Editor’s note: This article was supported by Hujiang Education Technologies. We believe in transparency in our publishing and monetization model. Read more here.

Online education is becoming increasingly popular in China. Driven by society’s deeply rooted obsession with academic achievements and the belief that education is one of the, if not the only, path to success. Online language learning and STEM (science, technology, engineering, and math) education have gained more popularity among eager parents who seek to give their children a leg-up in the competitive schooling system.

According to official data, online education companies in China had attracted 144 million users as of June 2017. And with a growth rate of over 20%, the online education market is expected to represent more than one-fifth of the projected global market size by 2019.

China is experiencing fast growth with capital pouring into the sector. The policymakers are supportive—one of the primary emphasis of its 13th Five-Year Plan is on the growth of online education. The Chinese government has announced that it will invest an overall $30 billion in edtech by 2020.

This spells big opportunities for edtech industry in China. Ridding the tide of rapid growth is a staggering number of home-grown companies who have flocked to list in offshore markets, specifically in the US and Hong Kong.

Hujiang, an early comer to the Chinese online education space, is one of them.

In July, the company filed an IPO with the Hong Kong stock exchange. Hujiang would be the first edtech company to list in Hong Kong.

Becoming a full-fledged technology company

Technology has transformed our education system in many ways. The MOOCs (massive open online courses), for example, increase accessibility of education and give students of lesser means an opportunity to pursue better-quality education at a relatively low cost. This is merely scratching the surface considering how much potential technologies like AI and big data has in the education sector.

The Shanghai-based Hujiang was founded in 2001 when China’s internet sector was still nascent. The company has since grown to be one of the largest online education providers and was named one of the “2017 Top 100 Internet Companies in China” by the MIIT (Ministry of Industry and Information Technology).

The company believes that new technology should be deeply integrated into different aspects of their businesses. For example, using AI and big data to monitor students’ learning and design more engaging study experience.

According to its prospectus, Hujiang now provides online educational products and services to 186 million users worldwide, offering over 2,000 proprietary courses. Last year, Hujiang’s monthly active users (MAU) was ranked top among all edtech companies in China, Frost & Sullivan data shows.

Product innovation as a competitive advantage

In this lucrative yet fiercely competitive market, product innovation is a way to competitive advantage. The Hujiang has invested heavily in research and development, focusing on pushing out innovative products and applications.

The company is now driven by two major business segments, the proprietary course platform and the flagship CCtalk platform. The latter, launched in October 2016, is an online teaching platform that enables real-time interaction between teachers and students through features like two-way live video chat and virtual whiteboard.

“Our biggest strength is that we understand education as well as teachers’ needs. They need care and good services. Besides, by providing a complete supporting system, from login to transaction, from teaching to course scheduling systems, from student attendance to their learning analysis, CCtalk offers a one-stop service, even including marketing and renewal proposals. You could say, CCtalk is developed for teaching,” Kong Wei, president of CCtalk, previously shared at the 4th World Internet Conference, Wuzhen Summit.

CCtalk became a FIELD (Field Immersion Experiences for Leadership Development) Global Immersion Partner for Harvard Business School in June. As of August, the average MAUs of the CCtalk platform reached 3.5 million, a significant increase from previous year’s 2.3 million. CCtalk offers courses in language, occupational skills, culture and science, and K12. As of August, there were well over 92,000 courses and over 63,000 self-employed teachers on the CCtalk platform.

CCtalk open course (Image credit: Hujiang)

Last year, the company launched an innovative e-learning program Hitalk, which aims to assist English learners improve speaking skills. The program allows users to learn through role-play simulations, by integrating big data and intelligent adaptive learning technology. According to the company, Hitalk is now capable of simulating nearly 1,000 real-world situations.

Boosting R&D capabilities

Technology innovation happens not only in product development but also in the operational aspects. Over the past few years, Hujiang has been putting significant emphasis on upgrading the technologies, as well as R&D.

The company’s prospectus shows a continued increase in resources devoting into R&D—from RMB 90.6 million in 2015, to RMB 165.2 million in 2016, to RMB 230.5 million in 2017.

“We consider our (education technology) capacity the key to ensure our success and have been focused on developing technological tools, media, processes and data resources that are crucial for facilitating learning and improving study performance,” the company said in a previous statement.

Efforts also go into beefing up technology capabilities: the company has developed an Intelligent Study System—one of the underlying technologies behind Hujiang’s platforms, apps, and services—which utilizes cloud computing and big data analysis to generate valuable user insights.

Hujiang currently has an in-house technology team of 600, who work closely with business and faculty teams to optimize AI and internet technology applications in their products and also the operation side of things. The company said it intends to further expand its technology team in the near future.

A look into China’s future: Unravelling China’s edtech landscape

Spend the money where it is most needed

China’s edtech market is rapidly evolving, highly fragmented and fiercely competitive. For even the bigger fish in the pond, it is still a tough survival fight.

By comparing Hujiang’s sales and marketing expenses with two publicly listed edtech companies in China—Sunlands (尚德机构) and 51Talk (无忧英语)—high operating expenses seem to be a struggle shared by edtech companies in China, where sales and marketing, and customer acquisition expenses are generally quite high. The intensifying competition in the industry is only driving the cost higher up.

Like many competitors in the market, Hujiang is also facing rising costs in sales and distribution efforts, as well as increasing expenditures on R&D and building technology capacity, but the company seems confident that devoting resources in the right areas is necessary to succeed in the wild, wild west.

Hujiang CEO Arnold Fu once said, “Hujiang was created as a non-profit BBS because I saw that many young people were driven to study online due to a lack of educational resources. When I decided to turn it into a startup, nobody believed that it would work. Because of this, I feel that it is very important that we recognize and support innovators and companies that are driving the revolution in education that is spreading around the world.”

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Nicole Jao

Nicole Jao is a reporter based in Beijing. She’s passionate about emerging trends, news, and stories of human interest within the world of technology. Connect with her on Twitter or via email: nicole.jao.iting@gmail.com.

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