Earlier this year, we reflected on Chinese New Year and celebrated the arrival of the Year of the Rabbit as a symbol of prosperity and longevity in Chinese culture. A common greeting at New Year is 恭喜发财 – ‘Congratulations and may you become wealthy!’ and, for many, prosperity begins with education.
It’s therefore fitting in September, the start of another year – the school year – when families are preparing their children for school and beginning to consider applications to schools for next year, to further explore the connections between education and wealth.
Education in Chinese culture
In Chinese culture, education is considered the most important, if not the only, means to attaining wealth: there is a famous saying: 书中自有黄金屋，书中自有颜如玉 which translates to, ‘all the houses made of gold and women with faces as beautiful as jade are found through books.’
It is little wonder, therefore, that education is one of the most frequent topics of conversation with my clients, many of whom are increasingly globalised families who on the one hand are pursuing schooling for children in international centres of excellence (not least the US and UK), and on the other adapting their familial relationships, governance and family businesses as the western-educated next generation take over or become more active participants in family affairs as the “great wealth transition” intensifies.
I have found that the trustee can be an invaluable resource for families navigating these issues.
The goal of a Western education for Chinese families
Ever since the implementation of China’s “open door” policies, beginning in the late 1970s, wealthy families have been sending children abroad, mainly to English speaking countries, for education.
Aside from the prestige, and enhanced career prospects, associated with attending a top echelon school – such as Cambridge, Oxford, Princeton or Harvard – families see a broad range of additional benefits to a western education, ranging from technical competency to soft skills. Clients have often spoken to me, for example, about international schooling helping to broaden horizons and build emotional intelligence – essentially contributing to making more well-rounded citizens of the future.
Speculation over the reversal of the open door approach and intensifying “de-coupling” from the United States have, though, given pause for thought. Not about the value of a western education per se, but the feasibility (or risks involved with) its attainment.
Indeed, figures suggest families are beginning to cool interest in the US which, while still by far the largest destination for Chinese students, has seen a decline in recent years following decades of sustained growth. Both the uncertainty around US-China relations, and concerns regarding anti-Asian racism (worsened by the Covid pandemic) are among the issues that clients have raised.
Despite this, the appeal of western education, overall, remains strong – even though the long term perspective increasingly is that educated children will return to China to be close to family and build domestic wealth.
For example, between 2021-22 a record number (151,690) of students from China went to the United Kingdom for their studies.
This trend is likely to continue, not least in response to China’s domestic educational policy and socio-economic evolution.
The clamp down on out of school tutoring in 2021 has seen reports of families turning to the educational ‘black market’ to ensure children become fluent English language users, even as speculation swirls around a rowing back from the prominence of English in Chinese classrooms – and society more generally.
At the same time, record youth unemployment faced by millions of university graduates every year has reinforced the value of a much more broadly based Western education and social system. All this has contributed to continuing interest in western education for children – now seen by many as the ultimate hedge against both China-specific and broader international risks.
In short, the families I speak to see a western education as the ticket to global mobility and citizenship of the world.
The role of the trustee
Supporting global mobility and the needs of international families is, of course, an essential component of effective trusteeship (and trusts services) – whether that is helping with multi-jurisdictional tax planning; establishing bespoke structures to fund the international education of future generations; or putting in place family governance structuring, communications and collective learning capabilities to smooth sustainable wealth transfer and succession.
Many wealth creators, for instance, accept that not everyone in a family can be provided for financially perpetually, but see that wealth can ensure the very best education (including MBAs etc.) – provided through mechanisms such as educational trusts.
But trustees also have a wider, pastoral, role to play – particularly when a trustee, or other professional adviser, shares the cultural background of the client. In my practice I have learned that listening carefully and showing empathy are key to finding the best solutions.
I’ve also found that much knowledge can be shared outside and beyond the professional spheres of tax and law. Whether it is discussing my own experiences of dealing with a child undertaking an Oxbridge education, or simply discussing books or films to encourage communication between parents and children – building understanding is essential.
After all, education, higher education in particular, can be a complex and divisive subject for families. Issues I have seen families grapple with include: which college or university is ‘best’; navigating tensions when a child has a preference for a perceived ‘soft’ subject (arts and humanities) and parents prefer ‘hard’ vocational subjects (maths, sciences, engineering etc.); cultural challenges when a western educated child returns to the family and ‘disrupts’ the domestic status quo with new ideas and opinions; new relationships and potentially mixed-marriages when a relationship blossoms at an international university.
I have always believed that the trustee must be able to help triage these issues – even where that means unseen (and, yes, sometimes unpaid) work. It is essential to safeguarding not just the client relationship, but the family relationships themselves.
This is equally true of a family’s wider ecosystem of advisers. With education so high on the agenda for Chinese families, the best advisers will focus attention on building out their professional networks to ensure they are able to provide access to educational consultancy and resources, and position themselves to help aspiring Chinese families ‘go global’ through their children’s international education – even as they help to navigate the complicated terrain of cross-generational and cross-cultural wealth succession.
A final thought on the Chinese proverb I quoted for the title of this article: 读万卷书，行万里路. In ancient China, an educated wise man (sic!) is one who “reads 10,000 books and travels 10,000 miles”. In today’s China, the same aspiration and ideal lives on. To be educated and wealthy, one not only obtains the best schooling but also has experience of the world.
Even as the world changes and political headwinds affect decision making, I have no doubt that international education will continue to be a marker of success for wealthy Chinese families. Likewise, experience of international education is an essential component of the well-rounded adviser.