University of Technology Sydney, whose Dr. Chau Chak Wing building is pictured here, is bucking a trend of decreasing student enrollments from China.

For Australia’s tertiary education sector, after years of coasting on the back of ever increasing demand from Asia – most especially, China which now controls a whopping 30% of the $28 billion a year market – it seems that the time may be nigh for paying the piper.

After a string of controversies about Chinese government interference in Australia’s universities, the higher education sector is being hit by unprecedented second punch — the first decline in Chinese student enrollments since Australia’s pioneering efforts in the international student market exploded two decades ago.

Data released by Austrade shows that between January – September 2016-2017 and January – September 2017-2018  overall visas granted to Chinese students fell by 2.35% compared to rises of 13.37%, 19.14%, 30.88%, 16.63% and 12.67% in the five previous corresponding periods, dating back to 2001-2012.

The trend is certainly causing panic around second tier campuses such as Macquarie University in Sydney, Geelong’s Deakin University and Griffith University in Brisbane, which have over-relied on Chinese students.

This shows the foolishness, senior observers of the sector noted, of the market relying, lazily, too much on one customer as China’s massive market share has indicated.

Yet the effect is uneven: Australia’s Group of Eight universities are, in the main, still raking in enrollments as is University of Technology Sydney, which is chock full of multimillion dollar Chinese donations for its buildings and China Studies Centre.

“It’s very much a top tier Sydney and Melbourne game now,” one industry insider told Crikey.

Why the dip in numbers?

Some in the sector are pointing at an anti-Australia campaign by China’s fearsome propaganda machine following clear evidence of attempted interference in a number of institutions by the shadowy United Front Work Department.

According to agents who sell services, China certainly has some effect but the primary cause has been identified as the gradual shrinking of the space between study and immigration over the past five to six years. “Australia has relied on the immigration story and not bothered to improve and diversify its branding,” another insider said.

To wit, Austrade, which was bizarrely handed the job of marketing international education from the Department of Education, despite nil experience in a niche sell and a poor to middling track record in marketing other Australian products and services, came up with the zinger of “The Future Unlimited” in 2011.

The Austrade website states that, “the new brand recognises the decision to invest in an international education is ultimately driven by the desire for a better future. The perceived return on investment in education – future income, life satisfaction, choice – is what matters most.”

So Australia relies on a “new brand” that is seven years old while competitors, many nascent in 2011, have whizzed past in terms of growth. The star success story is Canada which under the Trudeau government has boosted its own immigration quotas and is selling education as a path to residency and citizenships – sound familiar?

Australia is also being outdone by the UK, which has always been seen as a quality product (well marketed by the British Council) with a huge range of 120 universities. And the value proposition, with both the Australian dollar and the pound stronger than they were a year ago, is better.

Finally, China’s own universities and high schools are increasingly offering better services to their own citizens, which cannot be underestimated in Xi Jinping’s increasingly nationalistic China.

It’s worth noting US numbers, which boomed under Barack Obama’s presidency, are being hit by what the sector calls, unsurprisingly, the Trump effect. But any chance of Australia capitalising on this appears to be dim with the “joined at the hip” strategic attitude of the Turnbull government to the US. And US institutions — including major brands such as Harvard, Duke and Johns Hopkins — do a much better job at offering China-based options.

China aside, some other Asian markets are still doing well for Australia, including India, Nepal and Sri Lanka, but Indonesia is also in decline, with Malaysia looking to go the same way.

As one player pithily summarised: “We were pretty blase about it and Universities International did not invest in branding and positioning.”

So now the worm is starting to turn, no-one much is ready.