Since E-learning first showed up in mainland China in 2001, this new mode of education has presented considerable expansion momentum. The E-learning industry in China is still at its start-up stage; yet, its market opportunities cannot be underestimated in the long run.
The Development of the E-learning Industry in China
Though E-learning was introduced into mainland China more than 10 years ago, only a small amount of the Chinese populace has had access to it so far. In China, E-learning technology is more commonly used in Business-to-Business (B2B) market. The application of which can reduce staff training expenses up to 50%-70% and provide the flexibility of time and space that facilitates the learning process of the employees. Consequently, B2B market in E-learning commerce is far more established than the B2C (Business-to-Consumer) market, which accounts for the corporations & businesses segment enjoying a bigger proportion of the market share. Back in 2002, among 69 corporations that were surveyed, only 29% adopted online training programs. Whereas, by 2012 more than one thousand small and medium-sized enterprises (SMEs) have implemented E-learning technology in staff training and hundreds of E-learning startups made it possible to shape the industry chain.
In recent years, internet giants such as Baidu, Sina Weibo, Sohu, etc. have established their market dominance and private investments are unwilling to lag behind as well. In April 2014, Tencent launched their online Classroom, serving as an E-learning center where its registered users can take courses in language study, skill training, certification and preschool preparation. On the heels of Tecent, Baidu entered the market in August 2014 by investing $10 million in the Chinese online education platform Chuanke.com. In 2012, there were only nine investments made in online education companies in China. While by the end of 2014, the total investment was more than double that of 2013. With the active government support, the growing startups and flourishing investment environment display promising opportunities for the E-learning market. Online education is on its bright path to becoming the next education trend.
The Prominent Revenue Opportunities for the E-learning Industry in China
There are Four Major industrial divisions in the E-learning Industry in China:
- First are the tools and platforms suppliers. Generally, these suppliers provide customers with the fundamental structure of E-learning systems which includes authoring tools (for producing course materials), Learning Management System, Online Exam System etc. In the corporations & business segment, medium and large enterprises centering around urban cities in mainlandChina occupy the majority of the demands for E-learning systems. Lacking technological support or specialized knowledge, small enterprises have far less access to this new education system. In consideration of which, these suppliers offer ASP (Active Server Page) services to lower the entry threshold for those potential SME customers to set about staff training with ease. As primary suppliers in the E-learning market, the experience they have garnered enables them to take on other roles such as producing content, offering outsourcing services or consulting services.
- Second are the content producers. These producers provide general content varying from refinement to management. The most profitable E-learning content across all segments is English language learning.Since New Oriental (an education training corporation in China)launched its online learning portal Koolearn.com, the number of its registered users and paid users have been rising year by year. By 2015, the number of its cumulative registered users has reached more than 10.7 million. English learning is incredibly popular in China, even more than Chinese learning. Chinese Parents and schools are now purchasing a significant amount of digital English language learning products for children under 17 years old. Asides from English learning, content production for early childhood education or test preparation courses also meets growing demand. In September 2014, SmartStudy, a new startup that sells E-learning test prep courses for standardized English tests received $10.6 million investment from Baidu. As the demands for employee development in corporations and governments are increasingly higher, vocational and adult education presents significant revenue opportunities for commercial E-learning suppliers. Statistics show that enterprises and governments account for a considerable amount of online training for their staff, where English language learning, specialized skills refinement, and management skills cultivation are listed as top three training programs.
- Third are the custom and non-custom service suppliers. There are two major R&D (Research & Development) models for E-learning products in China. The independent R&D model within China occupies almost 70% of the market share. Its great advantage over the other model is that it can fulfill custom services to satisfy special needs of the local companies in China. Although the other model, the one that applies foreign technology to E-learning products is relatively more advanced, it is unable to dominate the market due to the lack of customization and practical localization. Custom services require a firm understanding of the operation and running systems of Chinese companies. The particularity of custom services usually requires for a higher threshold of specialized knowledge and skills, which encourages company cooperation and joint ventures. In the long run, with the growing importance of the correspondence between content and customers, custom services continue to be an important factor in the E-learning market.
- Last are the consulting services suppliers. Up till now, few corporations have specialized in providing E-learning consulting services for enterprises. Instead, most consulting services are provided by tools and platforms suppliers. Due to the shortage of professional consultants in this emerging field, E-learning fails to reach a wider range of supporters or a deeper application level in business management and development.When established enterprises in China, try to optimize their E-learning systems, they have to consult foreign companies for their expertise because currently few local consultants can offer this service.Therefore, revenue opportunities for these suppliers are considerable.
Market Competition & Future Development Trends
The rapid adoption of Mobile Learning is inhibiting the demand for E-learning in China.By Sep. 2015, the growth rate for M-learning in China has reached 14.5% and revenues will continue to accelerate with the persistent popularity of mobile devices. Two buying segments in E-learning market: consumer and PreK-12 (from pre-kindergarten to high school) presently are exhibiting negative growth, while they obtained considerable high growth rates in Mobile Learning. Although Mobile learning is still in its pioneering phase in China, the chances that it would become a threat to E-learning market are still big. Besides industry competition within China, foreign E-learning services suppliers are entering into Chinese market successively.The term “E-learning” has only been a common phrase since the late 90s but the early forms of E-learning can traceback to the 60s in countries such as America and England. Therefore, the E-learning technology in some developed countries (esp. America) is relatively more advanced and diverse than in China. Thus in terms of specialized knowledge and skills, foreign companies have more technology support than local ones, leaving lots of growing room for domestic E-learning companies.
The E-learning market has entered a commoditization stage and will soon enter the transition period to servitization stage. As an innovative mode of E-learning, Massive Online Open Courses have successfully drawn the attention from people all over the world. Since MOOC first came into China, it has gained significant repercussions, especially in Prek-12 and higher education field. Many renowned universities in China such as Peking University, Tsinghua University, Shanghai Jiao Tong University, etc. have all uploaded their special courses online for students throughout the mainland to extend their study services and widen their horizons. Moreover, Baidu (In Chinese: 百度), Netease (In Chinese网易), and other internet giants have launched their own websites with free and affordable courses for netizens to choose according to their needs. This trend opens up more opportunities for the E-learning industry within China.
In conclusion, the E-Learning industry in China is a relatively underdeveloped market in the country. Nevertheless, seeing from its upward trend and extra room for further development, China’s E-learning market is poised with great potential to expand.
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