Introduction: It was beyond doubt that the year of 2020 must be an important time pivot for the education industry. As the COVID-19 spreads since the beginning of this year, education is disrupted globally, but learning cannot be stagnant. In this special year, JMDedu will hold the GET (Global Education Technology) Summit under the theme of “Redefine Learning” to help both Chinese and international EdTech practitioners deep dive into the changes and rebuild confidence.

While what has been significantly changing in China? And where will the opportunities lie in the Chinese education market? In the upcoming weeks leading to the GET 2020 Summit, we will share our insights on how companies and organizations are rapidly adapting to change, as well as explore potential opportunities for further business collaboration.

Image Credit: tuchong

We have talked about the prospect of dual-teacher model in China’s K-12 training market. In China, K-12 is always a much more discussed topic than other categories in education, but in recent years, a highly potential market has attracted much attention from investors and entrepreneurs. It is vocational education.

If K-12 has a market of 200 million primary and middle school students in China, vocational education has a larger arena, which takes more than 500 million workforces.

The COVID-19 pandemic has imposed a heavy strain on the education industry. Widespread school closures, difficulties for offline services providers to shift to online, delayed or even canceled exams, and reduced businesses, have all challenged career training companies to ponder where is the way out.

ITXDL.CN (Xiongdilian), a Beijing-based IT training school, suddenly announced to stop its operations in February because of internal and external pressures, as the pandemic began to spread across China.

Despite all the short-term negative impacts, the COVID-19 has also played a positive role in accelerating the market's rapid development, with many providers witnessing a skyrocketing demand.

The segment will continue to boom with supporting policies, more investment, and social changes in the post-epidemic era.

A narrowly defined market 

Vocational education, which has been narrowly defined in the past, should include all kinds of education services that drive human growth.

It usually consists of two parts: degree and non-degree programs. The former is parallel to the level of high school and undergraduate education in the general education system, which will not be discussed in the article.

Non-degree programs, or training focusing on workforce development, include courses that emphasize job skills — both hard skills such as a new computer language or technology, and soft skills, such as improving communication ability, leadership, and management skills.

Sanjieke, a Beijing-based players in the area, offers courses in product management, product marketing, operations, digital media, and other skills critical for roles within the new digital economy.

Besides, learning related to personal development, hobbies, and daily life knowledge, such as learning cooking and fitness, different from skills to increase competitiveness in the workplace, also falls into the broad category.

Anyone who wants to catch up with rapid social changes should be a lifelong learner who keeps acquiring new skills and capabilities well past formal education years. Lifelong learning is becoming the norm.

Several edtech startups focus on the category. Dedao, also known as Luoji Siwei, provides a mobile app that allows users to subscribe to learn from key opinion leaders, ranging from science and arts to psychology and business. Udemy, a US-based online learning marketplace, offers various courses you are interested in.

Ge Wenwei, partner of Duojing Capital, an education industry-focused research and investment company, said “We are in an era when China's entire consumer goods supply chain is under reconstruction, the vocational education is going through redefinition, and the value of talents is undergoing rediscovery.”

COVID-19 spurs its rapid growth

In addition to the short-term negative effects, the COVID-19 has indeed accelerated the rapid development of the market, especially for online training companies.

The public health crisis, which is closely followed by layoffs and fewer job opportunities, increasingly makes people aware of how important it is to reskill themselves to excel in a career.

Online adult learning, workforce training, or corporate training platforms have significantly increased their new users, no matter in China or other countries.

The number of college graduates seeking to become civil servants in China has seen a sharp rise. Thus companies that provide online exam preparation services have added more learners. Offcn, a multi-category vocational education institution based in Beijing, generated around 7.4 billion yuan (US$1.1 billion) in revenue in the first three quarters of 2020, a 20.78% year-over-year increase.

According to a New York Times article, Coursera added 10 million new users from mid-March to mid-May, seven times the new sign-ups' pace in the previous year. Enrollments at edX and Udacity have jumped by similar multiples.

Even before the COVID-19, the market has seen its growth because of several factors.

It needs us to respond to the reality that employees now change jobs and careers many times and that rapidly evolving industries require them to learn new skills continually.

Since 2015, the rise of mobile Internet, artificial intelligence, big data and other industries in China has spawned new professions and talent demands, such as data mining engineers, machine learning scientists, and algorithm engineers.

However, the gap between higher education and employment still remains wide. Although traditional colleges and universities enroll lmore students than ever, these higher education institutions are used to teach theoretical and outdated knowledge, which is also common in other countries. 

Due to social changes like the difficulty in employment and the adjustment of labor demand caused by industrial upgrading, the Chinese government has launched a bunch of favorable policies and increased financial investment to boost vocational education.

Moreover, with a high internet penetration rate, consumers' habit of using the fragmented time to learn, familiarity with the online learning model, and willingness and ability to pay for classes, career development, especially online learning, increasingly garner investors' interest.

Sanjieke bagged $130 million in a Series B funding round in 2019, and Dedao secured 960 million yuan (US$1.43 billion) in 2017.

According to Deloitte's report in July, the training market in fragmented areas such as IT, automotive services, and finance is estimated to witness more companies going public. Primary health care and social services, wildly popular this year, will also expand the growth of related training services.

Big companies have also deepened their foraies into the intersection. Zhaopin.com, a US-listed Chinese online recruitment services provider, launched its training business and also invested in other companies focusing on workforce development.

Chinese food delivery giant Meituan Dianping opened “Meituan University” last year, which is a vocational education project aimed at providing digital skill training to workers and merchants. Short video platform Kuaishou also expanded into the area through the education ecology on its app.

Where are the opportunities ahead?

Although there is much potential to be tapped in vocational training category, challenges always come with opportunities.

A large and mixed consumer group not only means a huge demand, but also inconsistent course system and short product life cycle. 

Adults, different from K-12 students, usually have a stronger motivation when learning new skills, but they are also faced with many obstacles, including how to find a balance between work, family and learning, and how to learn more effectively.

Opportunities lie in that the market has many categories, a rigid demand from learners, large incremental market and low marginal cost. In contrast, challenges lie in the short life cycle of products, unsustainable payment, and fast iteration of curriculum development. But opportunities seem to outweigh challenges.

Companies from countries like the US have accumulated more experience than China through exploration for dozens of years. MOOC platforms like Coursera and Udacity, corporate learning companies Guild Education and EdCast, several listed post-secondary enterprises, and popular coding boot camps, such as Lambda School and Make School, all show the well-established training system.

For providers who hope to or have already entered the Chinese market, it is essential to based on China’s current market and foreseeable changes to share practical experience, provide quality content in professional skills, soft skills, and learning related to personal development and daily life knowledge, as well as to create a system to ensure good learning outcomes.

Given the enormous potential untapped in China's education market, we will use an example to talk about how overseas companies achieve growth despite the pandemic's adverse effects.