Toby Chu could teach a master class in ambition. Consider his grand plan for what he calls North America’s first educational “supercentre,” a 300,000-square-foot complex in the Vancouver suburb of Richmond that will house as many as 12 universities, colleges and training schools. Most of the prospective tenants are public and private academies from outside the Vancouver area that want to establish a footprint there in order to attract international students. Facing funding shortfalls at home, educational institutions are hungry to expand global enrolment, Chu explains. By allowing schools to share resources, facilities and marketing muscle, the supercentre aims to become the Canadian hub for the international education sector.
If anyone can make such a project happen, it’s Chu. He is president and CEO of Vancouver-based CIBT Education Group Inc., which he launched in 1994 and built into a trans-Pacific empire of private business, technical and language colleges. The company—No. 128 on the 2013 PROFIT 500—made a name for itself by tapping China’s insatiable demand for Western education. “Foreigners, especially those in Asian countries, love Western education,” says the affable Chu, seated in the CIBT headquarters’ 12th-floor boardroom that overlooks False Creek and the North Shore mountains. “Parents there will do anything to get their kids educated.”
CIBT’s mission is to serve this vast and growing demand in emerging markets. The publicly traded company owns and operates some 50 campuses under its own and two other brands, among them a China-based business and trade schools, and language schools and career and technical colleges in Canada. CIBT also exports its North American courses overseas via video conferencing technology.
In Asia, parents will do anything to get their kids educated, especially in international business.
Over the past five years, CIBT has grown by 523%, reaching $58 million in revenue in 2012, largely through acquisitions and by collaborating with fellow academic institutions. It also refers and recruit students for its North American partners, which range from private primary schools to public universities. In all, Chu’s fast-spreading web of institutions serves more than 13,000 students today, almost 9,000 of them foreign.
A Hong Kong native who moved to Vancouver with his family when he was nine, Chu studied business administration and marketing at the city’s Langara College. In 1986, after several years as an operations manager for a large food distributor, he saw an opportunity in exporting PCs to China, where the burgeoning IT sector offered little competition. “China was not easy to do business in back then,” recalls Chu, 52, who speaks Cantonese and Mandarin. The computer business thrived, but he had trouble getting money out of the country. “You’d take a cheque to a Chinese bank and you could take out only US$10,000 a day,” he says. “I just thought, ‘This is not how I can sleep at night.’”
To teach Chinese employees how to use the PCs he sold, Chu ran a training division. He spun off an IT school called Canadian Institute of Business and Technology Corp., but low-cost competitors from India and other South Asian countries eventually undermined this effort. Still, Chu took note of the thirst for international business skills in a country increasingly opening its doors to foreign investment. So, in 1994, he repositioned his Chinese education venture as a Western-style management school and renamed it CIBT. To eliminate the worry about getting paid, CIBT required that all tuition fees be paid in cash up front.
That same year, Chu heard a radio ad for MBA programs and had a flash: Why not take a North American degrees to China? The very next day, he met with officials at what is now the City University of Seattle, and together they launched the first U.S.-accredited MBA program in China. Ten students were in the inaugural cohort. By 2000, CIBT had expanded the program to include overseas study, offering students two years in Canada, Australia, the U.K. or the U.S.
When the SARS virus shut down China’s schools, Chu saw the crisis as another opportunity. His response was the Global Learning Network, a videoconferencing-based system that CIBT now uses to deliver 20% of its programs to overseas students. By 2006, the company was the largest MBA program provider in China, Chu says. But with all of the company’s revenue coming from that increasingly competitive market, Chu realized it was time to diversify. “I saw the need to integrate career-oriented technical trade programs to complement CIBT’s business degree programs,” he says.
Chu decided to start bringing Chinese students to Canada. In 2007, CIBT bought Sprott-Shaw Community College, which has 15 campuses in B.C. At the time, Sprott-Shaw had very few international students, but Chu’s aim was to leverage ithe college’s long history and Canadian brand in the global marketplace. Over the next five years, Sprott-Shaw’s international revenue surged by 800%, to about $8 million. But its many foreign students lacked the English skills to excel in some of the school’s most popular programs. So CIBT purchased Canadian ESL specialist King George International College. “The two schools feed into each other,” says Chu, who figures buying existing schools minimizes the learning curve and ramp-up period when entering new regions or new program areas.
Today, CIBT operates in 18 countries, including Brazil, India and Jordan, but Canada provides the majority of its revenue. “By bringing the students to study here in Canada, we reduced our emerging-market risk substantially,” says Chu. CIBT has been using roughly 4,000 agents in 42 countries to recruit students for its schools and for partner institutions in North America—a pipeline that generates more than $25 million in tuition revenue for CIBT. But the middlemen cost CIBT $5 million a year; to make itself less reliant on them, the company has launched its own headhunter arm, which also earns placement fees for recruiting students for its partner schools.
Since last year, for example, the division has has been recruiting Chinese students to attend Minnesota’s Bemidji State University; in turn, the students’ U.S. counterparts can spend a semester teaching English at Weifang University, a CIBT associate in China. Bemidji’s goal is to internationalize the university so its students are globally astute, says provost Martin Tadlock. That makes CIBT the perfect partner, he adds: “There’s no way we could do this on our own.”
Next up for CIBT: the Richmond supercentre. Although Chu is still awaiting approval from the city, he hopes to finish the $150-million project in three years. Through a partnership with a real estate developer, the education facility will be complemented by a 600-bed dormitory located along one of the Metro Vancouver SkyTrain routes. Steve Lee, a semi-retired Vancouver realtor and property developer, is a partner in the supercentre. “We have demand from students, we have demand for dormitories and we have demand for campus space,” he says. “We can’t bring it to market fast enough.”
Terrence Wong, Vancouver-based vice-president at CIBC Wood Gundy and a major shareholder in CIBT, sees plenty of upside for the company, especially abroad. Africa will be the next education market to open up, he predicts: “As far as marketing education is concerned, the only limit is Toby’s imagination.”
Yet, despite CIBT’s brand and track record in China, and its rapid sales growth, “the company has yet to achieve profitability,” cautions Siddharth Rajeev, head of research at Vancouver-based Fundamental Research. “The entire education industry has been underperforming in recent times.”
Chu can’t argue with that. “With the global financial crisis, education budgets have gotten tighter,” he admits, with fewer Canadian students signing up. But still he’s confident that CIBT can more than double its revenue to $120 million by 2018. “There will always be more students,” says Chu. Ambitious parents in emerging economies guarantee it.