma Xiaoying is lecturer in the English Department at the North China Electric Power University, in Beijing, China. E-mail: amxiaoying@126.com. Malcolm Abbott is a research associate at the Center for Research in International Education, 28A Linwood Avenue, Western Springs, Auckland, New Zealand. E-mail: mabbottnz@hotmail.com.

In recent years a number of universities have sought to take advantage of the increased willingness of students to study abroad. In the New Zealand case, the number of international students at the universities rose from 3,402 in 1998 to 28,195 in 2004. The total number of international students in New Zealand at all educational institutions rose from 26,021 in 1998 to peak at 115,197 in 2003. Since 2004, international student numbers have declined sharply in New Zealand, reducing an important export income for the country and forcing a number of universities to retrench staff.

The international student market is a potentially lucrative one but one that is also more unstable than that of most domestic markets. For the universities of New Zealand, the income from international students has proved to be rather unstable. Not only do universities face stiff competition in international markets, but they also face exchange rate risks that can affect their potential income.

International Students in New Zealand
The presence of international students at New Zealand's educational institutions is not a recent phenomenon. From the 1950s until the late 1980s the country hosted a number of international students. Some of these students came to New Zealand under formal assistance schemes such as the Colombo Plan, while others came privately, mainly from Malaysia and Singapore. These students did not, however, pay full fees for their tuition, and it was only after changes in 1989 that educational institutions were able to recover costs fully.

Through the 1990s the eight universities in New Zealand (all publicly owned) attempted to recruit full-fee paying international students. At the same time vocational education, foundation studies, secondary schools, and English schools (both public and private) also began to attract international students. With slow growth in domestic student numbers and the New Zealand government keeping a fairly tight reign on grants to educational institutions, many of them sought to supplement their revenues by actively attracting international students.

International students are attracted to New Zealand because of the lower cost of living in that country compared to Canada, the United States, and the United Kingdom. As well, a number are attracted through the possibility of immigrating and because of the ease of entry to students with low standards of English. In the New Zealand case there is no English standard for entry whereas in countries such as Australia students must have an IELTS (International English Language Training System) score of 5.0 to enter an English school.

Growth in international student numbers in New Zealand was promoted by the government to create additional export income. In 2003 and 2004 export education generated over $NZ 2 billion per annum in foreign exchange, making it the country's fifth-largest export earner after dairy, tourism, meat, and timber products.

Relying on China
Despite its strong growth, New Zealand's education export industry was very narrowly based. In the late 1990s nearly all of the growth in international student numbers in New Zealand came from China. Rapid growth in incomes in China over the past 20 years, coupled with a sharply rising level of high school participation and a lagging supply of places in state universities and colleges in China led to a surge in the numbers of Chinese students seeking an education abroad. In New Zealand, Chinese student numbers in the universities rose from only 93 in 1998 to peak at 16,523 in 2004. From virtually zero, Chinese student numbers rose to 58 percent of all international students at universities in New Zealand and 10 percent of overall university enrollments.

The universities in New Zealand became overly dependent upon this single market. The universities were dependent upon a supply chain that reached down through the secondary, vocational, English, and foundation schools of New Zealand. (A foundation school prepares students for university-level study.) The majority of international students in New Zealand attend these preuniversity schools. In particular, English schools, vocational diploma schools, and foundation schools enroll a very large part of international students in New Zealand. A number of the secondary schools have also been very active in recruiting international students. The universities recruit mainly from the English, foundation, secondary, and diploma schools. In recent years the numbers in these schools (of all types) has dropped sharply, especially the number of Chinese students, which peaked in 65,999 in 2003 and fell to 49,569 in 2005. Indications are that in 2006 the figure has fallen further.

A combination of factors have led to this downturn. In the last few years there has been substantial investment in higher education by both state authorities and private entrepreneurs in China, leading to the creation of many more higher education places in that country. Competition for Chinese students in international markets has also intensified, and a rising exchange rate in New Zealand has choked off the country's reputation as a low-cost country.

Downturn
The year 2006 has been a traumatic one for the export education industry in New Zealand as the impact of the retrenchment and closure of English schools has gradually begun to flow up to the universities, which for perhaps the first time in their histories have seen their student numbers and income decline. Retrenchment of staff in a number of the universities has taken place, and this process could quite easily continue into 2007 as the number of students studying in the various schools in New Zealand are far smaller than they were a few years ago.

Given that New Zealand's universities have relied upon recruiting international students from educational institutions within New Zealand, growth in numbers at universities could take a few years before it picks up again. Even when it does the universities are going to have to broaden their attraction away from China if they are going to be able to regain the position they held just a few years ago.

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