By 2030 Asia’s emerging middle class is expected to account for over 60 per cent of total world spending and, if past history is any guide, a significant part of family budgets will be spent on education. But what exactly?
A recent survey by MasterCard profiled 16 markets in the Asia-Pacific over 2012-13 and asked families how they are prioritizing their education and child “enrichment” spending. Summary findings are as follows:
- Just over two thirds of Asia/Pacific consumers save regularly for their children’s education and on average, this takes up 14% of their monthly household income. The highest market is Myanmar at 18%; the lowest is New Zealand with 8%.
- More than two thirds of households in Asia/Pacific spend on enrichment classes: the majority of children in China and South Korea are enrolled in learning a foreign language, while markets such as Australia, New Zealand and the Philippines place more emphasis on sports.
- More than half of parents in India (54%), Taiwan (52%) and Thailand (52%) are spending on extra tuition classes for their children, closely followed by Malaysia (46%), Singapore (45%) and Bangladesh (45%). Chinese (53%) and Korean (50%) households were more inclined towards foreign language classes. More than 50% of respondents from Hong Kong preferred their children to learn a musical instrument.
- Overall, a third of Asia/Pacific consumers intend to take up an educational course in the next year – highest in China (53%), South Korea (50%), Malaysia (44%), Thailand (43%), Hong Kong (41%), and Singapore (38%), and lowest in India (8%), Indonesia (12%), Japan (14%) and Vietnam (16%).
I have taken the raw data and set out two comparative charts below, concentrating on the three the most popular categories: Tuition (Academic), Foreign Languages and Sport.
First, we see the differences across the region between tuition and language spending, which also correlates to high propensity to international students studying abroad in English speaking countries. Korea, China and Hong Kong are obvious examples.
Household Education Spending Priorities I: Asia-Pacific Survey Data (% of Families)
Second, we can see how academic tuition spending correlates (or not) with sports. For example, while Indian families spend predominantly on tuition a more developed country such as Australia spends mainly on sports and related enrichment activities.
The broader implications are that Asia is a two-tiered education market in terms of spending, which should not be surprising given the vastly different economies within the region. Overall we can expect that emerging middle classes will spend as much as they can on assuring basic quality education by paying extra tuition or enrolling in private schools when they can. Once that is secure, and as we move up the income ladder, the priority for English language (think: jobs in service sector, higher education abroad) becomes more critical as a percentage of the family budget. Finally it suggests that Asia offers a highly diverse set of entry points for investors, educational institutions and private education providers in a region that – at the average household level – is in the midst of dramatic spending increases.