Part IV – II Analysis on Segments of the Online Vocational Education
In reality, vocational education is a closely segmented industry. As the demand for professionals gradually increases, more importance will be attached to companies in subdivided markets. Analysis will be conducted on several main online vocational education companies.
I. IT training
IT education has now been listed as a national key construction project. More and more attention has been paid by society, the state and the public to IT education with rapidly-developing IT industry in China.
Researches show that rapidly-developing IT leads to the gap of demand for millions of network engineers for developing, designing, constructing, implementing and maintaining network programming. Corporate demand for highly-skilled engineers for network, website management, network equipment and network security system increases on average as much as 71.2% each year. Mobile application development, mobile Internet, game and other industries have welcomed more rapid development since 2011, with a lot of employment opportunities.
IT is developing so fast that the shortage of development talents becomes an important factor of constraining its development. Now, IT training develops in a centralized way. And with constant capital input into this industry, some branded IT training institutions further expand, forming a pattern of relative centralization and monopoly of strong training institutions in the market.
Talent development becomes increasingly crucial as companies’ demand for IT talents constantly rises. Even though there are a lot of students that major in computer graduating from higher universities each year in China, yet many of them have difficulty in meeting companies’ demands within a short period of time, mainly because they do not have an access to practical experience on campus. Therefore, the most common problem facing IT industry is now the contradiction of academic education not in line with real corporate demands.
Vocational IT training has become an important bridge of connecting the above-mentioned two aspects and the first choice for “melting down” by university students. According to researches, employment pressure and knowledge updating demand are the two main reasons for many university students to choose IT training. On the one hand, university students’ employment issue becomes increasingly prominent, causing students to increasingly develop stronger awareness of making a plan for their future career. IT training institutions provide such courses as hardware maintenance and software development so as to effectively make university students become strong by making them take part in operational courses such as corporate practice projects. On the other hand, this trend is also in conformity with current social and economic situations: the prospect for IT is promising, and especially high-end technological posts, such as software development and network technology, are well paid and have a great space for promotion. Moreover, such slogans as “customized development”, “seamless connection with the market”, “high employment rate” and others made by many training institutions show university students the direct benefits and they also become baits for them to choose to melt down.
As the melting-down becomes increasingly popular, changes have taken place in the composition of people that melt down in recent years. In the past, job-waiting university students, especially many graduating college students chose to melt down, but now more and more lower-grade college students participate in such trainings, and the motivation for learning from employment pressure begins to decline among considerations for training. According to statistics compiled by some training institutions, unemployed college students in the second or third year now account for 30%-40% of the total.
Those years see rapid development of vocational IT training in China in this environment and context. But IT education and training industry still faces many challenges, including how to constantly improve vocational IT education institutions’ developmental concepts, how to make IT education shift from purely resolving employment issues to promote industrial innovation and development, etc., for the fast-developing IT brings in opportunities. Furthermore, the price war has made it very difficult for companies to survive in the fierce competition, coupled with the constant presence of foreign institutions in China. Take MCSE as an example, it was priced at over RMB 3,000 in 2000, including test fees and other expenses, but now the figure dropped to RMB 1,000. CCNA was priced at more than RMB 3,000 in its early days, but now its price has fell nearly 60%. In order to solicit students, some training institutions misused the price war, which was actually conducted at the price of these organizations’ brand image and the reputation of the whole industry. They always replaced part-time teachers with full-time ones and at the same time reduced the class hours so as to transfer costs, making it impossible to ensure the quality of teaching. That exerts a negative effect on the development of the whole industry and affects many strong and outstanding training institutions as that case becomes increasingly common.
According to industry structure statistics , 92% of employees in China’s IT industry now express that they need to improve their IT skills and 42% of participants say they long for achieving IT training. There is a huge space for IT training industry, but the competition is also very fierce. Innovative measures for services, products, enrollment and other aspects will become the most powerful weapon for companies to occupy the market as the homogeneity in IT education industry is very common.
That mainly because nowadays vocational IT education institutions cannot look at the market simply from the perspective of training any more, they must incorporate subsequent service and leading education into their own system with the always-changing customer’s demands, thus better building a bridge between learners and IT companies and pushing forward the optimization of the composition of industrial talents.
Throughout the development process of vocational IT education in China, it is easy to find that at present, vocational IT education is still at the transitional stage from the starting stage to explosive growth. In the first place, consumers increasingly tend to make reasonable choices from initial blind consumption and become increasingly concerned about such aspects as education institutions’ credibility, teaching quality and employment guarantee. In the second place, a variety of advertisements and mixed IT training institutions appear in the market as the competition becomes increasingly fierce. As free competition becomes increasingly red-hot, the “Matthew Effect” in IT training market will become increasingly prominent, making the strong stronger and the weak weaker. According to the forecast by China Online Education Research Institute, this trend will become clearer within the next three years.
II. Civil service exam
As employment pressure constantly increases in China, the persistent overheated civil service exam generates a special group — “a group of people who specifically plan to take the civil service exam”, including graduating university students and in-service white collars. They have something in common – spare no efforts to read exam books to obtain a “stable bowl” for civil servants.
According to China Business Journal, there were more than 1, 500,000 candidates to take the exam for 20,000 seats in 2013, with the admission rate of higher than 66:1 and the figure for 109 heated posts being as much as 1000:1. Over 9000 candidates vied for the most popular clerk post of Chongqing Investigation Team under the National Bureau of Statistics. On the whole, there are more people receiving the public servant exam training in the third-tier and fourth-tier cities than the first-tier and second-tier ones, so civil service exam training is very hot in these regions. The exam market is valued at more than RMB 1billon and cannot be ignored in China’s education and training market.
Over more than ten years’ stable development, the exam has formed a stable and mature industry. Face-to-face teaching dominates the market and occupies the share of about 70%. Books and supporting textbooks have a share of 28% and only about 2%-3% for online schools.
China’s national civil servant exam education and training institutions including Offcn Education and Huatu Education have built teaching centers in main prefecture-level cities and offered staged training classes from basis, module, intensive training, exam and inspiration classes. Courses are priced from hundreds of, thousands of to ten thousands of Yuan. By rough calculation, a candidate will spend at least a few hundred or at most one or two thousand Yuan if he wants to take the basic class for Administrative Aptitude Test, Proposal and Guidance of Interview for Public Servants. All classes will cost more than ten thousand Yuan.
Reportedly, there are now about 700 to 1000 training institutions for national civil servant exam in China, represented by such national chain training institutions as Offcn Education and Huatu Education, as well as many regional training institutions. Some of them place focus on their development in a province and set up centers in the whole province, while others only develop in cities. In the market of textbooks and supporting books for national civil servant exam, these two institutions have basically been the monopoly and published thousands of textbooks each year.
Civil service exam training market is composed of face-to-face teaching, book and online school. The market size of online learning is less than 200m Yuan. Online civil servant exam training is expected to have a share of a half, so there is a huge space for development.
III. Financial sector
According to the Report on Employment released by Zhaoping.com, in the second quarter of 2014, finance and IT/Internet industries are in parallel and the number of online posts grow 37% and 36% respectively compared with last quarter. Finance industry does not perform as better as in the first quarter, but the emerging Internet finance has begun playing a role. As financial reforms greatly speed up, the Internet finance intensifies the innovation of products in traditional finance. Therefore, the strong demand of the financial sector for talents will potentially go throughout 2014.
From the perspective of graduates’ employment, not only graduates in the specialty of economic management want to work in financial sector, but also many graduates majoring in computers or machinery or sociology or law cry for landing a job in this sector. Some college students even change their major and learn another relating to finance with a view to going for a specific job.
Financial sector, “a high-end service industry”, is characterized by high position and good salary. According to data about the average salary by industry released by the National Bureau of Statistics (NBS), it comes first with an average annual salary of RMB 99,659. The salary offered by a state-owned bank is very competitive in many second-tier, third-tier and fourth-tier cities where the income is on average low. Good salary, high position and the E-myth of the sunrise industry attracts a lot of graduates to enter a profession relating to this industry.
An increasing number of people choose online education as certified accountant qualification exam still remains popular, but enormous mixed training institutions and review materials in the market and incredible commitment of “guaranteed passing” make it impossible for candidates to judge the true and false. Most of vocational education in financial sector is continuing education, most of whose consumers are employees, so its consumption power is higher. The finance industry becomes another big vocational education market following IT and public servant exam.
IV. Construction industry
- Overall prospect
Online construction engineering training has a share of about 12% in construction market. But from the perspective of the development trend, online construction training will play an important role in China. At present, there are a lot of construction training institutions in China featuring scattered operation and very low-degree chain, and a vast majority of them do not offer remote training, thus making it very difficult to break regional limitations. Online education breaks limitations, geographically and practically, so it becomes a training product that learners in different places can have at the same time with high quality. For this reason, it has a promising prospect.
- Products and services
Online construction training products are mainly designed for construction exam training. For example, many online construction training institutions offer many exam trainings, such as certified architect, cost engineer and others, seriously homogenizing products. Offering differential products and providing learners with valuable training products are the problem that companies must face to keep a foothold in the market and exist for a long time.
- Analysis on the demand for architectural talents
According to the statistics released by a professional recruitment website, posts in connection with architecture and engineering online were 110,000-plus in February 2014, growing 50% year-on-year. Approximate 80% of employers are privately owned. At the beginning of 2014, the demand for architectural talents increased with the starting of many large-scale property development projects as the property development boomed.
China is home to 100,000-strong construction enterprises that employ over 40m people, while less than 1% of whom have a qualification certificate. Certainly, it is difficult to pass the constructor exam, so there is now a great gap for level-1 constructors and level-2 constructors in the industry. In the aspects of salary and career prospect, posts for constructor have a great potential, helped by the rigid demand in the market.
According to China’s qualification regulations, professionals working on engineering and project management shall have one or more vocational qualifications, such as urban planner, architect, engineer, constructor, supervision engineer, cost engineer, etc. That is a very high requirement for talents, so it is understandable why it is so “difficult” to recruit talents. Industry insiders say, “Employers have a lot of vacancies, but they basically want experienced people to fill them and many posts are the middle and high-level management. For this reason, it is not easy for new graduates or applicants having worked in the relevant industry for one or two years to be hired. ”
Therefore, many people choose to improve their competitiveness through continuing education and training and the employment rate by obtaining construction qualification certificate.
- Part IV – III Analysis on the SWOT of the Online Vocational Education and the Method of Breaking through the Dilemma
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.