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Table of Contents
List of Tables ............................................................... 3
List of Figures .............................................................. 4
Abstract ...................................................................... 5
The Internet Giants Enter the Fray ............................................. 6
Surge in Private Investments to eLearning Companies in China ...... 8
Sources of Data on the China Mobile Learning Market ................. 10
Primary Catalysts ............................................................. 11
Large-scale Learning Technology Deployments .......................... 12
Massive Academic Content Digitization Initiatives ....................... 14
High Demand for English Language Learning Courses ................. 16
Consumer Demand for Online Test Prep Products ....................... 18
Booming Enrollment in Online Education Across All Segments ...... 19
Rapid Adoption of eLearning in Early Childhood Learning ............. 21
What You Will Find in This Report ....................................... 23
Who are the Buyers? .............................................................. 23
What Are They Buying? ........................................................... 27
Related Ambient Insight Research ...................................... 33
List of Tables
Table 1 – eLearning Companies in China that Obtained Funding
in the First Three Quarters of 2015 (in US$) .................................... 9
List of Figures
Figure 1 - Primary Catalysts Driving the 2015-2020 Self-paced
eLearning Market in China ........................................................... 11
Abstract
China is the second largest Self-paced eLearning market in the world after
the US. Revenues in China will reach $5.7 billion by 2020, down slightly
from $5.8 billion in 2015. The compound annual growth rate (CAGR) is
negative-to-flat at -0.3% and revenues will remain steady over the forecast
period.
The growth rates for Self-paced eLearning are only negative in two buying
segments: consumer and PreK-12. Those are the two segments with the
highest rates of Mobile Learning adoption, which is cannibalizing eLearning
sales. The positive growth rates in the other four segments are keeping the
eLearning revenues steady in China.
As impressive as this looks at first glance, there were 1.4 billion people
(19% of the world's population) in China as of September 2015. A mere
11% of the population has access to eLearning so far and the demand is
quite high, pointing to breathtaking revenue opportunities for eLearning
suppliers in spite of the overall flat growth rate.
One trend that is unique to China is the high demand for digital early
childhood learning products. While there is a demand for these products in
some developed countries (particularly in Japan, South Korea, and the US),
the scale of the demand in China is found nowhere else in the world.
There are two other significant trends in China's eLearning market: the
The steady proliferation of online education startups (and a spike in funding deals
demand for Self- made with them) and the growing number of large Internet companies
paced eLearning entering the market. Prior to 2014, large Internet companies tended to
products in China
invest in online education companies and in relatively small amounts; in
has attracted
suppliers and 2014 they started acquiring them and now compete directly in the market.
investors from
across the globe. There is been a spike in the number of online education startups in China
The domestic that began in earnest in 2011. According to an April 2014 article in The
suppliers are China Times, over 1,000 new online education companies opened for
attracting the business in China in 2013 alone. According to BANC Business Research,
highest there are now over 6,000 eLearning companies in China. These companies
investments.
tend to focus on specific buying segments.
Baidu is the largest search engine in China. In August 2014, Baidu entered
the eLearning market in China when they acquired the Chinese online
education platform Chuanke.com. Baidu had invested $10 million in
Chuanke in 2012.
Baidu has been investing in online education companies for the last few
years and continues to do so, even though they now sell directly to buyers.
In September 2014, Baidu invested $10.6 million in a new startup called
SmartStudy, which sells eLearning test prep courses for standardized
English tests.
Tencent, the largest online mass media company in China, started offering
online courses in late 2013. In April 2014, they launched Tencent
Classroom "an e-learning center that offers exam-oriented courses in
language study, skill training and certification, as well as a few lessons for
primary and high school students." By August 2014, they had attracted
over 34 million users.
Domestic firms serving the consumer segment in particular are now gaining
large numbers of visitors and attracting a significant amount of private
investment.
The most active investors in online education in China in 2014 and 2015
were the venture capital firms DCM, Shunwei, Weitoulu, Gobi, ZhenFund,
Matrix, and IDG. The largest corporate investors were Qualcomm, Xueresi,
Bertalsmann, Baidu, and NetEase.
In just the first three quarters of 2015 alone, over $1.3 billion was invested
in Chinese learning technology companies and $359.9 million of that
funding went to Self-paced eLearning suppliers. There were 36 deals made
in China in the first three quarters of 2015; 13 of the deals were made with
eLearning companies.
caters to students of all ages, although the majority of their students are
young working professionals.
The financial reports from all these companies provide detailed cross-sector
information about the inhibitors and catalysts in their particular product
market and buying segment.
The top source for the commercial education technology market in general
in China is an edtech news website called JMDedu.com. "We observe the
dynamic development of the edtech industry, discover inspiring companies
and products, interpret policy change and market trends." They also track
private investments made to learning technology suppliers in China.
Primary Catalysts
The most significant catalysts in China driving the sales of Self-paced
eLearning products are:
The agency said the "online economy accounts for seven percent of GDP,
up from 3.3 percent the previous year." Internet retail sales were up a
stunning 55.6% in 2014 compared to the year before and online sales
reached over $53 billion.
In June 2015, CER reported that first quarter revenues in 2015 increased
by 39.1% with the online products growing by 51.9%. In collaboration with
China's education administrators and experts, China Education Resources
has been helping to transform the curriculum of the world's largest
educational system."
The telecoms and mobile device makers are active in the learning
technology industry in China. Korea-based SK Telecom has garnered
several large contracts to deploy learning technology to the schools in
China. "In June 2014, South Korea-based SK Telecom announced a deal
with China’s Zhongqing Group to provide SK Telecom's T Smart Class
platform to 1,300 schools in China. Zhongqing Group provides education
services to over 20,000 schools across China and is the third-largest
education software provider in the country.
Huawei is one of the largest telecoms and device makers in the world and
has a turnkey learning platform called the Huawei Distance Education UC
China Mobile Solution designed for higher education institutions. Huawei's solution is
operates the endorsed by the Ministry of Education's Department of Higher Education
largest PreK-12 and is currently deployed at the College of Peking University, Tsinghua
educational University, and the College of Beijing University of Post and
network in the Telecommunications.
world. The web-
based platform is
In February 2014, Singapore-based Popular Holdings launched their e-
used by over 22
million students in Smart platform in Hong Kong. "This cross platform learning management
China. system is designed for primary schools. It is a customizable, flexible and
comprehensive platform allows schools to manage assignments, customize
curriculum and track student performance and competency in the new e-
learning era." Popular also has offices in Beijing and Guangzhou.
In May 2014, the second national higher education network called the
MOOC Platform of Chinese Universities launched in China. The portal was
built by a company called icourses.edu.cn and NetEase (one of the largest
IT firms in China) and has the cooperation of 19 universities in China. At
launch, there were 56 online courses.
The Chinese Ministry of Education operates a portal for teachers called the
National Network Training Platform for University Teachers. Ambow
Education, a commercial eLearning supplier, developed the portal.
The demonstration school initiative involves a great deal more than porting
print textbooks to eTextbooks. It also includes an end-to end infrastructure
overhaul and the installation of learning technology and interactive digital
content. The initial demonstration schools were selected in 2012. In 2013,
the most successful were designated as "model" schools and are now the
digitization blueprints for the rest of the schools in the country.
There are four major catalysts driving the current digital English language
learning market in China:
One interesting result from the survey was the age children are introduced
According to the
Chinese National
to English. Just over 47% of children were between the ages of 3 and 6
Statistics Bureau, when they were first introduced to English. Out of all PreK-12 students
"73.8% of primary taking English, the largest cohort was three-year old children at 16.2%.
school students and
65.6% of middle There are over 50,000 English language schools in China and over 90% are
school students private institutes (companies). They are heavily concentrated in
participate in extra- economically developed areas such as Beijing, Shanghai, Guangzhou,
curricular Chengdu, Shenzhen, Chongqing, and Wuhan. They are becoming a
educational
significant reseller channel for commercial digital English language learning
programs."
products.
Hujiang reported In March 2014, New Oriental's CEO stated in the press that "80 percent of
that they had 3 New Oriental's trainees are kids between four and 10 years of age, as well
million active paying as students preparing to go abroad for further studies. The remaining 10 to
members and 70 20 percent are candidates for the National College English Test (CET) Band
million registered
4 and 6."
members "made up
primarily of young,
white-collar The private language schools buy language learning labs and use the
workers, many who software as supplemental content used in tandem with their classroom
work for foreign- instruction. The language learning lab suppliers often partner with
owned enterprises". commercial language learning suppliers for the content in their labs.
Finland-based Sanako has a subsidiary based in Shanghai and is the
leading language lab supplier in China; they resell the digital content from
Oxford University Press.
Pearson also delivers English language learning directly via their Wall
Street English business, which consists of over 530 learning centers. In
July 2014, they reported that their student base had grown 6% in the first
half to reach over 65,000 students.
The largest test prep firm in China is ATA. "ATA aims to become the world’s
biggest exam training provider that focuses on government, industry,
company and personal exam businesses."
The demand for test prep has created a spike in the emergence of online
test prep startups including, SmartStudy, Kuailexue, Yuanti Ku, and
Xingshuai Teach.
Yuanti Ku offers a wide range of digital test prep for standardized exams
including the Gao Kao, "administrative aptitude tests, essay tests for civil
servants, entrance exams for postgraduates, first-level constructor exams,
law counselor of enterprises exams, junior accountant exams, and
securities qualification exams."
Consumers are not the only buyers of online test prep in China. China
Chuanglian Education is a training company that focusses on civil servant
certification. In 2013, they aggressively migrated to online education via
acquisitions of Housden Holdings and of CL Education Limited. "The
Company expects that the online education business has vast potential and
will further broaden the revenue source in near future."
Traditional training
companies are
moving fast into
eLearning. Booming Enrollment in Online Education Across All
Classroom-based Segments
providers like
Beijing Juren Enrollment in online education is booming in all the segments in China from
Education Group preschool to professional education. The wide spectrum of eLearning
and Longwen adoption is unique in the world.
Education launched
online spinoffs in In July 2013, Yu Minhong, chairman of New Oriental Education, stated in
2013, each
the press that "online education will account for 40% of the private
investing over $8
million in their new
education market in three to five years, from 10% now." As of August
startups. 2015, 22% of all education spending in China was for online education.
Until early 2014, the Chinese Ministry of Education had to officially approve
online degree programs and did not allow foreign firms to grant online
degrees in China. As of 2014, 68 universities in China have dedicated
online learning institutes. The government suspended the approval
mandate in January 2014, making it easier for institutions to go online.
In BAIOO's recent financial statement, they reported that they had 56.2
million active users in the first half of 2014, making it the largest
educational portal in the world. They are already a $90 million business
and growing by a brisk 35% a year.
There are over 200,000 kindergartens (up from 134,000 in 2008) in China
and over 70% are private. In fact, the preschool segment is so
By the end of 2014,
commercialized in China that the schools are often referred to as
there were over 32
million children in "preschool educational stores."
kindergartens in
China. This is out of Even the public kindergartens charge tuition in China, although at rates
a cohort of 71 vastly lower than the private schools. This is because the government pays
million 2-5 year olds the teacher salaries in the public preschools, but not in the private
in the country. preschools. The government provides facilities for both private and public
preschools, although the large chains operate their own facilities.
three-year action plan with the goal to increase enrollment to 60% by 2014
and pledged "to build new preschool facilities, enhance and scale up
teacher training, provide subsidies for rural families for access to early
learning opportunities, and increase support for private early childhood
education centers."
RYB Education, Oriental BabyCare, Gymboree Play, and Music are some of
the leading commercial brand names operating in the private kindergarten
market. A significant number of publicly-traded kindergarten chains are
also prominent in China including Huijia Kindergarten and Hong Huanlan
Education Group.
RYB Education is a large preschool chain in China and licenses content from
US-based Scholastic in their preschools across China. Singapore's Popular
Holdings has preschools in several major cities in China and licenses digital
English language learning products from the BBC for use in their preschool
language learning centers.
In October 2014, US-based Kids ‘R’ Kids, a preschool chain with 157
preschools in the US, announced their expansion into China. The preschool
franchise "is poised to open its first international location in Shanghai at
the beginning of 2015 with nearly a dozen more schools to follow
throughout the course of the year."
Kids ‘R’ Kids makes extensive use of learning technology in the classrooms
and provides individual Computer Learning Centers in every school, which
are equipped with "the latest multi-touch screen technology and
educational software for development in a safe, child-directed learning
Consumers
Corporations & businesses
PreK-12 school systems
Higher education institutions
Federal government agencies
Local and provincial government agencies
While the growth rate for eLearning in the consumer segment is distinctly
negative at -7.3%, consumers are still spending significant amounts of
money on self-paced products. Consumers spent over a billion dollars on
self-paced education products in 2015. That said, consumers in China
increasingly prefer mobile education products.
In August 2015, the CFO of New Oriental made this statement about their
online learning portal Koolearn.com "The number of registered users
increased more than 67% year over year and the number of paid users
increased over 138% year over year. The number of cumulative registered
users has reached more than 10.7 million."
The central Chinese government and the provincial governments fund the
majority of public PreK-12 and higher education spending on learning
technology. For clarity's sake, this report includes the spending made in
the academic segments (including teacher training) by the government in
the two academic sections of this report. The forecasts in the federal
government section are expenditures made by the government for
employees, military personnel, and public safety personnel (China has a
national police force.)
There are over 230 million students and 14 million teachers across China's
520,000 primary and secondary schools. While the federal and municipal
governments provide the majority of digital content mapped to the central
curriculum to the schools, there are huge opportunities for commercial
suppliers with supplemental content, particularly IT training and language
learning content.
Parents pay for the textbooks and instructional material used by their
children in the schools. Parents spend an average of $320-$480 per year
per child. The federal government issues a list of approved textbooks every
year. The list issued in October 2014 was the first time eTextbooks were
included. The cost burden for digital educational content will gradually shift
to parents during he forecast period.
There were over 2,800 authorized private and public universities in China
by the end of 2014. There are over 700 private higher education
institutions in China and the number of private institutions is growing by
over 5% a year.
The number of enrolled higher education students has increased six fold in
the last decade to over 33 million students, the largest higher education
system in the world. By the end of 2014, 16% (5.28 million students) of
higher education students in China were online students.
Previous to January 2014, one major inhibitor for online education products
in the higher education segment was the law in place requiring institutions
to gain government approval for their online programs. This was a lengthy
The government agencies set the curriculum for the vocational schools with
input from local businesses; they have shifted away from agriculture and
industrial training to programs that map to the jobs skills in the highest
demand. These skills include finance, IT, energy, tourism, healthcare,
construction, languages, and teaching. These schools are increasingly
buying commercial eLearning products, particularly for language learning
and IT.
The defining
characteristic of
Self-paced
eLearning is the
pedagogical
structure imposed Despite the migration to Mobile Learning content, consumers accounted for
by formal the second-largest spending on self-paced educational content in 2015 in
instructional design China and a breakout for ten content types is included in the consumer
and systematic section:
development of the
digital courseware
IT-related courses
products.
Language learning
Early childhood learning
General academic courses (including supplemental and remedial)
Standardized exam and test preparation courses
Hobby and instructional "how to" guides
Medical, health, wellness, and fitness courses
Business and finance
Licensure and certification
Training and professional development
The growth rate for retail packaged eLearning in China across all buying
segments combined is negative-to-flat at -0.7%. This means that revenues
will remain steady over the forecast period.
Across all six buying segments, the growth rates for retail packaged
content and tools and platforms are negative. In contrast, the growth rate
for custom development services is positive at 2.3%, yet the growth rates
vary considerably for each of the three product types in each buying
segment.
now offers a range of online options for corporate and government buyers.
Wall Street English has dozens of international corporate clients sending
employees to English lessons, both physical and online. Wall Street English
also serves the government segments and customers include the Ministry
Private language of Education and the Ministry of Commerce.
schools, universities,
and PreK-12 schools
buy commercial The adoption of eLearning in the government and corporate segments has
language labs that created a demand for custom content development services in those
come pre-bundled segments. Higher education institutions tend to build their own content in
with self-paced house and except for a few private schools, the PreK-12 schools license
language learning commercial content mapped to the government curricula.
software.
Pearson bought GlobalEnglish in May 2012, a language learning company
that specializes exclusively in providing custom online business English to
corporations. GlobalEnglish has corporate buyers across the globe including
China. The acquisition increases Pearson's reach in the corporate segment
of China.
There is only one buying segment with a negative growth rate for packaged
eLearning in China and that is the provincial and local government
segment. The content needed in this segment has to be highly customized
(particularly in the local vocational schools that need content that maps to
the local businesses). It is no surprise that this segment has the highest
growth rate for custom content development services.
In China, the government stipulates that the aviation English courses map
to the language proficiency criteria set by the International Civil Aviation
Organization (ICAO). By law, as of 2008, all pilots and air traffic controllers
working in China must pass the ICAO aviation English test.
DynEd's Aviation English courses are used by China Airbus, Air China, and
BeiHang Flight College. China Eastern Airlines is a Wall Street English
customer. Aviation English Asia is based in Hong Kong and sells an Aviation
English Online course mapped to the ICAO.
There are only two buying segments with positive growth rates for
eLearning authoring tools and learning platforms: the PreK-12 and the
provincial/local segments. While the demand for eLearning in the corporate
and federal government segments are relatively high, there are very few
Chinese companies and federal agencies that maintain in house digital
content development and training departments; hence there is little
demand for tools and platforms.