Part II – V The Industrial Structure of Online Primary and Secondary Education
I. Source of online primary and secondary education companies
It is very important to understand the background of companies, deciding the competitive advantages and disadvantages of companies with different backgrounds. The backgrounds of online education companies engaged in primary and secondary schools are very complicated, but can be summarized as follows:
- Internet giant
Internet giants engaged in online primary and secondary education mainly include Baidu and Tecent, especially Baidu’s Zybang (which has been split from Baidu), Wenku.baidu, etc. In education industry, Baidu’s annual revenue stands at about RMB 5-6b, only second to the medical industry, so Baidu has attached great importance to the education industry. Tencent has poured money into such online education companies as Ke.qq.com, Entstudy and Yitiku. Alibaba has only invested VIPABC, but it cannot parallel Baidu and Tencent in terms of the investment in primary and secondary industry.
- Internet companies
Internet companies engaged in online education involve NetDragon, Youku and iFLYTEK. With abundant funds and technical advantage, they invest and buy other companies in addition to investing their own businesses, so they are very strong.
- Online schools with the background of famous universities
Most of the earliest companies engaged in online primary and secondary education are online schools that have the background of famous universities, such as Beijing No. 4 High School, Beijing 101 Middle School, The High School Affiliated to Renmin University of China, etc. With advantages of the brand of famous schools and teaching resources in them, these online schools have always dominated online primary and secondary education industry. Some online schools do not rely on any famous school but independently explore their own brands, such as Jd100, Dezhi and others.
- Online education companies originating from the publication industry
The greatest advantage of the publication industry lies in the long-term accumulated content resources, brands and enormous distribution channels. With the PC-based electronic content resources, it is very easy for newspapers and periodicals or book market to branch out to the mobile platform. Publishing houses mainly depend on outsourcing technical development and its own resources, so they do not have strong technical strength. The example of publishing enterprises in education industry includes Kuaxue.com, GoldenSun Education, Xinghuoedu, Beijing Education Media, King & Key Education Group, Canpoint, Shandong JinbangYuan Cultural Media Group, etc.
- Online education companies invested by venture capital
Online education has attracted enormous venture capital after its rise. Even though investors are stronger in technology, but due to the lack of content resources, they have to form content resources by integrating or processing content resources in order to become a provider. Emerging investment enterprises are represented by Yuantiku, Xueba100 and others. More than one thousand newcomers have appeared since the advent of the rush of online education in 2013.
- Online education companies originating from training institution
The main driving force for training institutions to engage online education is the significant demand for using the Internet to promote education and training. Training institutions are concerned that online education will overthrow the face-to-face teaching, so they enter this market with an aim to mainly integrate resources owned by training institutions, such as Master Mind Education, New Sharing and others.
- Online education companies originating from listed companies
Public companies, e.g. iFLYTEK, Kingsunedu, LANXUM, Qtone, Talkweb, Hongtao, Avcon and so on, have earlier taken “online education” as a strategic investment. These “strong” enterprises have bought some online education companies and become a very important funds source of the online education industry.
- Online education companies originating from property companies
Property-oriented companies in online education include Wei Dong International Education Group, which has also paid great attention to online primary and secondary education and purchased several online education firms. In addition, it aims to create the international online education industry alliance together with United Nations Educational, Scientific and Cultural Organization (UNESCO).
II. Analysis on advantages and disadvantages of companies with different backgrounds
Companies with different backgrounds differ in advantages and disadvantages due to various “genes”. The advantages and disadvantages of companies with different backgrounds are summarized as follows.
III. Distribution of online primary and secondary education companies
Beijing, the home to the most advanced technology and information, tops in the number of online education companies, making up 50% of online primary and secondary education companies nationwide. But as a matter of fact, by output and investment size, the figure rises to more than 80% of the total, suggesting that most large upscale companies are based in Beijing.
Beijing is followed by developed coastal cities Guangdong and Shanghai. Online education has also developed at a fast pace in Zhejiang Province. Jiangsu has always been reputed for its education in China, and online education companies in this province have made a figure in recent years because they are driven by the fast-developing economy.
Online education companies are technology-intensive ones, so there are less such companies in other places. With technological and economic superiority, Beijing is the leader in China in the aspect of developing online education. From the perspective of emerging online education companies, some online education companies are also located in Shandong, Jiangxi, Yunnan and other provinces, but they cannot match those in Beijing and Shanghai in scale terms.
From the perspective of segments, online primary and secondary courses still focus the study in primary, secondary and high schools and pay a little attention to pre-school education. Companies in pre-school education only represent about 30% of the total due to shorter-lived pre-school education. Meanwhile, the proportion of comprehensive companies engaged in primary, secondary or high-school education is very large.
- Part II – VI Product and Service Model of Online Primary and Secondary Education
This is a series of articles from Blue Book of China’s Online Education Industry, authored by our partner China Online Education Research Institute (COERI). Each post is a chapter from the blue book.