Amid the outbreak of Covid-19, China’s Ministry of Education announced to prolong schools’ closure and rolled out policies to ensure the teaching activities in elementary and secondary schools will normally proceed. Eyeing such signals, education companies are actively responding, not only migrating offline to online but also doing their utmost to look for success at the battlefield of customer acquisition and paid user conversion.
Meanwhile, as the large offline gatherings, exams and after-school tutoring activities are suspended to contain the spread of the Covid-19, a variety of short-term demands stimulated in China’s education market such as E-testing and education services in terms of family relationships improvement. But whether the surging demands will become a long-run market opportunity, we need to wait until the end of the epidemic and make further speculation based upon its market size and economic model.
In this article, we will introduce some prominent points highlighted in the documents unveiled by the government during the prevention and control of the epidemic, spurring business growth in the education sectors analyzed below.
Online Education & SaaS Providers
In the online education track, few companies are profitable due to the high cost of customer acquisition. Although e-learning during the closure of schools is encouraged by the national government, the seemingly prosperous market still does not mean a pivot for participants to meet a turnaround. Amid the epidemic, a large number of online education companies have gained users by offering free content. But when it comes to the number of students actually taking the online course and parents subsequently paying for their main products, we are not optimistic about the outcome.
Although parents whose children are at K-12 learning stage are forced to embrace online education, they are still concerned over the learning effectiveness, pushing online institutions to make further effort in R&D of teaching resources and upgrade their teaching models. Actually, Wuhan Cloud Classroom and National Public Service Platform for Educational Resources can just be regarded as e-learning via video courses and dual-teacher model with large-size class, which always have inherent drawbacks.
Plus, as we mentioned in the previous article, if institutions lacking experience in online teaching just hastily pivot their business, poor quality of online products will inevitably harm their brand image. But if not the epidemic impact, OMO (online-merge-offline) will still be an inevitable trend for facilitating user experiences in the long run. The coronavirus crisis actually accelerates natural selection in the education industry.
In such an industrial context, JMDedu believes that the epidemic still brings potential opportunities to some sub-sectors of online education. Specifically, major national exams have been postponed during the coronavirus outbreak such as the follow-up progress of 2020 China’s Civil Servant Exam and 2020 national postgraduate entrance examination, which may disrupt the career plans for many candidates. And many companies have to reduce headcount due to the economic losses caused by the epidemic, leading to more employment pressure in society and more fierce competition in the next year’s exam.
When we look at tutoring institutions focused on national major exams prep, currently they are concentrated in offline business with a lack of online infrastructure and awareness of online services, thus online education institutions in this track will see more chances.
At the same time, the government is calling for plans from social enterprises in order to better organize students’ online learning amid the prolonged closure of schools, providing some business opportunities for SaaS providers of online education. As of January 31, more than 10,000 colleges, secondary and primary schools covering 5 million students have introduced DingTalk’s live broadcast platform for teaching and learning activities amid the epidemic. In addition, many providers like ClassIn and EduSoho have provided users with free access to their products.
But from the perspectives of both teachers and students we have interviewed, third-party software is regarded as burdens because they need to download new apps and keep an eye on whether there is new information posted. So Tencent’s QQ as a popular social networking tool with abundant functions is favored by teachers without any concerns about privacy disclosure or any other issues. Moreover, China’s educational SaaS market is still not ripe with the challenges caused by product homogeneity. The demand amid the epidemic also attracts some platforms which do not cover education business to provide technical support to live broadcast lecturing, but they need to think about how to retain customers after this critical moment.
Despite the delay for students who are going to study abroad, IELTS, TOEFL, and GRE in February and March has been canceled in mainland China as one of the comprehensive measures to prevent spread of coronavirus at all public venues, which may also pose great threat on China’s offline language learning track, as well as the agencies providing services in terms of studying abroad.
In this case, language E-testing services such as Duolingo English Test, which has been accepted by many top universities worldwide, will attract more students to sign up due to its lower price and more flexibility compared to offline IELTS and TOEFL tests.
Also, the outbreak of epidemic has hindered the recruitment process for companies to conduct offline face-to-face interview. ToB solutions to address this issue are also favored by the market. As a top player in this sector, ATA(全美在线) has offered free service including e-testing and online interviewing, supporting employers to conduct their interview process by text communication, voice or video calling via the video technology-based platform.
In addition, postpone of several offline qualification certificate exams is a reminder for companies to reflect on its long-term interview model. Perhaps this kind of time-saving and labor-saving evaluation approach will become a main trend in the future.
Parenting Education Service
The Chinese government has asked people to avoid going to crowded places to prevent and control the epidemic, therefore parents need to quarantine themselves at home and kids should also study at home, triggering more domestic conflicts among different generations living in a limited space for a long time. This kind of situation has also drawn authority’s attention. On February 16th, MOE issued two documents for both parents and children group, providing some advice on the relationship improvement.
Li Xue, deputy chief physician of Pediatrics at Peking University Sixth Hospital, mentioned in an interview with China Youth Daily: “ Problems between children and parents are always existing, which is not just driven by the quarantine amid the outbreak of novel coronavirus.” But we cannot deny that the epidemic has made the conflicts more prominent.
When China’s 80s and 90s generation give birth to a baby, they have totally different education mindset from their parents that freedom, equality, respect, and happiness have become the keywords, and they are no longer bystanders of school education. According to “2016 China Parenting Education Report” co-published by China Children & Teenagers’ Fund and Family Education Research Center of Beijing Normal University, about 87% of parents said that they had ever been anxious in family education, of which nearly 20% had moderate anxiety and 7% had suffered from severe anxiety.
At the current stage, over 300 million families in China are facing challenges in parenting education and the spending on this demand has been increasing year by year, apart from doing some activities with their kids at offline institutions, parents are looking for new approaches to optimize their role in children’s growth.
With the popularization of online education mindset, leading companies have begun to tap into the parenting education market and sought for monetization with the main form of knowledge payment. Businesses focusing on parent-child reading, swimming, as well as traveling have witnessed rapid expansion during the past years. Statistics from EduInsight show that from 2013 to 2019, 63 parenting education-related programs have closed 438 deals, of which 4 deals have raised more than 100 million yuan respectively.
But the development of China’s early childhood education sector is still at the initial stage, it is predicted that an industry reshuffle will take place when the market rules are implemented. Moreover, we believe that the outbreak of novel coronavirus will also spark further industrial upgrades. Players in parenting education should attract investors and consumers by standardization and content resources on the basis of professional knowledge.
In the past few years, although many projects have failed because of uneconomical models, there are still many players covering parenting business aspiring to stand out. Due to the epidemic, offline childcare institutions are closed so that parents are eager to find the best way to educate and accompany their kids at home, so we believe that online parenting education services will usher in a burgeoning period in a short term.