China’s craze for Common Core-aligned curricula

July 26, 2017

Chinese students are coming to American schools to study in large numbers, but aside from the burgeoning communities of Chinese students found on university campuses, there is now a growing number of Chinese students attending high schools and even primary schools in America. At the same time, more young students engage with Chinese supplementary schools, on- or off-line, offering “American primary school curricula” in China. Schools that advertise their “CCSS-aligned curriculum” to Chinese parents have gained traction in recent years, particularly online-only supplementary schools that offer English-medium subject-based instruction directly to consumers.

What drives the fast-growing Chinese online language education market? What are opportunities that foreign education companies should see and seize? This article will answer these questions by revealing recent trends, examining the unique characteristics of this market and looking ahead to potential growth drivers and opportunities in 2018 and beyond.

Not your grandmother’s cram school

The booming market is primarily driven by the education consumption needs of Chinese parents, which are evolving rapidly. As millennials become parents of K-8 students, their perceptions of quality and value in English education generally and online education specifically are influencing the market in a major way. Attitudes toward education among millennials in China are conceptually different from those of their elders. Not only are millennials more willing to purchase online education products, but they also put more value on spoken English, creativity, experiential learning and other learning experiences deemed to be lacking in the Chinese system.

To meet the demand of these millennial parents, companies from across China’s education industry spectrum began offering live online classes primarily focusing on improving English speaking skills a couple years ago. These companies included not only traditional supplementary schools such as New Oriental (sub-brand Donut’s English), and TAL Education Group (sub-brand Le Waijiao), but also newer online-only platforms offering MOOCs, tutor-matching and even live-streaming services. At the same time, several more startup companies, whose founders are also millennials, have emerged. One prominent example is VIPKID, which is a platform for connecting K-12 Chinese students with native English speakers for one-to-one online language lessons. It was launched in 2015 and has more than 100,000 fee-paying students as of April 2017.

Companies like VIPKID, which connect foreign teachers and Chinese kids learning English, have gained tremendous traction in the last two years. There are a couple main reasons for this success. On one hand, the supply of foreign teachers, particularly teachers who are native English speakers, is scarce in most parts of China – there are over 100,000 foreign teachers teaching English in China, 30% of which are hired through official channels. On the other hand, demand is vast – there are 40 million students in China’s K-12 segment who are taking after-class English courses and their overwhelming preference if for courses taught by foreign teachers. Such demand and supply imbalance represents clear opportunity for internet companies who can match Chinese children and foreign teachers without having to secure visas for the teachers.

“Learn what the American kids learn at home”

Amid the growth stage of China’s market for live online English courses, the selling points of many companies are similar – speaking English with foreign teachers from home. However, companies entering the market today gain little competitive advantage by offering similar products as their competitors. Therefore, differentiation is a top priority for new entrants and the most notable differentiator in today’s market is the focus on high-quality curricula.

In 2017, many big online education companies launched sub-brands to offer live online English classes targeting K-8 students. They include; 17zuoye, which recently launched UStalk, offering one-on-one live online English classes taught by teachers from North America; TutorABC (formerly known as VIPABC), a big online school that launched VIPjr; and Abc360, one of the forerunners of live online English course providers, also launched a sub-brand called Landi English. Abc360’s CEO has even expressed that the company will deemphasize their adult business and focus on K-8 business going forward due to the bright prospects of the K-8 consumer-facing market.

Aside from the fact that these new initiatives are all attempting to carve out a slice of the K-8 consumer-facing education market is the fact that these sub-brands all promote American CCSS-aligned curricula. The popularity of American CCSS-aligned curriculum is a byproduct of the influx of Chinese students into American schools, often occurring at earlier and earlier ages. Per data from the Department of Homeland Security, the numbers of students studying in primary and secondary schools in the United States, while still a fraction of the post-high school student total, have shown higher growth rates than those post-high school student totals historically. For families who want their children to be prepared to succeed in U.S. universities by getting them used to the learning style and language, supplementary online education is the next best option.

 

Source: Department of Homeland Security Student Exchange Visa Information System, 2017 Emerging Strategy analysis

 Partnership activity among American and Chinese education companies rises

As major companies in the market keep growing, they tend to establish partnerships with well-known global education brands to strengthen their competitiveness and establish footholds. In 2017, several major online schools have partnered with international education companies. This July, TutorABC entered into a partnership with ETS. The Chinese company will start to distribute TOEIC and develop test-prep products for TOEIC, a business English assessment product from ETS. In the same month, DadaEnglish formed a content partnership with Pearson.

As of now, it seems the partnerships are limited to distribution agreements for educational content and tests. Going forward, it is expected that there will be more partnership activity between Chinese online education companies and established foreign brands, and these partnerships will be devised in different ways. Besides importing original content, some ambitious schools may want to co-develop content with foreign publishers. There may also be opportunities for partnerships regarding teacher training, student/teacher exchange, edtech development, etc.

Looking ahead in 2017 and into 2018, the market continues to enjoy its growth stage. Many schools are eager to adopt American curriculum or “CCSS- aligned curriculum” to appeal to Chinese millennial parents. Simultaneously, the concept of “learning what American kids learn from your home” is gaining traction rapidly. As the demand for consumer-facing online delivery of American K-12 curriculum continues to boom, we expect to see more partnerships between Chinese online education companies and foreign established education brands in the coming year. Original content from American providers is a differentiator for Chinese schools and technology companies, one that they are banking on as the market matures. Contrary to popular conceptions of doing business in China, the active engagement between Chinese and American education companies doesn’t appear to be fading away anytime soon.

To find out more about China’s burgeoning education market and how Emerging Strategy can provide insight that helps decision makers make the right moves in international markets, please reach out to our team at info@emerging-strategy.com to schedule an introductory discussion.

 



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