Virtual US tutors are helping Chinese kids gain an edge A BOOMING INDUSTRY
Online schools battle with traditional tutoring academies for supremacy in an $80-billion market
Hardly anyone bothered to learn English when Wu Wenhua was growing up in 1980s China. But now that she has an 11-year-old son, Wu believes knowing the language is key to opening doors.
So Wu, 38, signed Ryan up for an online service, called VIPKid, that connects Chinese grade schoolers with US teachers for one-on-one classes . With Ryan now top of his class at school, Wu is satisfied—or at least as much as a hardcharging Beijing mother can be. “He recently got 99 out of 100,” she says, grimacing slightly. “He does pretty well.”
Parents like Wu are fueling an education boom in China that's having global repercussions. Millions of children are pouring into classes for English, math and the sciences to gain the skills they need in a knowledge economy. Chinese parents have always prioritised academic achievement; now they have the means to invest in extra-curricular education, propelling a domestic market that UBS says will double to $165 billion within five years. Leading players such as New Oriental Education & Technology Group. and TAL Education Group have gone public in the US and seen their shares soar.
Now, online start-ups are gaining ground with parents who grew up in the internet era and see advantages in digital learning. Beijing-based VIPKid has expanded to 200,000 students and just raised venture money at a valuation of more than $1.5 billion from Sequoia Capital and Tencent Holdings. Shanghai rival iTutorGroup has won backing from Alibaba Group Holding Ltd. and Qiming Venture Partners. (The online education clash is yet another proxy battle between Alibaba and Tencent, which | Online start-ups are gaining ground with parents who grew up in the internet era and see advantages in digital learning | Beijing-based VIPKid has expanded to 200,000 students and just raised venture money at a valuation of more than $1.5 billion from Sequoia Capital and Tencent Holdings Ltd | Shanghai rival iTutorGroup has won backing from Alibaba have squared off in almost every fastgrowing tech sector.)
“Chinese parents have high expectations for their children; everyone wants their kids to get into Tsinghua or Peking University,” says Edwin Chen, an analyst with UBS Securities. “This is creating huge demand.”
In the West, early efforts at online education floundered. The technology wasn’t good enough, and there was significant and Qiming Venture | A combination of factors have given online schools a boost: Finding good teachers can be a challenge, while internet access and mobile services have spread widely institutional resistance. Many remain unpersuaded that digital instruction can replace the traditional classroom. In China, however, a combination of factors have given online schools a boost: Finding good teachers can be a challenge, especially in subjects like English and in places beyond the biggest cities, while internet access and mobile services have spread widely. For the nation’s education-obsessed tiger moms and dads, it’s worth the risk to prepare their kids for a high-tech future.
Sceptics believe online education will probably remain a small part of the overall industry. But Curtis Johnson, an author who has championed online teaching, is convinced that global adoption is coming, owing in part to experiments in nations like China. “This is just as inevitable as watching movies or listening to music or reading the news online,” says Johnson, who co-authored the book Disrupting Class with Harvard University's Clayton Christensen in 2009.
Chinese parents currently pay for fewer extra-curricular classes than their Asian neighbours. Last year, about 37 percent of kids in China received tutoring, compared with the 70 per cent in places like Japan, Taiwan and South Korea, according to UBS. But the research firm projects that ratio will hit 50 per cent in five years, during which time the Chinese government expects the number of kids attending kindergarten through 12th grade to swell to almost 200 million.
Traditional tutoring companies, with brick-and-mortar classrooms, are already cashing in. New Oriental, founded by Peking University professor Minhong “Michael” Yu in 1993, is projected to reach revenue of $2.2 billion in the current fiscal year. TAL Education, which opened its doors about a decade later, now has more than 500 learning centers in about 50 cities and is expected to boost revenue to $1.7 billion this fiscal year.
VIPKid has set itself apart by recruiting American teachers and positioning its services as similar to the education in top US schools. Cindy Mi, the startup's 34-year-old founder, argues that teaching online allows the kind of data analysis and scientific review that will lead to fundamental improvements in education.