Leader: Quality is key to success abroad

Less than a year ago, the main concern about overseas students for UK universities was whether they could fit them all in. The British Council was predicting that numbers would triple in 15 years, and Australia's IDP Education expected them to quadruple. Now expansion is going into reverse, largely because of a change of tack in China, and it would be easy for panic to set in.

China was seen by many as the saviour of UK higher education: an increasingly prosperous country with unimaginable numbers of students who would be attracted by prestigious English-language universities. The share of Britain's overseas students coming from the People's Republic was growing rapidly. But good judges such as Sir Howard Newby, chief executive of the Higher Education Funding Council for England, have been warning universities for some time that the bubble would burst before long. China has put more money into higher education than any other country in recent years, encouraging more students to stay at home and drive a harder bargain if they go abroad.

A continuing downturn in recruitment from China, as predicted in Beijing this week, would be serious for a number of British universities in the short term. But it could lead to a more balanced intake for those institutions that are sufficiently flexible to switch their attention elsewhere. The latest figures from the Universities and Colleges Admissions Service tell only half the story because they are restricted to undergraduate admissions, but they show recruitment continuing to rise in most of the rest of the world.

There are lessons to be learnt from the Chinese experience if universities are not to lurch from crisis to crisis. The most obvious is that the international market is extremely fragile and subject to swings beyond any institution's control. The strength of the pound, for example, is a bigger factor in the loss of market share to Australia and the US than any change in visa regulations or perceived quality issues. That makes it even more important for UK universities to offer value for money. Three quarters of foreign students surveyed by the British Council last year considered their courses expensive. In the global market, fees must be competitive.

Even more important, however, Britain has to be seen as a destination of quality. Associations with substandard institutions in the host country can damage the reputations of others who are more careful about their partners.

And any perceived indifference to overseas students' needs, either in terms of study support or work placements, is more dangerous still. The overseas market may continue to be lucrative, but it will never offer easy money.