China has the largest state-run education system in the world, with 291 million students and 18 million teachers in over 529,000 schools in 2021 (The Ministry of Education).
The Ministry of Education of the People’s Republic of China is the agency of the State Council that oversees education throughout the country. In 2019, the State Council issued a blueprint for the country’s education development in the coming decade, called China’s Education Modernization 2035. This plan sets the objective of establishing a modern education system of lifelong learning with universal quality pre-school education, balanced compulsory education, enhanced vocational education, and more competitive higher education.
K-12 Education: China has one of the world’s largest K-12 education markets. China’s regulations commonly categorize K-12 education service providers as either non-profit or for-profit. Non-profit entities are mainly schools that provide full-time curricular education. For-profit entities include private schools, academic extracurricular tutoring, and non-academic extracurricular tutoring.
The K-12 education market has grown rapidly in recently years, and in so doing, raised social anxiety among parents and students seeking to gain an edge. Early in 2021, China’s central government enacted tough rules regulating and restricting the private tutoring market. One example is the clampdown on the for-profit curricular tutoring industry from July 24, 2021. This policy affects both online and offline tutoring service providers. There remains enormous demand for better education and supplemental learning as both parents and schools seek a competitive edge for their students. Large players might shift their business focus to new frontiers like extracurricular tutoring and vocational education, both of which were not impacted by the above-mentioned regulatory changes.
Higher Education: Despite the fact that China remains the largest source of international students in the United States for the 2020-2021 school year, with over 300,000 students in undergraduate, graduate, non-degree, and optional practical training (OPT) programs, this figure decreased 15% when compared to the previous school year.
Source: Open Doors
Undergraduate and Graduate Programs: 125,616 Chinese students were enrolled in U.S. undergraduate programs and 118,859 in U.S. master’s and doctoral programs in the 2020-2021 school year. The number of undergraduates decreased 15% from the previous year, and the number of graduate students decreased by 13%.
In 2020 international student economic impact reached $14.4 billion according to Bureau of Economic Analysis, U.S. Department of Commerce. U.S. colleges and universities should continue to prioritize the safety of in person study and provide support for international students during COVID-19 restrictions to increase their appeal to Chinese students. Promotion of American education in China should remain active as competition for Chinese students from other English-speaking countries is strong.
Community College Programs: In the government’s China Education Modernization 2035 plan, one of the six key points is to significantly improve vocational education in China, which creates new opportunities for U.S. community colleges. In pursuit of this plan, China is building the world’s largest vocational education system to tackle this aging country’s labor shortage problem. Vocational schools are gaining increasing government support and seeking international cooperation in vocational education and career development. On the other hand, parents and students at vocational schools still prefer higher academic degree programs. U.S. community colleges’ vocational programs and transfer programs can meet both needs.
Education Technology: 2022 was a challenging year for the education sector in China. The Education industry experienced local regulatory changes in China’s private after-school tutoring sector. The long-term impact of COVID-19 on education in China is expected to lead to an increase in spending on digital infrastructure and new digital models utilizing the new tools available in digital education. Students have had to adjust their ways of studying by adapting to online learning on various technology platforms.
As there is still strong demand from the education industry, boosted by relevant national policies, the total revenue of China’s education technology market continues to rise, and is expected to reach $75 billion by 2022. However, due to the industry’s high demand for service experience, professional technical services, solid sales channels and other factors, small enterprises and new entrants also face high industry barriers. China’s education technology market entered a stage of rapid growth from 2017 to 2020, with the total revenue of the industry increasing from $46.4 billion to $61.1 billion, with a compound annual growth rate of 9.6%. In 2020, due to the COVID-19 outbreak, the growth rate from 2019 to 2020 was lower than in previous years but still showed an increasing trend.
Some industry trends in the EdTech sector include:
- Hardware equipment sales are the largest component of China’s education informatization market, accounting for 39% of revenue in 2020, followed by integrated IT solutions and software services accounting for 28.1% and 26.4%, respectively.
- Integrated IT solution providers in the education information market are mainly engaged in integrating hardware and software products and bundling their integrated IT solution services to customers in several regions.
- Online Merge Offline (OMO) Model: The OMO model of the education industry refers to a business model that reshapes the entire education chain through technological innovation and organizational change, and then achieves online and offline integration. For example, New Oriental has launched the dual teacher model and TAL has launched Xueersi online schools. For institutions, OMO is one of the key means to achieve product differentiation, and reduce customer acquisition costs; OMO does not specify a precise boundary and scope, as each institution explores its own solutions under the OMO model based on its own understanding of technology and education, according to iResearch Inc.
- STEAM learning continues to be a major priority for the Chinese market. The demand for STEAM education and training has seen the booming creation of training programs and startups offering out-of-school courses in coding, robotics, and 3-D printing, attracting the attention of publishers, toymakers, and app developers. STEAM-related courses are not only in demand for older children and students; rising middle-class incomes and fears of intense future competition for college admissions and jobs are leading parents to pay substantial sums for STEAM-related education for even young children.
- The emphasis on project-based learning is growing.
- Continuing with the growing demand for personalized learning, formative methods are supplanting traditional, summative approaches (especially with regard to test taking). As a result, more EdTech firms with solutions that focus on formative assessments are emerging.
- Robotics kits are becoming better packaged (even for young students) and incorporate apps to teach coding.
- Elements of AI (albeit noncomplex) are becoming an integral part of responsive apps that adjust to various learning levels.
- EdTech firms have seen the emergence of opportunities to create apps for preschool and kindergarten students.
- The mobile education texting-for-homework-help/crowdsourcing market has expanded to include a handful of firms that have developed crowdsourcing apps/web platforms to allow students to answer each other’s questions or to engage quickly with a teacher/expert for help.
Challenges and Barriers
- The biggest challenge for U.S. EdTech firms is localization. Many firms have created education technology to specific curriculum and U.S. state standards. To adapt their technology to a specific market, whether it be language, standards, curriculum, etc., will increase costs. This may deter some U.S. education technology firms from entering smaller markets with unique languages or very specific curriculum standards and requirements.
- Finding the right local partner is an important multiplier to market exposure. Other ways to gain awareness in the marketplace are through e-commerce or targeting private schools and parents.
- Startups in the EdTech sector face a unique challenge in marketing their products worldwide on a limited budget.
- New entrants need to establish a good brand image and relationships in order to establish strong sales channels. After years of operation, existing education IT solution service providers have generally established well-known brands in the regions in which they operate and have strong relationships with educational institutions.
- Educational technology companies will have to comply with new privacy and data transfer rules.
- China Education Expo– Beijing, Guangzhou, & Shanghai
- Global Education Technology Summit & Expo– Beijing and Online
- China (Hainan) International Education Equipment Expo
- Global Smart Education Conference