When creating EdTech products, don`t ignore the Chinese market. It is now gaining the most ambitious pace of development and promises to grow rapidly.
With the emergence of the first distance learning technologies in 1728, the US confidently and for a long time held leading positions in the pace of development of this area. All key innovations were introduced on the basis of the most famous American universities, under the guidance of experienced instructors/experimenters. This was facilitated by a favorable situation with local funding and a truly high level of members’ education.
Unlike the US, China has long held a conservative stance and applied standard EdTech solutions in the learning process in schools and universities. Significant slowing factor also contributed to the lack of full access to the global Internet for all residents of the country. Even today, not all Chinese people have such a privilege. According to some information, this figure is about 53% of the total population.
Given such an obvious difference in the potential of countries, one would assume that China will still catch up with the United States in terms of the pace of implementing educational technologies. However, the real situation shows a completely different trend: for the past few years, experts in the field of online education have rightly considered China to be the fastest growing region. Here are some statistics on this topic according to the expert agency Navitas Ventures:
Over the past 10 years, funding for American EdTech projects has grown by 101% and almost twice as much, by 160%, for Chinese EdTech projects. Next, we will talk about the peculiarities of the development of these two markets and see what has caused such an unstable development trend – education in China VS the US.
EdTech in the US
According to the opinion of the authoritative research platform, Tracxn, the number of EdTech startups was about 4251 business units in early 2019. The most successful and expensive EdTech project still remains one of the first online platforms – Coursera, which is worth almost $2.5 billion.
In 2018, American educational technology companies raised $1.45 billion, and the total market reached phenomenal $43 billion. However, even with such impressive numbers, the US does not maintain a consistent high rate of development of the domestic industry. The leading news education organization, EdSurge, presented this unstable trend in one of its reports:
As can be seen in the chart, starting from 2013, EdTech trends in the number of transactions is rapidly falling. A minor exception is only 2015, but it did not drastically change the situation.
Now, let’s compare the factors that positively and negatively influence the development of the US EdTech market:
|Positive factors||Negative factors|
|Decent technical base||Saturation of the local market by EdTech startups |
|Good financing||A tendency to a decrease in the number of investment transactions and an increase in the amount invested. |
|Qualified specialists||Discovery of the Asian and Latin American regions as a valuable market for profit in EdTech projects |
|Demand for high-quality education and EdTech careers||The pace of economic development is significantly inferior to the Chinese indicators.|
|High solvency of residents|
|Availability of relevant government programs|
|High population of the country from the category of potential students|
Making a conclusion about the state of the American online education market, we can note its stable growth, and the year 2018 brought financial indicators to a more serious level, compared to the previous three years.
EdTech in China
According to the research by the HolonIQ innovation center, Chinese startups brought more than 50% of the total capital invested by venture capitalists into EdTech around the world in 2018. About 100 unicorns were created in China. This means that once in 4 days one of the Chinese startups reached an estimated $1 billion or more.
The total number of venture capital investments in China has almost reached $ 36billion, while data from Chinese main media platform, JMdedu, suggests that 130 Chinese EdTech projects attracted about $2 billion between January and March 2019, which is a 2.4% growth annually although the number of transactions also shows a slight negative trend compared to the previous year:
The most expensive project in Asia is the online platform for learning English, Vipkid. Its capitalization is now about $3 billion. In 2018, it received an investment of $500 million, which was a world record for this reporting period.
Now, consider the key factors that influence the development of the EdTech industry in China:
|Positive factors||Negative factors |
|High rate of economic development, as a result – an urgent need for a large number of qualified employees for jobs in EdTech||Difficulties with access to the Internet in some Chinese regions|
|The most large-scale market of potential consumers of educational services in the world – from K-12 to college students||Closed infrastructure of the Chinese online space|
|The Thirteenth State Five-Year Program provides a substantial budget for the modernization of the education system in China.|
|Great demand for learning English with English-speaking teachers|
|The Chinese consider obtaining high-quality education as one of the most important goals in life and allocate a large part of their personal budget for this. |
According to researchers at Navitas Ventures, many EdTech startups are located in China, but the majority of them are in Beijing. It is a fantastic concentration of 120 startups per 1 million people! For example, New York is in the second place with 117 startups per one million people.
So, we can make quite a logical conclusion for beginning or developing businesspeople: when creating EdTech products, don`t ignore the Chinese market. It is now gaining the most ambitious pace of development and promises to grow rapidly. There is the potential, and it is almost inexhaustible.