Though it’s a shame, the education market in China, especially the private education sector, will sill be largely about pre-exam training in the foreseeable future.
New Oriental Education & Technology has been in the business for twenty years and the market leader. It started establishing its online presence with Koolearn ten years ago. It is reported that revenues from the online offerings increased 50% for six consecutive years and the margin is higher than that of offline classes.
Ten years later, however, the company seemed to haven’t seen online learning explosion. At a recent event, Yu Minhong, CEO of New Oriental Education & Technology estimated that just a little more than 10% of the training market was online and the offline still made up more than 80%.
But he expected the online part would grow faster that 40% of the consumption would be through the Internet in three to five years. (in Chinese)
New Oriental won’t be a platform but a content provider.
“I think there will be three models for training-oriented education, the offline, platforms and content providers”, Yu said, “I position the future New Oriental as a content and offline education provider. We’d not build a platform.”
“More than a few online education services are working on both content and platform. They would die eventually. You cannot do the both at the same time, for you don’t have enough money; even if you had enough money, you couldn’t have enough talent supply. And the two requires different mindsets.”
Yu doesn’t think the online courses would replace physical classes, saying the experience of taking a class is different from buying a physical good from an online store, and that having a class in a physical classroom wouldn’t be beat by the online experience. One thing he pointed out is true is Chinese parents must prefer having their kids sitting in a classroom with a teacher to having them at a connected device that they may not be concentrated on the course or surf anywhere else online.
New Oriental has about seven hundred physical schools where Yu hopes to see 10% – 15% annual increase in profit considering the impact of online education.