Strong global growth projected for private K-12, but variable by market
A new report affirms the remarkable growth in private K-12 education worldwide, particularly through the rapid expansion of international schools as well as English-medium private schools. Prepared by the Shanghai-based market intelligence firm Emerging Strategy, Opportunities for Private Education: China, India, Indonesia, Malaysia, and the UAE picks up on estimates from International School Consultancy (ISC) and the BBC to point out that there are more than four million students enrolled worldwide today in 8,000 international schools, and that “hundreds of millions” more are enrolled in English-taught K-12 programmes in private schools. The picture that emerges is one where the rapid expansion of the sector has been driven by strong demand from families for high-quality, English-medium education – a demand that has in turn been driven by the rapid expansion of the middle class in many emerging markets and an increasingly globalised outlook for students and parents. “The supply of international schools has now caught up to rising demand in recent years,” says the report. “Led by global operators that have hurriedly opened chain schools in metropolises in emerging markets, local private schools have also begun offering international curricula, transforming themselves into new categories of internationally oriented private schools which cater to segments outside the narrow niche of elite families traditionally served by international schools.” While supply and demand may be better matched for the time being, the outlook is for further growth ahead. Again with reference to ISC estimates, the report forecasts that global enrolment in international schools will surpass eight million students by 2025. In a tacit acknowledgement of the challenges that many local governments face in providing high-quality public education, private K-12 schools are also expected to continue to expand rapidly, and to do so by targeting a variety of customer segments.
Five key markets
The report zeroes in on five select markets where private K-12 plays a prominent role: China, India, Indonesia, Malaysia, and the UAE. The UAE is well-established as a major hub for international schools. Almost all private schools in the country are international schools, and the government actively promotes private K-12 education, in part with an eye to fuelling future economic growth and partly in the context of broader education reforms. While Emirates officials may be supportive of private K-12, the report cautions that the UAE market is also crowded and highly competitive, and points out that better opportunities for new entrants may be found in neighbouring markets, such as Qatar. Malaysia, meanwhile, has also seen a rapid expansion of private schools over the past decade, growing from less than 1% of total K-12 enrolment in 2002 to 15% in 2013. Emerging Strategy adds, “With only 142 international schools present, there appears to be a significant market opportunity for international schools, particularly for those that have the capability to offer international curricula and programmes that meet the needs of local families, such as additional religious instruction.” As in the UAE, government policy is also playing a part in the sector’s expansion in Malaysia. The current view is that international schools can be an important driver of economic growth. With that in mind, the Malaysian government removed limits on foreign ownership of schools in 2012, introduced new tax incentives, and removed an enrolment cap for Malaysian students – effectively allowing for unlimited enrolment of local students. Particularly in the context of Malaysia’s efforts to internationalise higher education and promote greater links with foreign providers, the report anticipates a continued rapid expansion of the sector there and notes Malaysia as one of the most promising global markets for private-sector providers. In contrast, the Indonesian government is sending signals that may dampen a further expansion of private international schools in the country. Foreign ownership limits persist and much of the private K-12 enrolment is concentrated in religious schools which receive public funds. “Demand for English-medium schools and international schools has been surging in recent years due to the perceived status and high value of proficiency in English,” notes the report. However, it also cautions that under current public policy, international operators may find it difficult to differentiate their programmes from local English-medium schools. India and China are the world’s two biggest drivers of demand for international education, and so it is no surprise that they are also home to well-developed private K-12 sectors. There are more than 300,000 private schools in India, which together account for 30% of all enrolment at the primary level and 50% of all secondary students. However, nearly all - 95% - are low-cost providers, and only about 5% of private schools are affiliated with major education boards in the country. The international school segment has expanded considerably over the past decade, doubling to the point that there are now more than 400 schools in operation. But there are significant regulatory barriers for new market entrants, and the report cautions that, “Those which wish to enter India’s market for private education need careful branding to attract target segments and access to information on the complex regulatory regimes in the country.” The final market considered in the report – China – is an interesting study in contrasts. Private K-12 enrolment accounts for a relatively small percentage of all school-age students in the country, in large part because of China’s high-quality school system. International school enrolment, however, is growing quickly and, after an average annual growth of 11% over the past several years, now surpasses 250,000 students. Emerging Strategy maps three distinct segments of international schools in China: traditional international schools that cater primarily to expats, international divisions of public schools that are linked to foreign providers, and schools that offer international curricula to Chinese students, and often at lower tuition fees than schools enrolling mainly expat students. The report authors see this third category as the most likely focus of continued growth going forward, concluding that, “As competition from the public school-affiliated international programmes dwindles and the reputation of private K-12 schools improves, more and more parents who might otherwise send their children to public schools may send children to private international schools for locals.” One of the overarching observations in the report is that while the broad demand trends are strongly in favour of continued growth in private K-12 and international schools, market conditions and regulations vary considerably from country to country. At the level of national markets, there is much more nuance in private K-12 provision than the top-line trends would suggest. Therefore, both established providers and new entrants will need to continue to map their expansion plans with careful considerations to local conditions. For additional background on international schools and private K-12 provision, please see “UAE leads the world in English-medium international school enrolments” and “K-12 international school enrolment surpasses four million worldwide”.