Moving Families to Asia? Caution: Think Schooling First
Liz Perelstein, President, School Choice International
Introduction:
Finding suitable school places when families are relocated to another country is an often
overlooked, but critical component of relocation. When facing a move abroad, nothing is
more daunting for parents than the prospect of moving children from a school where they
are thriving to the unknown. Social concerns, curriculum gaps and overlaps, language
differences, key years for assessments, graduation requirements – as well as the impact of
all of these on repatriation can cause valuable executives to refuse an assignment. And any
of these can derail an assignment precipitously. School placement abroad is challenging
under any circumstances; when school places are scarce even the most senior executives
may become alarmed enough to threaten an assignment.
The Climate in Asia:
During the last decade, following the business explosion in China, Asia has become a
favorite destination for global companies. Expatriate numbers have far surpassed the
international schools’ ability to accommodate incoming students. Unlike in English
speaking countries such as the UK and Australia, or even a number of other European
countries, local schools rarely are perceived by expatriates as a viable alternative to
international schools for their children. As competition for school places has become
aggressive, schooling has turned into a high stakes venture for businesses intent on
relocating key employees.
Hong Kong clearly tops the list of competitive education environments, with Singapore
close behind. This article will focus specifically on Hong Kong. But similar conditions and
similar practices (i.e., capital investments called debentures) apply throughout the region.
Schooling in Hong Kong Today:
While there are over 70 international schools in HK, 21 of which are British curriculum
schools run by the ESF (English Schools Foundation), only a handful are specifically
American schools. As a result, Hong Kong International School, a well resourced facility
where 58% of students are American, is the first – and unfortunately often the sole - choice
among a majority of Hong Kong bound American families. Transportation challenges
between Hong Kong Island and Kowloon, massive amounts of traffic, as well as curriculum
preferences of incoming families make for the most complex school placement problems that
we, at School Choice International, have encountered in our 13 years.
That said, international schooling has been a problem for some time. As long ago as
2007,The Economist ran an article on space shortages:
…slots in international schools have become precious. The economy is booming in
China's tailwind, attracting well-paid expatriates. Prosperous local residents,
meanwhile, are deserting local schools because of what is seen as deterioration in
English-language teaching since the reversion to Chinese sovereignty in 1997.
The Economist, June 14, 2007, “The $1 million Question: What is the Price of a Good
Education?”
Not long after this article was published, the recession brought excess capacity to Hong
Kong’s International schools, but upwardly mobile local families aspiring to an American or
international education for their children quickly filled the vacant seats. The explosion of
Americans, coupled with local student enrollment in international schools has resulted in a
shortage of spaces that has reached an extreme. Typically, international schools lose onethird of their students each year. Local students are not transient, so when foreign
business picked up again in Hong Kong, most international schools were fully enrolled.
Scarcity of school vacancies this year was exacerbated by the tornado and subsequent
nuclear meltdown in Japan, as companies suddenly moved employees to an alternative
office in Asia.
Preferred Admissions Schemes:
It is not new in Hong Kong, or in Asia in general, for international schools to rely on the use
of debentures in their admissions practices. Debentures are non-interest-bearing bonds
that provide capital for construction, infrastructure, or other costs. In return for this
investment, debenture holders receive preferential treatment in admissions decisions.
Although debenture schemes serve the same purpose, there is an absence of clarity and
uniformity surrounding them. Selling school places to the highest bidder is uncomfortable,
particularly in the education sector. Partly as a result of this awkwardness, the details
surrounding their cost, the process or the impact on admissions may be elusive and
specifics change frequently. There are separate programs for corporate and individual
debentures, and each school runs its own debenture scheme. For the most part, a
debenture is bought either by a company or by a family before a child is admitted to a
school.
Debentures:
Companies purchase debentures to ensure that international schooling does not become an
obstacle to an overseas transfer. At Hong Kong International School they are currently
priced at HK $500,000, approximately $64,000 US per child. Debentures do not guarantee
admission, but place the debenture holder’s assignee closer to the top of a lengthy waitlist.
Students also must be “admissible” to the school, as determined by prior grades, testing and
as well as subjective factors. Debentures also must be received 90 days prior to the start of
the school year to be considered in the first round of admissions decisions.
Once secured, debentures may be reallocated to another family either when they become
due or when a student leaves the school. In some cases a debenture can be purchased from
another company wishing to sell one, but in the current Hong Kong climate, this does not
happen often. Schools, at will, can buy back debentures to reissue them at higher prices,
and can change their relative weight in admissions decisions at any time. Some schools
require companies to commit to several debentures. At the most popular schools in Hong
Kong, waitlists to purchase debentures can be as long as 8-12 years. Nevertheless, there
clearly are cases where waitlists are circumvented, although the conditions surrounding
purchase of debentures that are technically unavailable are secretive. In addition, there is
an active “secondary market” for debentures, facilitated by brokers. Debentures sold in this
market range from $40,000 to $450,000 US per child – or even more.
Although this is the most typical model, some schools have opted for mandatory debentures,
which are not sold not in advance, but which are required when a child is offered a place.
These debentures do not give a child admissions priority, but similarly raise funds for the
school. In an atmosphere of excess demand, schools can set fees at their discretion.
Individual Capital Financing Schemes:
Individual debentures are costly for a family (one must be purchased for each child) but
some schools raise money from families through other methods. An Annual Capital Levy is
a different way financing capital expenditures that are tied to admission. The levy is less
expensive at the outset but does become costly as the fee is assessed each year. Unlike a
debenture, which technically may be resold to the school (at a price and conditions
determined by the school at the time of sale), a capital levy may not be resold.
Corporate Surety Scheme – ESF (English Schools Foundation) Schools:
The English Schools Foundation’s 21 schools throughout Hong Kong are distributed as
follows: 9 are primary schools, 5 are secondary schools, 2 are schools that cover all grade
levels, 4 are kindergartens and they also run a school for children with special educational
needs. All ESF schools follow the English National Curriculum. These schools also are
faced with shortage of spaces, which they have addressed by instituting a Corporate Surety
Scheme (CSS) in recognition of the educational needs of relocating families. The ESF
schools allocate spaces to future students according to catchment area, so the Corporate
Surety Scheme was designed to address the inevitable uncertainty about residential
location during the transition period.
The scheme works as follows: The CSS is essentially a “wait list” that opens each year in
January and closes in June of the same year. The waiting list applies only to the upcoming
academic year. The list is limited in number and operates alongside the regular ESF wait
list. The company pays the monthly tuition fee during the waitlist period, as though the
child were already enrolled in the school. For example, if the tuition fee is HK $6,000
(approximately) and a child is added to the list in January, the upfront cost of the CSS
during the 6 month period is * $6,000 – or $36,000 HK.
The Path Forward:
To recapitulate, there are a fixed number of international schools in Hong Kong today, and
of these, many of these offer the national curriculum of a particular country (Australia,
Germany, Canada, etc.) when many families are seeking a more general international
curriculum or an American style education.
The more popular schools are almost impossible to access. Yet, for families more openminded about their children’s education, there are spaces to be found. Families need to
make some sort of trade-off. It may be curriculum, it may be location, or it may be the
convenience of educating multiple children within a particular school. But flexible families
are inevitably the winners.
Despite the obvious advantages in educating children abroad, worry and fear dominate
parents during the school placement process. Parents need both education and reassurance
to help them understand that education is far more than schooling. Today, when children
will be graduating into an environment in which the skills they will need are unknown,
where any specific content is instantly accessible on the internet, parents would be well
served to reexamine the purpose of education. Living in an exciting Asian metropolis,
exposure to and the opportunity to negotiate with children of diverse cultures, the chance to
learn other languages, and the ability to operate in a world of uncertainty are far more
important skills than any particular curriculum for today’s students. Companies that have
addressed parental concerns with research and educational programs rather than
succumbing to panic have been able to address their problems more effectively – and with
far less stress.
As the facts are difficult to change, it would serve HR well to work closely with education
vendors in developing a proactive approach both in the short and long term. Businesses
interested in operating in any Asian country must do their homework on schooling before
any other planning - to ensure that key talent is willing to relocate. Education providers
can assist in assessing family suitability based on educational factors. Long term
educational planning can be addressed to “big picture” decisions, for example developing a
strategy for purchasing debentures as well as for utilizing them most effectively to
accommodate the greatest number- or most important - employees. Simultaneously, HR
and education professionals must transmit a unified message to relocating employees.
Expectations need to be managed, and creative solutions (for example, distance learning
while awaiting seats) need to be explored. In Asia more than elsewhere, and in Hong Kong
more than elsewhere in Asia, only by working as a team, HR professionals and education
providers can make these transitions palatable.