Foreign-owned agencies providing services for Chinese students hoping to study at universities overseas may soon be locked out of the Chinese market entirely as part of a government plan which will also strengthen supervision over domestic operators.

Chinese businesses have welcomed the move, though critics have claimed that it unfairly protects locally-based businesses.

The draft regulation, issued by the Ministry of Education on October 29, will allow provincial-level authorities to approve or reject licenses for domestically owned companies, while also requiring that they set aside an emergency 500,000 yuan fund ($80,100). They will also be subject to fines of up to 100,000 yuan if their fraud prevents customers from attending universities overseas.

However, it will also ban foreign intermediaries from entering the market entirely. It states that foreign agencies and their representative offices in China, foreign-invested enterprises and schools cooperatively run by Chinese and foreign parties, as well as individual foreigners, are not allowed to engage in any form of intermediary services in China.

Hu Benwei, executive director with a Beijing-based consulting center on intermediary agencies, said foreign-owned agencies had been increasing in number and "If students are cheated by them, it is difficult for the authorities to track down who should be held responsible." However, some Chinese operators disagreed, noting that foreign agencies also provide assistance to locally owned agents.

Local vs foreign

The Australian Broadcasting Corporation reported in July that New Zealand officials discovered that applications from 279 Chinese students contained fraudulent and forged content, and "China-based" agencies were to blame for the falsified information, which included tertiary qualifications and bank statements.

Of course, foreign agencies are also guilty of cheating students, but unlike domestic agencies, which are often the subject of tales of fraud on the Chinese blogosphere, a cursory online search of fraud by foreign agencies fails to yield significant results.

In one case, a Web user surnamed Huang said she lost two opportunities to study abroad in 2009 because of an Australian agency. She claimed that she lost the first opportunity because the agency did not send the offer with her signature back to the university she had applied for, although the agency insisted that they had. When she received an offer from a second university via the same agency, she was threatened and told to pay a fee for both applications, or risk losing the chance to get a visa.

Support for the measure

Unsurprisingly, domestic agencies are pleased with the news. They say that it will protect students from predatory behavior and facilitate supervision throughout China.

Hu's company is not an intermediary agency per se, it instead acts as an intermediary between potential students and the agencies by recommending reliable services. He told the Global Times that "a large number of unlicensed foreign agencies in China operate under the name of the enrollment office of a foreign university, which are even more deceptive, as it's often easier for agencies related to a university to win trust."

"Besides, some foreign chambers of commerce or cultural exchange associations also cheat their customers," said Zhang Weiyong, an overseas study consultant with the National Development and Reform Commission Training Center, who also used a Chinese idiom to describe the situation, by saying that these agencies were "hanging out a sheep's head but selling dog meat."

Zhang is also the chief technology officer of the American department at the Beijing Golden Orient International Educational & Cultural Exchange Centre, which essentially acts as an intermediary agency.

"Generally, those agencies offer two kinds of services: providing information on foreign universities and handling the student's application process," said Zhang, adding that the first service should be offered for free, while those who offer the second option should be properly licensed.

However, some subsidiaries of foreign agencies have managed to apply for licenses, by working with locals and having locals act as the legal representative. The Australia-based Dipont Education Management Group, which has subsidiaries in Chengdu, Changsha and Wuxi, has these outlets listed as licensed agencies by the Ministry of Education, despite the fact that the ministry specifies that only Chinese citizens can register for a license.

In defense of foreign agents

Wang Wanlong, an overseas study consultant and CEO of the California-based Wang Consulting International, told the Global Times that increased supervision would be sufficient, instead of a ban. "The ban, if passed, will go against the principles of fairness of the WTO," Wang said, adding that without these agencies which can be more knowledgeable when it comes to foreign universities, people applying to overseas schools may find that the situation becomes even worse.

Even domestic agencies sometimes rely on their foreign counterparts. An employee of a licensed Chinese agency said on condition of anonymity that her agency fears the ban could have negative ramifications.

"Some applicants ask us to help them with a change of university when they feel dissatisfied, and in these circumstances, we often seek help from those foreign agencies for their connections," she said, adding that the draft should provide more clarification on which agencies exactly will be banned.

Questions sent to the Ministry of Education on the draft did not receive any reply as of press time.