For many the United Kingdom’s vote to leave the European Union was unexpected. Though how Brexit will actually work and what will happen is unknown at this stage, one obvious result has been the collapse of the pound sterling.
The British pound hit a 30-year low against the US dollar, and the value of the pound against the Chinese yuan also dropped by almost 10 percent to a historic low on June 24. Currently the exchange rate of the pound to the yuan is 1: 8.9 – on June 23 it was 1: 9.71.
The dramatic depreciation of the pound has caused a stir among Chinese in China and in the UK. While some are unhappy about the result and have lost financially, others have seen the Brexit vote as a positive move and have applauded the depreciation of the pound. Like Qu Xinyi, a 22-year-old graduate from University of Shanghai for Science and Technology, who is about to take a master’s course in Journalism at Cardiff University in Britain in September.
Followed the news
Qu said she hadn’t expected Britain to leave the EU. “I kept following the news on the referendum, and most mainstream media in Britain and in China indicated that most would vote to remain,” she said.
Though the result was a surprise to her, it has been advantageous. Qu told the Global Times that her tuition and accommodation fees had dropped by almost 10 percent with the exchange rate.
“My tuition fees are about £15,000 and my accommodation fees for the year are about £5,500 which would have been worth 198,850 yuan ($29,892.73) before Brexit,” Qu said. “But now I only need to pay about 180,400 yuan – around 20,000 yuan less.”
Her attitude was echoed by 22-year-old Duan Xiaoyun who is going to pursue her postgraduate studies in Finance and Investment at University of Leeds in September. Duan said her year-long master’s course was quite expensive – her tuition fees alone were about £20,000 and she also needed to find about £6,360 for accommodation. Because of the dramatic depreciation of the pound last weekend, she now could save up to £2,500.
“I am happy that I didn’t change my yuan into pounds before the referendum,” she said.
Qu said many of the Chinese students going to study in the UK were concerned about the exchange rate.
“I joined a WeChat group of Chinese students going to study in the UK. While British media were updating the voting results, my peers in the WeChat group were updating the exchange rates. Many of them were cheering as they watched the pound drop.”
No lifestyle change
However she did admit that the decrease in the cost of tuition and accommodation didn’t really matter a great deal to her and she would not be changing her lifestyle when she moved to the UK.
“The depreciation of the pound could also result in inflation in the UK, so the living expenses for overseas students might also increase,” Qu said.
She is concerned that British universities might increase their fees for foreign students to counter the pound’s depreciation. She said one of her friends has already been told in an e-mail by her UK university that her fees would be increased.
Wang Lu has been helping Chinese students enroll at British universities for four years. She is the UK department manager at Vision Overseas, one of the largest foreign education service providers in China. She agreed that students about to study in the UK this year could have an advantage with the depreciation of the pound.
“Studying in the UK usually costs a Chinese student 300,000 yuan, and now with the lower exchange rate, every student can save up to 30,000 yuan,” Wang said.
Wang said some students had been so overwhelmed by new exchange rates that they had converted all of their study and accommodation fees into sterling after the referendum. But she warned that these benefits for Chinese students wouldn’t last long. “If Britain is certain to leave the EU and the value of the pound remains low, British universities will probably increase their fees,” she said. “Prices in the UK could also rise gradually.”
According to a 2015 report by the New Oriental Education and Technology Group, a major provider of private educational services in China, the UK is the second most popular destination for overseas education for Chinese students. Online statistics show that there are currently about 150,000 Chinese studying in the UK.
Travelling and shopping
The depreciation of sterling is not only good news for students but it’s cheering news for Chinese people wanting to travel and tour Britain.
Chen Bei (pseudonym) is a 26-year-old middle-school English teacher in Hangzhou, Zhejiang Province. She had originally planned to go to America for her two-month summer vacation, but, after the referendum, she changed her mind and will now tour the UK.
“The value of the pound dropped to a historic low, so with the same amount of yuan, I can get more pounds and this saves on air tickets, travel and accommodation in the UK.”
Wang Xiaosong, the chief executive officer of http://www.lvmama.com/, a leading e-commerce travel agency, told the Xinmin Evening News that the big drop in the value of the pound was encouraging more Chinese to travel and shop in the UK.
He said there had been a 40 percent increase in the number of people booking traveling packages to the UK in this July and August on his website compared with the number in 2015. Apart from lower travel fees, the depreciation of the pound also offers bargain shopping for British products. Chen said she had always wanted a classic Burberry trench coat but hadn’t bought one because of the cost. With the new exchange rate in place she can now afford one.
“The depreciation of the pound means that all products sold in the UK are 10 percent cheaper for Chinese buyers,” she said. “The trench coat I want costs £1,195 pounds on the official website. It cost me about 11,472 yuan before the referendum, but now I can buy it with about 10,500 yuan, saving about 1,000 yuan.”
Chen said the exchange drop also coincided with Britain’s annual summer sales. “The low exchange rates alongside the big discounts makes me excited about the trip there in August. I’m afraid I might buy too many bargains and won’t be able to bring them all back to China,” she said.
Keeping a secret
Some of Chen’s friends have already asked her to purchase high-end skincare and cosmetic products and luxury handbags for them. “I am trying to keep my travel plans secret. If too many friends and relatives know they will probably want me to do some shopping for them.”
Like Chen, many Chinese online shoppers cheered at the low exchange rates after Brexit. On Sina Weibo, one of China’s most popular social networking platforms, some Chinese netizens reported making a lot of new orders on British e-commerce platforms like Beauty Experts and Mankind immediately after the pound tumbled.
And some Chinese online retailers used the lower exchange rates as a lure to attract customers to British products. Tmall International, Alibaba’s platform for cross-border commerce, is offering many British products at a new “Brexit price” – at least 10 percent lower than the former price. Though Brexit may have made education, travel and shopping in the UK more affordable for Chinese people, it also brought unexpected and major losses to some.
Jiang Ru is in her early 20s and moved to the UK three years ago to study. She has just graduated from the University of Glasgow in Scotland, and works as an editor in London. She and her husband bought a property in Britain and paid the deposit in June. Both she and her husband had thought Britain would remain in the EU, and that the pound would rise in value after the referendum so they asked their families in China to change a large amount of yuan into pounds before the referendum.
“We lost a lot of money,” Jiang said. She is unsure whether Britain’s real estate market will be adversely affected by Brexit but said if property prices went down, they would lose more.
Apart from financial concerns, Jiang is also worried that Brexit might make it more difficult for Chinese to get work visas in the UK.
“My husband works in finance in London. Most of his company’s business is related to Europe, and most of his colleagues are Europeans,” she told the Global Times. “Because of Brexit, those European employees might also need work visas like Asians in the future. But the number of work visas issued every year is limited, and this means that the competition for work visas between Europeans and Asians could be fierce.”
She said many British companies had businesses in Europe, and preferred employees whose native languages were French, Spanish or German.
“Because most Chinese don’t have a good grasp of these languages, they tend to be at a disadvantage when competing with Europeans for UK work visas,” she said. Though Jiang has concerns about her financial and social situation in the UK, she does not plan to leave. “My husband and I just graduated from university. If we go back to China now, our salaries will be much less than we can earn in London,” she said.
She said most of her Chinese friends there don’t seem concerned about the future of Britain. “It will be two years before Britain really leaves the EU, so currently we didn’t feel any difference. And potential issues like inflation has not happened.”