We Chinese immigrants to Australia, in addition to the pleasant environment, than the local excellent education system. Around many friends living in Australia in recent years have spent the first few years of the transitional period, no longer asked to buy a house, remittance things. To give birth to a suitable childrens kindergarten, became everyone’s top priority. Many Chinese will go to buy school districts and think of primary schools, middle schools and even universities, but they will pull down kindergartens. Wait until after looking back to a good kindergarten, only to find people queuing for more than a year, worry a lot of young parents, because children can lose at the starting line.In retrospect, in such a sparsely populated country as Australia, nurseries even appeared to be homegrown places like the one in China. So, investing in a kindergarten in the local, promising?
The answer is yes.
According to IBIS statistical studies, the child care industry in Australia is a huge market worth A $ 12.4 billion, with annual profit growth of 14.3% in 2016-2017. Looking at the growth rate of Australia’s GDP, which is only 0.5% (Q3 / 2016), the child care industry can be said to be developing at the speed of light.
First, child care industry in Australia so hot, mainly in the following four reasons:
Government funding support
The long-term caregiving profession has long been Australia’s immigration profession, the reason behind it is the scarcity of preschool teachers. To encourage more private capital to enter the industry, the Australian government is currently implementing two kinds of special funds to support the child care industry: Child Care Benefit (CCC) and Child Care Rebate (CCR), 99.6% of Australia Families can get both types of government welfare funds. Judging from the current government budget, the support for these two special funds will be further strengthened.
2. Women return to work
With the continuous enhancement of corporate social responsibility and the increasing demands of modern women for occupations, the average female employment rate and the employment rate of pregnant women in Australia have experienced 20 years of sustained growth. This growth has pointed the way for the long-term development of the kindergarten industry. The higher female employment rate means that more families will choose to entrust kindergartens to take care of their children rather than abandoning their work to take care of their children. The 2016-2017 forecast shows that the employment rate of women will continue to increase, further pushing up the demand for kindergartens.
3. The rapid growth of children’s population
Although the Australian kindergarten industry has foreseen the pressure of population growth on the number of people admitted to the hospital, the industrial layout has been advanced ahead of schedule. However, the rate of population growth exceeded the government’s expectations and many children faced a landless situation, especially in Sydney. The goal of the Australian government is to make preschool children get at least 15 hours a week in kindergartens. Only 74% of four-year-olds in New South Wales attend kindergarten, while enrollment rates across the country are 95%. The Australian Productivity Council said that 85% of children in kindergartens across the country meet the standard of 15 hours per week on kindergarten, compared with 60% in New South Wales.
4. Household disposable income growth
Australian kindergartens are prohibitively expensive, usually costing between $ 70- $ 80 a day, private kindergartens can cost $ 200 a day, and even more are high-end kindergartens, costing $ 80 an hour. However, as more women join the workforce, the overall income of Australian families has been effectively raised, and more families can afford kindergartens. Between 2016 and 2017, the family’s discretionary income will be raised.
Second, the industry constraints
However, with such a shortage of kindergartens, the growth rate of kindergartens is still low, mainly due to the high threshold of the industry. Australia has a very strict industry rules system. The child care industry is heavily regulated by the National Qualify Framework (NQF) for kindergartens. This framework is designed to ensure that Australian kindergartens can continue to maintain a high standard of preschool education.
Driven by the NQF framework, at least one-half of employees at the Day long care center will need to earn at least a Certificate III level from 2014 onward. As kindergarten staff’s education continues to rise, the wages they pay are also on the rise. In 2016-2017, the work of kindergarten kindergarten teachers is expected to increase by 11%, which will consume about 67% of the revenue growth. Continued to enhance the industry regulatory efforts and the continuous growth of staff salaries is to consider whether to invest in kindergartens, the biggest factor.
Third, the industry competition pattern
Australia’s child care industry concentration is very low, the four major kindergarten groups and countless small kindergartens constitute the entire A $ 12.4 billion market. Among them, the four big kindergarten group’s total income is less than 20% of the national market.
According to ACECQA, as of the first quarter of 2016, 83% of kindergarten operators owned only one kindergarten and 16% owned 2 to 24 kindergartens, With more than 25 large-scale kindergarten operating groups, only 1% of the total.
About half of kindergartens are for non-profit kindergartens, which explains why the kindergarten market in Australia is so fragmented. One of the largest not-for-profit operators, ABC Goodstay Early Learning, took over a total of 678 kindergartens by ABC Learning, the nation’s largest kindergarten operator, and now has a combined market share of 7.2%.
However, for-profit kindergarten operators are also rapidly gaining market share. Both G8 Education and Affinity Education are listed on the Australian Stock Exchange, and they are constantly expanding through acquisitions and mergers of regional kindergartens. G8 Education is currently Australia’s largest private kindergarten operator, accounting for about 7.8% of the country’s market in Australia. From 2010 to 2015, G8 Education has acquired 415 private kindergartens.
Fourth, the composition of profits and costs
As the child care industry has many forms, such as full-day park, half-day park, home garden, etc., and the nature of the operation is different, each kindergarten profit level vary greatly. In the case of G8 education, for example, its operating margin can reach 22.7%, while its non-profit, good early education has a profit margin of just 1.9% in 2014-2015.
However, as far as the overall industry is concerned, the average profit can reach about 10%. The cost of staff salaries more than 50%. In contrast, apart from fixed costs such as utilities, the cost of rent is only 3.4%, which is likely to be lower than most would have imagined.
Fifth, investment kindergarten in the end is worth it?
Childcare in Australia has long been regarded as a rigid need for a family unit, and the population of Australia is also facing a period of rapid growth. Kindergarten education is a less risky and less competitive industry than any other industry. Not only stable income, but also less susceptible to technological upgrading, facing the cost of updating. Kindergarten will be a good investment choice for the foreseeable future.
However, the kindergarten industry has experienced the fastest growth phase. According to IBIS’s forecast, after experiencing a 12% growth in 2016-2017, the industry’s average growth rate will remain at 5.8% for the next five years.
In the near term, the biggest uncertainty facing the kindergarten sector right now is that the federal government is discussing a policy to promote the reform of the childcare industry. The reform proposes the Single Child Care Subsidy (CCS), which if adopted, will be implemented by 2018 and will bring about dramatic changes to the childcare industry in Australia. Single child care Care Allowance CCS will replace the existing Child Care Benefit (CCB) and Child Care Rebate (CCR). Kindergarten operators will receive direct government subsidies, profit levels and growth rates will exceed expectations.
* Source: IBIS World