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New Zealand's 1.7 billion NZ dollars (about 1.1 billion US dollars) foreign-student industry is bracing for a tough time early next year after a dramatic slump in visa applications from Chinese students, according to officials.

New Zealand Trade Commissioner Grant Fuller was quoted Monday by New Zealand Herald as saying that there has been a "significant falloff" in applications from Chinese students.

About 20,000 new visa applications were made by Chinese students last year.

"I'm not saying it's a halving of the market, but it almost is," said Fuller.

"When I left Shanghai at the end of October, the trend was looking towards 11,000 to 12,000 this year."

He said universities are well-placed for next year, but the drop will affect private training providers, language schools and some secondary schools.

The high-profile collapses this year of two private New Zealand schools, Modern Age and Carich, combined with rising exchange rates and quality concerns have taken a toll.

Other nations such as Ireland, Britain and Canada are also trying to attract foreign students.

"It's becoming very competitive at a time when New Zealand's image in the market has taken a bit of a hit," Fuller said.

Foreign exchange earnings have risen by 50 percent a year, from 545 million NZ dollars (about 348 million US dollars) in 2000 to 1.7 billion NZ dollars (about 1.1 billion US dollars) last year, making education New Zealand's fifth-largest export industry.

Education New Zealand Chief Executive Robert Stevens described this year as "challenging," and said he expected the situation to get worse before it improved.

But there is confidence that plans to diversify the market from an over-reliance on Chinese students will work, he said.

High on the agenda will be proposals for greater regulation of the industry.

In February, a program of high-level university visits to China will begin, starting with a delegation from the University of Auckland.

Fuller said it was essential that the universities "lead that charge."

Eighty percent of the Chinese students coming to New Zealand have plans to obtain a degree from one of its eight universities.

"If New Zealand starts to focus back on quality students, quality relationships, building strong relationships with the Chinese government, then our future is very bright," he said.

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