I remember being told as a child that if all the people in China jumped at the same time, the resulting earthquake would be cataclysmic. Having a done a little research, I was happy to learn that synchronised jumping has little impact on the rest of the planet. The same cannot be said of the changes happening in education across Asia, and China in particular.
A recent report from EdTechXGlobal and IBIS Capital which looks at the key transformational changes that are occurring across the education and training sectors, includes a particular focus on Asia. So, to set the scene, some interesting facts about the Asian region:
Asia is home to 60% of the world’s population, some 4.4bn people;
there are over 600m K12 students, which is 10x more than in the US; and
the share of household expenditure spent on education in Asia far outweighs the US : China 30%, Korea 17%, Japan 10% and US 1.6%;
The rise of Asia has been well recorded, but the undercurrents within education and training are probably less well known. The thirst for learning is strong and is matched by the commitments both in time and money that individuals are prepared to make. One of the major pressures on students is the heavy emphasis on high-stakes testing in countries across the region. For example, over 9.5 million Chinese high school seniors take the national university entrance exam known as the "Gao Kao" every year. These students are competing for 6.5 million available places in the higher education system and achieving high scores in the tests is vitally important for students and their parents.
The resulting impact of these pressures is that there is a huge spill over into the private provision of education, from after school tutoring to online test and prep. A recent survey by market research company Mintel, found that 90% of children from middle class families in China attended fee-charging after-school activities. In a highly competitive education market, the hunger for educational improvement has reached fever pitch. In the period from 1985 to 2012 the share of household expenditure on education in China has increased by more than 13x.
Not unsurprisingly there has been a corresponding increase in the supply of tutoring services. In the report, EdTechXGlobal and IBIS Capital project that after-school tutoring in China will grow from $50bn currently to over $90bn by 2020. The competition isn’t just amongst students it is also for institutions to get the best tutors. Newspapers reported in October 2015 that a superstar tutor was offered $11m in Hong Kong to jump ship to a rival institution. An offer which he turned down!
EdTechXGlobal and IBIS Capital project that after-school tutoring in China will grow from $50bn currently to over $90bn by 2020
In recognition of the strong demand for globally recognised education, British private schools have been keen to take advantage of this trend. To date, 44 overseas campuses have been set up across Asia which now educate almost 25,000 pupils, more than double the equivalent figure in 2012.
English language learning also represents a huge area of growth. In China alone, there are more English language learners than the English speaking population of the US. The English language training market is currently worth approximately $14bn and is expected to more than double over the next 5 years in China. Jack Ma, the founder of Alibaba, is well known for being fluent in English, all of which was self-taught. In his determination to learn, he eagerly sought out foreigners to practise speaking with. He even worked as a free tour guide for 9 years in order to master the language.
Today there is a proliferation of English language offerings, both on- and off-line, making the would be student’s learning somewhat easier than that of Jack Ma’s. In China there are more than 50,000 language schools and a range of online courses. For example, TutorGroup has become one of the largest English language learning institutes in the world. Through VIPABC.com and TutorABC.com, students have 24/7 access to more than 3,000 tutors in 32 countries. Teachers provide live, online teaching services 365 days a year, 24 hours a day and the platform has the capacity to deliver over 8 million two-way interactive courses a year. If TutorGroup was judged by total enrolment, it would rank among alongside the University of Georgia and Cal-Berkeley and within the top 50 universities in the US.
As investment into the sector climbs and adoption rates respond to the inherent student demand, this is the market to watch
As you might expect, TutorGroup has also attracted strong investor interest. In November 2015, the company raised $200m at a valuation of over $1bn from a range of international investors. More generally, Asia has experienced a strong increase in the amount of investment coming into the sector, particularly within EdTech. In 2013 there was $132m invested into Asian Edtech, by 2015 the figure had grown tenfold to $1.32bn. This level of growth far outstripping the investment growth rates being experienced in American or European EdTech. In the EdTechXGlobal and IBIS Capital report, the areas attracting most investment interest are K12 and vocational training. China and India being the biggest geographic beneficiaries.
A range of larger corporate players have also come into the market such as Xiaomi, Alibaba, Baidu and CITIC in China, Wipro in India, and education giant Benesse in Japan headlining key investments. In addition, companies have set up their own education businesses. For example the Chinese casual gaming business Ten Cent launched Tencent Classroom in April 2014 to offer exam-oriented courses in language study, skill training, certification and K12 lessons. By August 2014, Ten Cent claims it had attracted over 34 million users to its new services.
These are heady days for the growth of EdTech across Asia. As investment into the sector climbs and adoption rates respond to the inherent student demand, this is the market to watch. There is already strong digital infrastructure and in most cases a mobile first strategy, allowing players to leapfrog legacy systems. As a consequence, Asia is now starting to re-balance the US global influence in EdTech.