Strategic Roadmap development for international education in the University sector

Strategic Roadmap development for international education in the University sector

What are Strategic Roadmaps? Strategic Roadmaps are planning tools that identify strategic goals and pathways for growth in international education in each sector and show a series of steps that will enable those goals to be reached. The emphasis of the roadmap development is on activities and decisions, as opposed to business planning. Before you come 1. Reflect on the messages in this background paper 2. Identify three tangible actions that will lead to a better outcome for the university sector on the path to 2025 3. Enrol in the workshop.. The outcome of the development process will be roadmaps that have been developed by and for each sector. Strategic Roadmap for the University Sector

Contents 05 Introduction 06 The University sector and international education 10 Market overview 13 Key trends 19 Drivers of Change 25 Scenarios to consider 29 Growth opportunities 3

We all know the industry goal for 2025 But what s the plan? What do I do tomorrow to get on the path to 2025? Strategic Roadmaps The roadmaps are an exciting collaboration opportunity to take part in a project that will influence the direction of our industry for years to come Jump on board. Take part. 4

Introduction The Leadership Statement for International Education was released in September 2011 setting a target to double the economic value of international education to $5 billion by 2025 and outlining a range of proposed actions for achieving that target. While the Leadership Statement sets out key Government objectives for the international education industry and actions that are likely to contribute to the achievement of key targets, it does not set out the strategic options, choices, and actions appropriate for each industry sector to achieve growth that will contribute to the 2025 target(s). The aim of developing International Education Strategic Roadmaps is to do just that provide each sector of our industry with achievable pathways to success. this, which actions / steps have the highest priority and which will yield the greatest benefit relative to their cost / benefit To identify the intermediate steps and interdependencies within each sector To inform the work that ENZ is undertaking to support industry growth. To be successful, the roadmap needs to be developed by and for your sector. We look forward to your participation in the roadmap development process and to having the opportunity to work with you. When completed, the roadmaps will be used: As a communication tool to inform industry and key stakeholders on the potential for each sector between 2014 and 2025 To identify the key issues that currently affect the sector and its ability to grow To identify what actionable steps are required to achieve the desired 2025 destination for each sector, and within Grant McPherson Chief Executive Education New Zealand 5

The University sector and international education

The University Sector and International Education Background Universities are the most valuable contributor to New Zealand s international education industry generating $309m in tuition revenue in 2012, and contributing an estimated economic value of $901m to New Zealand s GDP. International students enrol in courses ranging from Foundation and ESOL and short courses to advanced postgraduate studies. Overall about 16% of the student body are international fee paying students. Universities also deliver offshore programmes, distance education and education consultancy services and commercialise research. It is estimated that universities earned $12.4m in offshore revenue in 2012/13. By headcount, the university sector is responsible for 20 per cent of New Zealand s international education industry s enrolments (18,300 of a total 92,995). When calculated by EFTS, the proportion is a higher 27.4 per cent (13,704 of a total 49,997). Table 1: Total number of international students, EFTS and tuition revenue over the past five years International Fee Payment Students 2007 2008 2009 2010 2011 2012 2007-2012 (%) 21,748 19,562 19,424 19,678 18,690 18,300-15.8% EFTS 16,069 14,068 14,137 14,349 13,753 13,704-14.7% Revenue $274m $251m $267m $284m $293m $309m +12.7% Strategic roadmap for the University sector 7

A Strong Sector for Growth All eight universities ranked in the QS top 500 universities in the world All universities offer comprehensive, high quality, portable and internationally accredited and recognised programmes NZ offers studentcentred learning. Universities outperform the ISB benchmark in all areas apart from learning experience NZ offers world leading research experience and strong connections to industry with specific strengths in agriculture, biotechnology, biomedical science, emergency management, geophysical sciences, geothermal, marine science, law and psychology PhDs All universities have a commercialisation office All universities have a strong international alumni Some universities run successful offshore education programmes, consultancy services and distance education Two MOOCs * QS World University Rankings by Subject Strategic roadmap for the University sector 8

Current Product Mix Business subjects dominate About 1/3 of students enrol in Bachelor degrees in the field of management and commerce. Around 11% are enrolled in sciences, followed by society and culture, engineering and health. Universities enrol significant numbers into Foundation and ESOL programmes (2012) Study Abroad students are a significant market - according to the Institute of International Education around 2,900 US Study Abroad students chose New Zealand in 2010/11. Course Popularity The highest growth areas over the past 12 months were business, STEM subjects (engineering, science, technology, maths) and health. STEM enrolments are up 6% over 2012. Strategic roadmap for the University sector 9

Market Overview Market Overview 10

Key International Markets China is the dominant market Chinese students (7,520) made up 32% of international student enrolments at universities in 2012 Other key markets were the United States (2,190), Malaysia (2,000), India (1,290), Viet Nam (1,050), Saudi Arabia (990), and South Korea (960) Growth in recent years has come mainly from China with traditional leading markets flat or in decline, particularly Malaysia and Saudi Arabia. Main markets for offshore delivery and consultancies are the Middle East, China and SE Asia Strategic roadmap for the University sector 11

Who are our Competitors? Other English-language destinations but competition also from aspiring Asian education hubs 46% of university students in New Zealand also considered the United States as a study destination during their decision making process. Followed by Australia (43%), the UK (35%), Canada (23%) and Singapore (8%) Once committed 75% of university students applied solely to New Zealand. A minority of students also applied to other countries. Australia (11%), and the US and UK (both 6%) Source: i-graduate report, 2011 ENZ brand research last year in key markets found that most students considered a number of other destinations. Where two other destinations were considered alongside NZ students were also looking at Australia (24%), the UK (22%), USA (21%), Singapore (14%), Canada (12%) and Malaysia (4% ) 12 Strategic roadmap for the University sector 12

Key Trends Key Trends 13

International Trends Developing markets are experiencing rapid growth Countries and governments do not have all the resources to meet this demand. Innovative players provide governments, institutions and corporates value for money in education services. New digital technology platforms Disrupting traditional education business models by reducing delivery costs and enhancing the learning experience. Massive Open Online Courses (MOOC s) are fundamentally changing how and where education is being delivered. Education has become a dynamic multinational industry Attracting international investment and new commercial partnerships. Universities will need deeper relationships with industry to support research, meet student demands for experiential learning and lead innovation Strategic roadmap for the University sector 14

International Trends Increased international competition and brand building efforts Many countries are looking to increase their international education market share. Notably Australia, United Kingdom, Ireland, Western Europe, United States and Canada. Increased populations of 16-22 year olds generating new demand Higher education, training and vocational qualifications are required. Forecasts predict Asia, Latin America and Africa will provide this demand. Not all international markets will travel offshore to be educated Emerging economies will be focussed on transformational change within their domestic education systems. Middle class consumption is growing China, India, Japan, South East Asia and US and will account for the biggest share of world s middle class growth Strategic roadmap for the University sector 15

New Zealand Trends Decline in numbers reversed in 2013? Enrolments peaked in 2004 at 29,001 and steadily declined to 18,300 by 2012 Between 2011 and 2012 the number decreased by 20% in Canterbury Indications in 2013 are positive. Indicators show for the Jan- August 2013 period there was a 4% growth in total enrolments and a 6% growth in first time university student visas The Auckland Effect benefits some With three universities based in Auckland the region dominates with over half of international university enrolments 6,000 5,000 4,000 3,000 2,000 1,000 0 Number of International Students by University 2010-2012 2010 2011 2012 Auckland AUT Waikato Massey Victoria Canterbury Lincoln Otago Fees and student value rises but does this impact on competitiveness Since 2007 tuition fees have risen by an average of 31%. Over the same time the number of international students declined by 13%. Rapid Increase in International PhDs Numbers have risen from 704 in 2005 to 3,354 in 2012 MOOCs slowly entering the picture Massey, Waikato and Auckland have set up and/or joined international MOOC initiatives in 2013 New products 180 point taught Masters Strategic roadmap for the University sector 16

New Zealand Trends Recent University enrolments have increased modestly, but value is up significantly 2013 saw modest increases in international student enrolments in the University sector, but over the last few years the mix of undergraduate vs post graduate enrolment has changed significantly, leading to much higher value per enrolment. High value, multi year enrolments The sector s average tuition revenue of $22,541 (2012) is the highest of any sector and increasing rapidly as the mix of graduate vs postgraduate enrolments changes together with growth in enrolments in higher value subjects (e.g. STEM). Universities have the highest proportions of full-time international student enrolments and multi year programme enrolments, making churn the lowest of any sector Strategic roadmap for the University sector 17

What Students are Telling us Positive and consistent student satisfaction The 2013 i-graduate survey showed that students are satisfied with their experience (87.6%), a slight drop on 2011/12 but above the global benchmark. Students were least satisfied with their learning experience, which was below the international benchmark. Areas of concern relate to employment; employability, careers advice and work experience. The other areas of arrival, living and support were close to the international benchmark, with only marginal variations which indicates that New Zealand universities do not enjoy comparative advantage on any overall measure. 79% of international students surveyed in 2011/12 would recommend their institution to others thinking of applying. This was 2% below the global benchmark. Area NZ Universities International Student Barometer (ISB) ISB +/- Arrival 88.3% 87.7% +0.6% Learning 85.6% 86.1% -0.5% Living 86.9% 86.8% +0.1% Support 88.6% 88.3% +0.3% Overall 87.6% 86.8% +0.8% 18

Drivers of Change Demographic shifts Shifts in global economic power Student mobility Competition 19

By 2030, two-thirds of the global middle class will be residents of the Asia-Pacific region Ernst & Young. (2013). Hitting the sweet spot: The growth of the middle class in emerging markets. Over the next two decades, global middle class expected to expand by another three billion Chinese middle class expected to reach one billion by 2030 20

Drivers of Change: Demographics Since 1800 the world has seen two great middle class expansions, and we are living through a third. The nineteenth century industrial revolution created a substantial Western European and American middle class, which grew again after the Second World War a spurt which this time included Japan. Today this is happening in the emerging markets (EMs). In Asia alone, 525 million people can already count themselves middle class more than the European Union s total population. Over the next two decades, the middle class is expected to expand by another three billion, coming almost exclusively from the emerging world. By 2030, so many people will have escaped poverty that the balance of geopolitical power will have changed completely, and global trade patterns will also be unrecognizable. Ernst & Young. (2013). Hitting the sweet spot: The growth of the middle class in emerging markets. Strategic roadmap for the University sector 21

Drivers of Change: Demographics By 2024, India, China, Indonesia and the US will be home to over 50 percent of the world s 18 to 22 year old population. This is despite China s tertiary-aged population being projected to fall by roughly 40 million people in the next decade. Strong growth is forecast in both emerging and key advanced economies such that the world economy is set to recover to its long-run average growth rate by 2015. Over the next decade, global growth in tertiary enrolments will slow from about five per cent per annum to 1.4 percent per annum. India, Indonesia, Brazil, Nigeria and China will dominate global higher education growth in the next decade. The number of outbound students will continue to grow, primarily due to growth in higher education enrolments, as latest forecasts show a marginal decline in the future propensity to study abroad. Source: British Council. (2013). The future of the world s mobile students to 2024. 22

Drivers of Change: Student Mobility China and India will continue to make up over one third of outbound mobile tertiary students, with Germany, South Korea, Saudi Arabia, Nigeria and Turkey also sending significant numbers of students abroad for education. The US, the major beneficiary of growth of outbound students from China and India, and the UK, driven by the large outbound markets from India, Nigeria, Saudi Arabia and Pakistan, will continue to dominate as destination countries to 2024. Should there be an economic slowdown of the growth in the BRIC nations, there will be a tangible effect on global GDP due to the lower affordability of higher education due to the lessening of household incomes and exchange rate effects. Tertiary enrolments and outward mobility globally would decrease and traditional host markets will be negatively affected. Source: British Council. (2013). The future of the world s mobile students to 2024. Strategic roadmap for the University sector 23

Competition is driving change on the global education stage. Fast. OnlineUniversities.com (2012). All-you-can-eateducation for $30 a month. 24

Scenarios to consider 25

Grow proportion of international students What would an incremental increase in the percentage of international students look like? University Total student population 2012 Total international students 2012 Current Percentage international Students +2% Increase +4% Increase Auckland 32,657 5,301 16% 5,878 6,531 Otago 19,197 2,690 14% 3,071 3,455 Victoria 16,787 2,919 17% 3,189 3,525 Canterbury 13,171 1,240 9% 1,448 1,712 Massey 19,704 2,739 13% 2,955 3,349 Waikato 10,371 1,940 18% 2,074 2,281 AUT 19,117 4,631 24% 4,970 5,352 Lincoln 3,717 680 18% 743 817 TOTALS 134,721 22,140 16% 24,328 27,022 Source: Universities New Zealand 2012 Highlights Report Australian universities are forecast to grow international student numbers from 17.8% of student population in 2005 to 26.3% in 2025. Strategic roadmap for the University sector 26

Baseline growth per University Institution approach: Based on incremental growth in student numbers and average value per institution Number of providers Current total value generated by international education Average value generated per Uni in 2012 Projected average value generated per Uni in 2025 Projected value generated by the Uni sector in 2025 Unis 8 $0.901B $0.112B $0.187B $1.500B Strategic roadmap for the University sector 27

Possible Value / Volume Scenariosbased on total number of students and spend on fees and living costs Unis Students 2025 Mean Tuition Fees 2012 * Annual growth in fees Value tuition fees 2025 Living costs 2012 Av CPI Living costs 2025 Total value per student 2025 Potential Economic contribution High value/ high volume 30,000 $17,224 5% $30,931 $24,000 2.4% $31,900 $62,831 $1.884B Low value/ high volume 30,000 $17,224 3.5% $26,026 $24,000 2.0% $30,400 $56,426 $1.692B High value/ low volume 20,000 $17,224 5% $30,931 $24,000 2.4% $31,900 $62,831 $1.256B Low value/ low volume 20,000 $17,224 3.5% $26,026 $24,000 2.0% $30,400 $56,426 $1.128B This table shows the impact of increases in student volumes combined with various fee increase options. What scenario is most realistic, desirable and achievable? 28 * Taken from the 2012/13 study of economic value by Infometrics

Growth Opportunities 29

Achieving Growth Areas to focus on: Product Development Brand Development and marketing tools Improving the Student Experience Quality perceptions Post-graduate demand Links with industry and the workplace Leveraging alumni and international networks Access to capital and funding and risk management for offshore activities International partnerships in growth markets Institution and industry collaboration and pathways Limits in popular faculties or internal diversification caps Competitive pricing Internationalising staff and students Infrastructure Blended/digital learning Transnational education / offshore delivery Improving pathways for international students in secondary schools to increase the current transition rates What else is needed for growth? 30

Opportunities Capacity to build numbers onshore flat domestic enrolments and new investment in infrastructure and facilities Offshore Education to reach stay at home students Education Technology blended, online, distance and MOOCs Collaboration onshore and offshore with each other and with NZ exporters Growing scholarship and study abroad markets ME, the EU, Japan and Latin America Developing pathways onshore and offshore There are export sector niches where NZ Inc has the motivation, capability and competitive advantage to meet international demand. How can universities play in these niches? High Growth Sectors Agribusiness Health ICT Digital Technologies Food and Beverage Renewable energy Creative industries Professional Sport 31

NEW IDEAS GROW BETTER HERE Strategic Roadmaps will identify: Actionable steps necessary to get to desired destinations Interdependencies among steps Alternative routes that will optimise opportunities or minimise risks. Jump on board. Strategic roadmap for the University sector

For further information on the strategic roadmap process contact: Adele Bryant Business Development Manager adele.bryant@enz.govt.nz T +64 27 464 5265 http://www.educationnz.govt.nz