GET2021 | China's Online Education Submits the Answer Sheet, What Do You Learn?
2021-05-07 12:00:42

Introduction: In 2020, JMDedu ran a two-month national tour across China as a part of events to promote the GET2020 Summit (Global Education Technology). We networked local education companies through seminars with various themes and investigated several key cities' market environments. 

Now, the GET2021 national tour is on the way! We take our tolls on major cities and hope to share more unique insights and broader perspectives about the thriving edtech industry in China. If you aim to explore the "secrets" beyond plain facts, follow us on this article series.

On April 16, 2021, we held an education industry seminar in Shanghai, with the theme "Innovation and Prospect of Online Education in the Digital Economy". Speakers discussed their views on the digital economy and analyzed the development trend of the online education sector in combination with policies in the recent year. This article will cover JMDedu's analysis and opinions towards China's online education market, incorporating sharings from the speakers. 

Market Fundamentals Have been Changing

Mei Chujiu, JMDedu's founder, put forward that the market fundamental has changed. People's needs are becoming diversified. If companies still value the experience and logic from the past two or three decades to provide services, they will lose a large portion of the market share in the long run. 


Mei Chujiu, founder and CEO of JMDedu

"Two sub-divisions in the education and training market are short of supply," stated Chujiu. One is education management, which can help high-income families make education plans for their children, similar to the family trust fund. The scale is tiny, but the unit price per customer can be very high. The other is rural education for 600 million rural populations, which can help address the problems faced by children left behind in the villages to be cared for by aging parents or relatives (left-behind children) and those traveling with their parents to cities (migrant children). 

Online education is regarded as the top 1 threat to many local offline education firms at this seminar. Chujiu agreed that distance learning has efficiency advantages in customer acquisition, cost, and teaching and research. However, she pointed out that purely online could not fully achieve the best learning effectiveness. Students have their personality traits, so should education also be personalized. On the other hand, offline education naturally has strength in building emotional affinity through face-to-face engagement. "It is actually a race between the two, and it depends on who will do it well first, "Chujiu said.

Glimpse Opportunities in Trends: Data-Driven

Online education has walked through a 10-year journey since 2011. Zheng Zhe, vice president of Huode Changjing Video, a video hosting and live streaming service provider, brought up that the users habituated to online learning who were kids ten years ago contribute to the outbreak of online education. So how to board the ship and catch the next wave? 


Zheng Zhe, vice president of Huode Changjing Video

Answers are already emerging: data-driven. Zhe claimed that eye-catching data is no longer resulting solely from good IP or inspiration. Instead, data is used to find out what the target group may concern about. But, how to execute? He further offered a methodology: find the right person, right direction, and right method

Education applications should identify their target users. For instance, when designing and updating educational products for the millennial generation, it is indispensable to find their interests and precisely satisfy their demands. For millennials, five economies are rising: 

  • Second-hand economy: sell, swap, buy or donate used or unwanted on second-hand platforms to explore the extra value.

  • ACGN (Animation, Comics, Games, and Novels, used in some subcultures of Greater China and Southeast Asia.) economy: refers to a series of commercial behavior aimed at the audience of ACGN culture through making, exporting, and publicizing products with the features of ACGN aesthetics, such as cosplay, garage kit, anime peripheral and Bilibli website.

  • Two-child economy: China officially abandoned the mandated one-child policy in 2015 and started to allow a second child for married couples. The universal two-child policy stimulates greater household consumption in education and healthcare.

  • Self-made video economy: refers to receive economic benefits from filming videos on their own. 

  • Slash economy: by adopting a slash career, a millennial who feels unfulfilled in a particular area seeks employment outside their normal 9-5 job to achieve balance and pursue a passion, which promotes revenue stream and entrepreneurship. 

Regarding direction and method, ask ourselves: why do we do that? What is the logic behind doing that? "In fact, what we have been pursuing is to see the future opportunities in the trend," stated Zhe. "There is no secret in the education industry, but there is a secret recipe. We all know how to generate traffic and how to convert and monetize it. However, only after breaking down the whole process can we have a deeper understanding of our operation routines, marketing, and promotions, rather than simply buying traffic and cooperating with a KOL."

No Standard Answers for Education Products 


Zheng Zhe, head of Looking Education

Chen Zhu, head of Looking Education (hereinafter, Looking), which focuses on the K-12 division, shared the company's history. Founded in 2015, the number of employees has grown up to 18,000 in less than two years. Now there are approximately 30,000 students in Shanghai. He told the audiences that Looking's rapid original capital accumulation is due to the favorable time, geographical and human conditions. At that time, the market was ever fast-growing, and a significant number of students studied Mathematical Olympiad (MO) to win entry to top schools. Meanwhile, it further accelerated its progress while others were adopting the strategy of hunger marketing. More importantly, it introduced a new partnership model - 3:7 revenue share, which poached many teachers to join the company within two months. 

But Zhu mentioned that Looking's reputation was "not very positive" at that time - the way it occupied the market was called "barbaric invasion", and rivals identified it as vicious competition. He admitted that they later found that things with less investment, short cycle, quick effect, and high economic benefit cannot solve the long-term development problem—the limited number of students for an offline classroom.

Since then, Looking headed to invest in online education, observing that the highest online class renewal rate was only 55%, while offline classes never need to worry about the number. So to improve the renewal rate, it brought flipped classrooms in, and then the renewal rate reached 95%.

Besides, Zhu indicated that despite the high renewal rate for the offline scenario, the human efficiency is low, leading to financial losses. For instance, Looking planned to launch a new product where students gather together to do extensive subject exercises. However, according to Zhu, if students come to the offline classroom, the geographical location creates the barrier. Thus, the plan was abandoned. 

In other words, without any innovations, the limits of offline are geographical locations and the number of students in a single classroom, but the renewal rate is high. Differently, online generally has a lower renewal rate but no geographical restrictions. 

Guess you might consider OMO (Online-Merged-Offline) as the best approach to balance between these two. Undeniably, OMO is the hottest buzzword in recent years, and some even treat it as a master key. However, Zhu highlighted that it is unnecessary to embrace OMO passionately and always think of making disruptive products. "If doing offline mode, we should do it steadily and solidly and use online as a supplement, and let it be." During the pandemic, Looking turned the online + offline products into online dual-teacher classes where each student has a lecturer and a tutor for one year. Compared with that of a traditional online mode, human efficiency improved significantly and the cost was more controllable for the dual-teacher model. At last, the renewal rate hiked to 84.7%. 

Look Forward and Think Ahead

Yao Yufei, the founder of Duojing Capital, a boutique investment bank that focuses on education industry research and investment and financing services, reviewed the education policies in the past year and looked into the future of China's education market. He unveiled four trends in China's education space.


Yao Yufei, the founder of Duojing Capital

Firstly, tightening regulations. He observed that since 2020, a series of education policies have not only boosted educational informatization at schools but also accelerated the digital transformation at after-school training centers. In the second half of 2020, the government has tightened the regulations of online education companies, mainly due to the advertising war and many other potential violations.

Secondly, the demographic transition could tackle the problem of student enrollment. Nowadays, the overall scale of existing educational resources cannot fully meet the needs of pre-school and school-age children, which is manifested as the overall enrollment demand is greater than the amount of admission available. According to the National Bureau of Statistics, from 2019 to 2020, the number of newborns in China has dropped by nearly 31%. Ministry of Education shows that in 2019, the teacher-student ratio in the pre-school education institutions is around 1:17. Looking ahead, Yufei said that the newly born population wouldn't stop the decline. He expected that between 2023 to 2025, the pre-school ratio projects to be about 1:10 or even 1:8, and children would have no difficulty admitted to kindergartens; by 2026 or 2027, their enrollment into primary school will become smooth too. He concluded that as the birth rate descends, sufficient resources for daycare, kindergartens, and primary schools would be out there. And we will undergo tremendous changes in the next few years, even including school district housing. 

Thirdly, lower-tier cities have been the new battlefield for K12 education institutions. Many have been delving into local teaching and research, implying that both online and offline institutions compete for the local traditional K-12 market. Yufei believes that the market penetration rate for this sector in the lower-tiers has enormous room for increase. The K-12 giant New Oriental is opening showrooms in various cities, and many local leading companies are also expanding. 

Lastly, regarding the whole picture of the online K12, teachers, content, and technical support are progressively complete, online teaching technology is getting smart, and marketing channels are becoming diversified. There are abundant teaching modes, such as the popularized dual-teacher, and the users can freely pick according to their preferences. 

It is worth noting that disciplines learning and competency-based education are not distinctly separate. For example, we are more inclined to cultivate comprehensive abilities and emphasize the cognitive processes themselves instead of only improving scores. We also tend to integrate relevant knowledge points into competency-based courses. Mathematics, logical thinking, and spatial thinking are directly or indirectly fostered and enhanced through various experiments. 

The whole industrial chain of the education and training sector is growing up. "Although online education has reshaped when and where to teach and study, it has not altered the traditional pedagogy and learning process," Yufei stressed. 

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