“Before the economy opened up, a chic suit meant one with the label of a state-owned factory sewn ostentatiously on the sleeve. How times change.”
—From “China’s Luxury Boom: The Middle Blingdom” in The Economist
Technically, education does not fall under the category of luxury goods. But practically, in a market like China’s — with its rapidly growing affluent class and ambitious, highly aspirational, and surging middle class — there is a demand for “luxury” education: relatively expensive, world-class education that fits with all the other evidence of success an individual can assemble. What fits best in this regard for many Chinese students and their families? A degree from a prestigious American or British university.
As one of the most important engines of growth in the global demand for education, the Chinese market offers opportunities enough for institutions of all shapes and sizes. But a consideration of the role of elite or luxury brands in China, and the relationship of prospective Chinese students to those high-profile institutional brands, provides important insights for all recruiters in this critical market.
The American dream
A recent CNN article notes:
“While Chinese students traditionally went abroad when they failed to secure a place at a top-tier local university, the best students are now forgoing elite Chinese universities to study in the United States.”
And as the 2012 Open Doors Report revealed, the number of international students at institutions in the US increased by nearly 6% to a record high in the 2011/12 academic year. The growth is largely driven by strong increases in the number of students from China, particularly at the undergraduate level.
Chinese student enrolments increased by 23% in total and by 31% at the undergraduate level.
The CNN article further noted that there is a growing trend of Chinese families sending their children to US boarding schools for high school in order to secure them better chances of getting into elite American universities. Additionally, they want to spare their children the emphasis placed on preparation for the gaokao, the National College Entrance Examination, in Chinese secondary schools.
The article also notes the trend of US universities setting up branch campuses in China; our recent post on the importance of assuring quality and brand integrity in branch campuses applies particularly well to the Chinese market. Here more than in many branch campus markets, students are increasingly sophisticated and sensitive to brand prestige.
The British establishment
A British degree is just as attractive to many Chinese as an elite American one.
Statistics from the Higher Education Statistics Agency (HESA) in Britain for the year 2010-11 show that Chinese compose 22.6% of the total non-EU international population in Britain, and sources quoted for a China Daily newspaper article by Elizabeth Gasson entitled “Chinese are attracted to branded British universities” assert that the stricter British visa rules implemented in 2012 affecting international students have actually helped some British institutions:
“They (Chinese) like brand names. The more unobtainable it is, the better,” says Jazreel Goh, marketing director of the British Council, the culture and education section of the British embassy. “They want to be seen.”
Further in the article: “Emma Leech, marketing director of Nottingham University, winner of the 2011 International Brand Master award, says: ‘I think we are one of the strongest brands in China because predominantly we’ve been established for a while and we are fairly well networked in China.’
When questioned about whether such issues as the post-study work visa cancelation in April this year and higher tuition fees have led to a decrease in application numbers, Leech says: ‘No, just the opposite. Our numbers have actually gone up …. Institutions which have been most hit by application numbers are the institutions without a strong brand.’”
Indeed, recent statistics from HESA indicate that the number of Chinese students enrolled in higher education institutions in the UK for the academic year 2011/12 continued to increase, up by almost 17% over the same period to 78,715.
Appealing to the mindset of the prospective Chinese student
The Economist piece cited at the start of this article points out:
“The average Chinese millionaire is only 39, which is 15 years younger than the average elsewhere. Prosperous Chinese are less shy about flaunting their wealth than people in other countries. On the contrary, many believe they must show off to be taken seriously.”
The article explains the psychological underpinning of the “bling” factor in China:
“It is a symptom of the fact that they have more to spend, that necessities no longer gobble up every spare yuan and that they can afford to add a little colour to their lives.”
Initially in China’s economic turnaround, say ten years ago, the newness of affluence created demand among Chinese for highly visible expressions of wealth: it was all about handbags and jewellery and any other kind of branded sign that you were a person of means. But some time has now passed to get more used to the new reality, and a KPMG report, “China’s Luxury Consumers: Moving Up the Curve,” notes that:
“The ‘bling factor’ remains a key to the growth of luxury consumption, but Chinese consumers are also gaining greater appreciation of brand values and heritage.”
The KPMG report noted several motivations for luxury consumption among Chinese, and recruiters from elite schools seeking to attract Chinese might do well to consider them when promoting their brands in China. They include:
- Conformity and status seeking: “The fame and status of a brand are particularly strong factors among the youngest (20–24 years) and oldest (over 35 years) age brackets.”
- Indulgence: “Many join luxury brand clubs not for the exclusivity but because they are regular consumers of luxury experiences and privileges and expect a consistent level of service or additional perks.”
With regard to the latter point, indulgence, naturally Chinese students shouldn’t be promised some standard of living or education at an institution that is different from what other students experience. It is more about the ways in which obtaining a degree from a certain institution is indulgence in itself. For example, in promotional materials, one might:
- Invest in production values – high quality types of paper, photography, etc.
- Highlight the beauty and/or historical richness of a campus in photography
- Note VIPs who have graduated
- Devote enough space to state-of-the art facilities
- Highlight world-class lecturers
- Promote sophisticated industry links and/or research projects
Also, keep in mind that for certain segments of prospective Chinese students, the expense of a degree is not going to be an obstacle – it may in fact be a reason to choose the institution over another.
Finally, it is likely a very worthwhile activity to make sure you are nurturing current Chinese students and alumni; these students will be networked to the kind of families and peers who will cock a very attentive ear to reports of how well the student is enjoying his or her experience. As much as any overt branding your institution engages in, it is this word of mouth that is so important in building the brand in foreign markets, especially one as brand- and status-conscious as China.