Introduction: since early August, JMDedu has been launching a two-month national tour across China as a part of events to promote the upcoming GET2020 Summit(Global Education Technology). We aim to network local education companies through seminars with various themes and investigate several key cities' market environment.
In the last piece, we share exciting insights from the first seminar in Taiyuan, Shanxi province, talking about the education and training sector's environment in Taiyuan and China's education industry's future pattern.
In this article, we will introduce the environment of the education industry in Xi'an, the ancient capital of thirteen dynasties, and then look into how local education institutions should move towards the online education business.
2020 is a pivotal year for the development of online education since 2014. The sudden outbreak of the epidemic has caught those education and training institutions whose business is mainly offline unprepared. Some have been kicked out of the battlefield, some rushed to shift everything online, and some harvested lots of traffic and achieved rapid revenue growth.
On August 15, JMDedu held our second seminar in Xi'an, Shaanxi province. Xi'an is famous for its world-class historical and cultural resources. It has grown into a “web celebrity" in the global tourism market, known for the perfect integration between the history and human civilization with the modern city.
But how can local education institutions approach online education in the ancient millennium capital? Questions such as “What kind of online education model fits you?", “How should offline education companies embrace doing business online?", and “How to spend wisely on carrying out online education?" were discussed.
In the earlier years, Xi'an received a tremendous investment in infrastructure, higher education, and hi-tech industries as China's government decided to make Xi'an a center of the aviation industry, which led the ancient cultural city to become the most industrialized city in northwest China. It is the only city in China with a complete industrial chain of aerospace system, with superior in spacecraft carrier power, significant satellite payload and application on the ground, impeccable space measurement and control capability, and sufficient human resources and innovation. Xi'an National Civil Aerospace Industrial base, inaugurated in 2006, targeting aviation industry clusters and national strategic emerging industries, has become China's largest national civil aerospace industrial base.
Besides, Xi'an has abundant educational resources, with the most significant universities' density and the largest number of people receiving higher education in China. There are seventy-five colleges in the city, and 7 of them are first-class. Despite many graduates from colleges, they settled in apart from where they studied and sought out career opportunities in other more dynamic cities for decades.
To meet the challenge of increased development in human resources, Xi'an has been implementing strategies to snatch talents. Since March 2017, it has successfully issued a pack of policies and measures, such as the “unprecedentedly loose" new policy on household registration and 23 new talent introduction policies. Nowadays, more graduates are willing to enjoy the brilliant job prospects in Xi'an, and the city is attracting an increasing number of entrepreneurs to start up their business here.
As the center of Northwest China, Xi'an, which possesses many human resources and high purchasing power, has become the foothold of education companies who want to expand their business layout in non-tier one cities.
What sets Xi'an's K-12 education different? For most provinces and cities in China, public schools are ranked higher than private schools. However, the top five middle and high schools are private in Xi'an, which gather the best teachers and students across the province. Each of them has excellent hardware and facilities, and the college entrance examination scores are excellent. Therefore, these schools are the main targets for parents and children to compete in primary and middle school entrance examinations.
Now let's look at the after-school training sector in Xi'an. It initially arose in the late 1990s, aiming at students with poor academic performance. At that time, most of the training institutions were set up by retired teachers. Teachers could earn RMB1 for one hour class and RMB70 cents per hour for substitute lessons in the school. However, in the training institutions, they could obtain RMB80 for two-hour classes.
Starting from 2003, some university-affiliated schools and private schools began to thrive. Many famous principals and teachers who retired from public schools joined private schools and became the leading force for running those schools.
After 2008, private schools began to stand out. While studying Mathematical Olympiad in the after-school tutoring institutions was hotting up, extra-curriculum training institutions became a kind of rigid demand for school education instead of a supplement. The students in training institutions were stratified, and there were super top classes, especially receiving students from five famous schools.
Till two years ago, the extra-curriculum training sector was still in vast chaos. As being considered as profitable and profiteering, the educational training sector attracted all kinds of people to come into this battlefield, such as bank staff and coal owners. Thus, four ministries and commissions of the state have jointly carried out special governance actions on off-campus training institutions. With the governance, the “barbaric growth" of after-school training institutions is sort of effectively curbed but still a long way to go.
Initially, Dong Wang, the founder of Yixuanyuan and Hixiaowo, was not optimistic about online learning. In 2005, Dong started an education-related business from offline children's English training. One year later, he set up an offline kids weiqi(Chinese chess) training institution in Xi'an, i.e., Yixueyuan, which now has 60 directly-operated stores nationwide. Until the second half of 2017, he was still unwilling to try online mode and disliked virtual learning.
With the Internet changes all facets of life and society, he has a new understanding of “Internet + education". In 2018, he created Hixiaowo, an online children's weiqi training institution, with 8000 students currently studying. In the educational industry seminar, he deemed that the Internet would transform education as much as retail, advertising, and payment methods within ten years. “We tend to overestimate what will happen one year later and underestimate what will happen ten years later." In his view, the Internet is not unable to change education; it just has not started yet.
Dong divides the changes brought by the Internet into three steps. Going online, becoming intellectualized, and forming networks. In the first step, we collect users' feedback. In the intellectualization step, we use feedback to optimize users' experiences continuously. The last one is to construct an ecosystem that incorporates platform and business.
Meanwhile, Dong introduced two types of online education present at the market: one is to achieve online sales, online classes, and online services; the other is to prepare for becoming intelligent and networked. In this regard, he said, online is just a process, not a goal. He suggested that educators should focus on the latter rather than treat online as a destination.
“The experience and result from online education will certainly surpass that of offline education." From his perspective, the change of the Internet on education has just started.
Concerning education moving online, Xiaolei Zhang, Chief Strategic Officer of Qinxue education and head of class, does not fully agree with Dong Wang. “As long as there are differences between online and offline, there is room for [offline insitutions] to survive," Xiaolei claimed.
As a leading regional institution in the K-12 educational training field, Qinxue Education has been rooted in Xi'an for many years. Faced with K-12 large-sized online class competition, Xiaolei admitted: “they will take some students, but not all students."
He pointed out that the high cost of user acquisition is still an issue for large-sized online classes. And there are noticeable differences between online and offline regarding teaching, service, and experience, reflecting each one's advantages and features. “Different strokes for different folks," said him.
Additionally, Xiaolei introduced three K12 online education modes: one-on-one, small-sized classes, and large-sized classes. He showed that one-on-one faces the “double-high" problem - high customer acquisition cost and high teacher cost, while small classes often encounter difficulties in teacher recruitment. For large-sized classes, the teaching quality and effectiveness are relatively low and equipping sufficient homeroom is necessary, which would result in lots of pressure on labor costs.
How should education companies in the K-12 field embrace online education? Xiaolei believes that recording broadcast classes is a feasible scheme. In his opinion, the marginal cost and customer unit price are lower. It is also easier to operate and can be tied to other products' sales, compared to live-streaming classes where we should consider the cost of developing and maintaining the live broadcast system.
“Strategy is number one," Xiaolei suggested that we should deliberate its development in the future no matter which model to adopt.
The repeated and ongoing epidemic is regarded as a “life-or-death test" to educational training companies. Chujiu Mei, the founder of JMDedu said at the seminar, “it is hard to be sure, but it's okay on the whole"
She mentioned that bankruptcy, layoffs, and business transformation have become common in the first half of this year. However, the fundamental reason education institutions are not surviving is their poor operation and management, not the epidemic.
In terms of transforming business models, Chujiu revealed that facing the pandemic situation and chasing the trendy virtual education, many institutions chose to turn everything to online all at once. She suggested that educational institutions should be patient because they need “pay tuitions" to evolve online successfully. The key is to spend the money wisely and carefully. She indicated that it is undesirable to imitate how education giants burn the capital. Also, recruiting famous teachers with a high salary is not suitable for small and medium-sized institutions.
Moreover, Chujiu indicated that the pandemic accelerated the development of OMO(Offline-Merged-Online). An example is EEO's core product Classin, an interactive online classroom offering educational solutions that combine OMO teaching with intelligent data. Currently, it includes examination and evaluation, tutoring and Q&A, a homework question bank, teaching service, teacher training conference and enrollment, and marketing services, etc., introduced by Liwei Guo, central China director of sales.
Chujiu emphasized that education institutions should be cautious; meanwhile, they should dare to attempt new things, not be afraid of making mistakes, and find the methods that fit them. She put forward that only the way you explore is suitable for yourself. It is useless to duplicate other people's models.
In the face of enterprises whose layout is nationwide accelerating the business expansion to lower-tier cities, she hoped local small and medium-sized companies to benefit from learning how big institutions manage and organize their business.
In the end, Chujiu identified the trend of the education industry. She claimed that the next five to seven years would be the stage for the online education war. The Matthew effect (sometimes summarized as “the rich get richer and the poor get poorer") would be prominent, but innovation and entrepreneurship would still lead. From her perspective, there will be new opportunities for the education industry in large-sized online classes and small classes, vocational education, short video, live broadcast, modern agriculture, new education, and returning home for entrepreneurship.