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Course with employment: "The profession of a Methodologist from scratch to PRO"
Find out moreChina has eased some restrictions. Why?
The new rules are being actively discussed in various circles, including among taxi drivers, notes Joey Jiao, Vice President of Investments at Blue Elephant Capital. His company has invested in 90 early-stage educational startups. Jiao has mixed feelings about the new restrictions: as an investor, he is upset, but as a citizen, he is satisfied.
In recent years, marketers from large companies have actively exploited parents' feelings of guilt to promote their educational courses, convincing them to invest in their children's futures. Analysts have found that more than a third of Yuanfudao employees working under the title of "teaching assistants" were actually engaged in sales, which underscores the commercial focus of such services. This demonstrates the importance of parents' critical approach to choosing educational programs and the need to carefully analyze the real value of the courses offered.
Many schoolchildren spend 13 to 17 hours a day on classes. This time includes not only lessons in school, but also extracurricular activities, homework, and exam preparation. Such an intense schedule can negatively impact students' health and psycho-emotional well-being. Finding a balance between study and rest is important to ensure effective learning and personal development. Foreign teachers often noted that their students seemed tired and sleepy during classes, and parents expressed dissatisfaction with late calls from online educational platforms. In China, the term "chicken child" (鸡娃) has emerged to describe children overwhelmed by their parents' ambitious expectations. Consequently, many citizens supported the government's decision to restrict online platforms on weekends. Officials also required online classes to end no later than 9:00 PM, with at least 10-minute breaks between classes. This innovation is aimed at improving the quality of education and preventing student fatigue.
Among the main opponents of the reform are "tiger mothers" – parents who strive for high achievement for their children. Journalists from the Chinese publication Sixth Tone conducted a survey of 30 families in Shanghai and Beijing. The results showed that the overwhelming majority (92%) continue to seek extracurricular activities for their children even after the ban was introduced. Three-quarters of respondents noted that the authorities have not made the upbringing process easier, but, on the contrary, have increased the stress in family life.
In China, preparation for children's final exams begins in elementary school, as reported by Skillbox Media, citing Olga Bolkunova, founder and CEO of China Insiders. Under pressure from ambitious parents, the country's authorities are willing to compromise. In November 2021, The Wall Street Journal reported on China's plans to allow educational platforms to monetize college and high school students, but in exchange, they must provide free classes for students up to ninth grade. According to the publication, companies such as Gaotu and Yuanfudao were leading the negotiations. Thus, the Chinese education system continues to adapt to market needs and parental demands, underscoring the importance of quality education in the country.
Changes in the private education sector began in July, but it is too early to draw final conclusions, notes Olga Bolkunova. Starting in mid-December, private tutoring companies will be transferred to the status of non-profit organizations and will resume providing their services. The state is introducing price regulations and establishing a number of requirements: the company's director must be a Chinese citizen permanently residing in the country; courses must comply with the school curriculum, and the training center itself must have offline classes and certified teachers. These reforms were initiated due to the low qualifications of teachers in the field of additional education and the high prices of courses, which Bolkunova confirms.
Should we expect a relaxation in the future?
Chinese officials experience a chronic information deficit, which leads to instability in political decisions. A lack of understanding of the real situation forces authorities to vacillate between weak and harsh legal measures, notes Angela Zhang, Director of the Center for Chinese Law at the University of Hong Kong. This information vacuum fosters uncertainty and hinders effective decision-making, which negatively impacts the country's governance and development.
The goal of the current education reform is to reduce the burden on students and reduce the financial costs of education for parents. High education costs often lead families to forego having a second or third child. The government is unlikely to completely abandon this policy, as declining birth rates pose a serious threat to China's future economy. Unsurprisingly, the Chinese Ministry of Education, in addition to introducing relaxations, also imposed new restrictions. In December 2021, applications for homework help apps, through which students could upload assignments and search for ready-made answers, were suspended. According to specialized media, the new restrictions affected the Xiaoyuan Souti and Zuoyebang platforms from Yuanfudao, and they will have to re-register with local educational authorities.
A reduction in negative headlines is creating a favorable atmosphere for investors who previously recommended avoiding Chinese tech stocks. At the beginning of 2022, major players such as Alibaba, JD.com, and Baidu demonstrated growth on the US stock markets. This positive trend may also spread to EdTech giants. According to analysts at Societe Generale, the most difficult stages of regulatory changes in the tech sector are already behind us. Despite the ongoing updating of the legislative framework, these changes are expected to have a positive impact on the sector's growth in the long-term. 2022 promises to be less turbulent, which should reduce the level of uncertainty in the market.
Supplementary education in the K-12 sector according to the school curriculum has not suffered as a whole from the EdTech crisis, notes Olga Bolkunova of China Insiders.
EdTech in China continues to develop. This is neither a tragedy nor a surprise. Olga Bolkunova emphasizes that the technology-enabled education sector has not lost its relevance. On the contrary, it is adapting to new conditions and challenges, demonstrating its viability and potential for growth. EdTech innovations in China are opening up new opportunities for learning and improving the quality of education, making it an important element in the modern educational landscape.
The government's approach to innovation is based on a model that first grants industry freedom of action and then regulates. While relaxations are not expected, new patterns of interaction between private companies and educational institutions can be expected. This will create conditions for more effective implementation of innovative solutions in various fields.
How will the situation affect Russia and other countries?
Following the introduction of the new rules, analysts predicted that users would begin to switch to Western online educational platforms, including American ones, due to the closure of Chinese services. BCS World of Investments expert Valery Yemelyanov noted in an interview with RBC that shares of American EdTech companies could rise significantly amid news of their adaptation to a Chinese audience.
Experts express concerns that the restrictions imposed in China could become the basis for the introduction of online education standards and strict controls in Russia and other countries. Specifically, in India, since January 2022, the government has warned higher education institutions about the risks of collaborating with educational platforms that offer distance learning. Management programs such as Upgrad and Eruditus are at risk, raising concerns among analysts and journalists. This situation highlights the importance of carefully considering international educational standards and the risks associated with distance learning in a global context.
The initial reaction of the professional community in Russia was largely emotional. It reflected our internal concerns about increased government regulation. "Could they really want to repeat such measures here?" notes Margarita Aranovskaya, co-founder of the Smart Ranking agency, which publishes a quarterly ranking of the largest EdTech companies. It is important to understand that such changes can significantly impact the development of educational technologies in the country and the industry as a whole.
Comparing the reactions of Russia and Western European countries to changes in education and the economy is interesting. Russia emphasizes terms such as "prohibition of foreign ownership", "private capital", and "non-profit organizations". At the same time, European countries are more focused on concepts related to the "decommercialization of education," "prohibition of profit-making from children's education," and "equal access to educational resources." These differences in perception highlight the different approaches to education and economic issues in the two regions.
Russian companies will feel the missed opportunities in the future when they begin to enter the international market. They will miss China. Russian entrepreneurs have begun to enter the Beijing market, focusing on the children's supplementary education segment. If they were to take similar positions in the field of mathematics and programming as American companies in the field of foreign language teaching, this would give them 1% of the market and a significant share of revenue. This approach could become the basis for successful expansion into international markets and attracting new clients.
The number of schoolchildren in China is almost 15 times higher than in Russia, which makes this market unique and inimitable. The educational opportunities and needs of Chinese schoolchildren create enormous potential for the development of various educational programs and technologies. Interest in the Chinese education market continues to grow, opening new horizons for international cooperation and investment in educational projects.
According to the expert, India is the closest market in terms of size. However, the main problem is that although the number of children is large, the financial resources of their families are limited.
How are Chinese EdTech companies coping?
Alibaba-backed Zuoyebang has closed three of its 14 regional support centers, which served as offline offices for teachers and sales teams. Meanwhile, New Oriental has laid off 60,000 employees over the past six months. The company has spent approximately 20 billion yuan (approximately $3 billion) on compensation for laid-off workers, tuition compensation, and lease termination expenses. These changes reflect current economic realities and the need to optimize costs in the education sector.
Chinese companies are finding various ways to address current challenges. According to Olga Bolkunova, founder and CEO of China Insiders, approximately 50% of online schools are beginning to offer courses in art, sports training, and programming. These areas are not formally part of school curricula and are not subject to current restrictions. Approximately 25% of online institutions are re-registering as non-profit organizations and are gradually adapting to the B2B sector or equipment. They are developing innovative technologies such as smart classrooms, intelligent pens and lightbulbs, and cloud solutions, including robots for automating homework assessments and tracking student progress. The remaining 25% of companies are exiting the market.
Companies actively developing their areas are increasingly turning their attention to niches supported by Chinese authorities, such as the digitalization of agriculture. Recently, New Oriental founder Yu Minhong announced plans to recruit hundreds of teachers to help farmers sell agricultural products through livestreaming on online platforms. This approach not only promotes the development of the agricultural sector but also creates new opportunities for business in the digital economy.
Another option is the transition to vocational education, according to Skillbox Media experts. Vocational education provides relevant knowledge and skills necessary for a successful career in in-demand fields. This decision can be a key step in improving career prospects and increasing competitiveness in the labor market.
Western media widely cover the strict policy in the field of supplementary education, while practically not touching on the reform of secondary vocational education. Olga Bolkunova.
In 2015, the Chinese government launched the "Internet+" (互联网+) program, aimed at integrating innovative technologies into traditional industries. This initiative is called "Internet+. Education" and is actively supported by local educational institutions. The program is developing new courses and specialties that meet the requirements of the digital economy, including high-tech equipment, smart technologies, biomedicine, space research, and elderly care. As the need for skilled talent in innovative sectors increases, these trends will undoubtedly spread to other countries, fueling the global growth of educational technology initiatives. Many companies looking to expand are considering entering markets in other countries, including Indonesia, Cambodia, Myanmar, and Japan. For example, MeiShuBao's international team grew from 16 to 80 employees in just a few months. However, experts warn that the path to international expansion may be more challenging and time-consuming than expected. When entering foreign markets, companies must devote significant attention to localizing and adapting their products. Zethe Kettlekamp, Content Curator at Midwest Virtual Academy, emphasizes that deep localization of EdTech products involves not only translating content and software but also ensuring compliance with local laws, payment systems, and cultural specifics. This requires significant resources and time, which should be taken into account when planning an international strategy.
Read also:
- China's offensive on EdTech: who won, who lost, and what investors think
- Invisible intelligence, offline renaissance, and courses on credit. What did 2021 bring to EdTech?
- X5 Group and VkusVill went into EdTech. Why do they need it and what do they teach?
- We tell you about the best EdTech startups in Russia and the CIS in 2021 according to HolonIQ Russia & CIS
