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China's online education industry finally graduates with honours

Online education emerged in China about a decade ago, but has come of age this year with the launch of a number of new platforms set to spark explosive growth over the next five years in the e-campus and internet learning industry.

Photo: Online education: the new digital battleground.
Online education: the new digital battleground.

Online education is experiencing massive growth in China as educators and major internet companies collaborate to provide new platforms for learning. A number of high-profile new initiatives have recently been launched, among them a new venture led by the Beijing New Oriental School. Announcing the deal, Michael Yu Minhong, the school's founder, said that his company was partnering up specifically to access the online education market. He believes that, over the next three to five years, the education industry will have an online-offline split of 40:60.

With Alibaba and Baidu's education portals going online over the last six month, a related deal saw 17 Alibaba-Temasek-Qiming Venture Partners announce a US$100 million investment in the online education platform TutorGroup. Meanwhile, speaking in Beijing, Xiaomi Inc Founder Lei Jun said his company was investing Rmb1 billion over the next two years in order to create an online education platform – 100.com. Earlier this year, Guo Guangchang's Fosun Venture Capital Investment, in partnership with another investor, stumped up US$20 million for Uniqudo, an online education provider.

China's Compass Info Consulting Corporation reports that China's education and training industry was worth Rmb960 billion in 2012, indicating an online education share of Rmb70 billion, (7.3%). Looking ahead, this share is only set to increase. Based on the 40% figure championed by Yu, the online education market would be worth up to Rmb300 billion-Rmb400 billion a year.

Transforming the educational business model

China's online education industry can be usefully divided into five categories. Firstly, there are the traditional enterprises that have close ties to schools and parents, including educational content vendors, such as Qtong Education and Talkweb Information. Secondly, there are enterprises that create information systems for the Ministry of Education and individual schools, providing cloud platform and related technical support. These include Tianyu Information, Lanxum, Avcon and China South Publishing. Thirdly, there are the educational software developers who are actively developing online educational content, including Shenzhen Kingsun Science and Technology, Xin Nanyang, Beijing Gehua CATV Network (BGCTV) and Sumavision. Fourthly, there are those companies that provide technical support for voice and video tools, such as iFlyTek. Finally, there are enterprises providing broadband and terminal support that are also constructing smart education platforms, notably Dr Peng.

Industry analysts suggest there will be massive changes in the market's  structure over the next five year. These will transform online education business models in line with the explosive growth in the industry.

The growth in online education is basically in line China's education system, according Jiang Min, a specialist online education consultant. He says: "China follows a different development path to other countries. The countries that perform better in Massive Open Online Courses (MOOC) and educational technology mainly use information technology as part of the teaching process, as well as as teaching aids and materials. China, however, is still focussed on exam-oriented online classes, with exam paper databases as the main remit."

'Online education with Chinese characteristics'

China's system of college entrance exams and exam-oriented education results for K-12 education (12 years of primary and secondary basic education) has long dominated the online education market. This has seen online education generally takes the form of video animations and the like, with the system acting as a remote teaching tool. As "online education with Chinese characteristics" develops, exam paper database websites, which provide downloads of past examinations or mock examinations, will become ever more popular.

One company – Yuantiku – provides multiple-choice exercises for students to complete on their mobile devices. The app also generates questions that are tailor-made for each student. Currently the app covers such examinations as the National Judicial Examination and those for graduates, accountants and engineers. The Yuantiku.com website is estimated to have more than 400,000 registered users.

Photos: Baicizhan (left) and Xuexi Zhandui: competing e-learning platforms.
Baicizhan (left) and Xuexi Zhandui: competing e-learning platforms.

Industry sources suggest that online classes for vocational skills represent the largest growth area for online schools and courses for the K-12 segment. A related survey indicates that vocational students with clear goals are motivated to learn independently in online classes and are also willing to pay – which clearly establishes this as a hugely successful online education business model.

Compared with the core curriculum basic education, vocational education and training have more flexible and diverse learning cycles, ones that largely depend upon content and have shorter training periods. As most occupational skill students work part-time, flexible online classes are ideally suited to their requirements. The market for vocational online classes – such as language learning, computer programming and related qualification examination aids – therefore has great promise.

Better products, improved learning

While online video or animation courses represent an elementary level of online education, internet products with an educational application and those more focussed on user experience are being developed. The Yuantiku app, for example, uses intelligent algorithms and big data mining techniques to optimise the student's experience of completing exam related questions and improving results. A representative said its popular exam preparation product has seven databases and costs Rmb25 per month. Three months after the app went online, the number of registered users paying for the service reached 10% of the total.

Vocabulary memory software is also popular. Baicizhan and New Oriental's Le Word network are two popular products that use pictograms, charts and other right brain cognitive memory models to assist recall, while providing self-tests is consistent with left brain mechanical memorisation. The software programme encourages a Hermann Ebbinghaus [a 20th century German pioneer in the memory developmemt sphere] approach to the study of memory, learning and forgetting curves, and also offers "virtual games" to enhance the user experience.

Photo: Michael Yu, New Oriental Founder and digital learning pioneer.
Michael Yu, New Oriental Founder and digital learning pioneer.

The English learning software, Yingyu Liulishuo ("speak English fluently") integrates social networking and its newly launched "PK" feature helps users become highly motivated learners. Some of the more traditional online schools have also stepped up their efforts to enhance the learning experience, such as Beijing No. 4 Online School's use of social media and gaming points for after-class practice. This has been designed to encourage independent learning and transform the "passive learning" approach that currently characterises the majority of e-campus education.

Ren Yuan, Special Correspondent, Beijing

Content provided by Picture: HKTDC Research
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