Part IV – III Analysis on the SWOT of the Online Vocational Education and the Method of Breaking through the Dilemma
I. Analysis on SWOT
(i) Analysis on advantages
- Rigid demand
Most people receive vocational training with a very clear purpose: undoubtedly, to land a more stable or highly-paid job. Civil service exam or IT training is conducted for “employment” – the rigid demand.
The goal set in the Decisions on Accelerating the Development of Modern Vocational Education is that the number of students in secondary vocational education schools will reach 23.5m in 2020, up 30% compared with 2014; the number of students in tertiary vocational education schools will hit 14.8m in 2020, up 154% from 2012, producing more than 10m graduates each year. The number of employees receiving continuing education is 0.35b, 40.7 times that in 2012. Graduates’ employment pressure increases year by year and there are 7.49m new graduates in 2015, with the initial employment rate of about 70%.
The situation in labor market is very severe in 2015. But in face of such a situation, graduates from vocational schools are welcomed in the market. It is a must for in-service employees to improve vocational skills as they are increasingly required to have more knowledge and skills. Therefore, the demand for improving vocational skills is very strong, for instance, the demand for training targeted at data analyst, product manager and others rises accordingly. The law of conserving the supply-demand relationship has always been the force of driving the market. The multiplication of vocational education people will bring a huge demand to online vocational education and training. Meanwhile, such public companies as China High-Tech Group and Hongtao have bought segmented giants to enter university students’ exam training, construction training and others. Moreover, Sichen and Leyikao work with FESCO to build vocational education together, and Century Dingli has purchased Ultrawise Information to enter vocational IT education.
- Driving effect of national policies
The development of online vocational education also benefits from changed national education policies. Owing to the serious disconnection between higher education and employment, most graduates cannot meet companies’ requirements for skills, making companies to shift their employment concept gradually from “degree” to “learning ability”. With the strong demand for skilled talents, the driving force of national education policies will provide opportunities for the development of vocational education industry.
The Decisions on Accelerating the Development of Modern Vocational Education (hereinafter referred to as Decisions) released by the State Council on June 22, 2014 states that overall arrangements shall be made to accelerate the development of modern vocational education. It stresses that such an effort is the major strategic arrangement made by the Party Central Committee and the State Council, helping deeply implement the innovation-driven development strategy and creating more talent dividend. Premier Li Keqiang also mentioned in the Government Work Report of 2015 that it is necessary to comprehensively push forward the building of modern vocational education system and lead some local undergraduate higher education institutions to transform into application-orientated ones. Also, such key words as higher education, vocational education, digitalization, Internet and others are repeatedly emphasized in the Thirteenth Five-Year Plan. Thus it can be seen that efforts will be intensified to promote online vocational education industry, in which some large cadre vocational education groups will inevitably appear.
- Technological advancement
The fast-developing Internet is overthrowing the traditional learning pattern. Finally, modern people can make use of their segmented time in an integrated way with the help of the Internet when the transmission of knowledge is not limited to face-to-face teaching in classrooms and Chinese characters on books. Unlike the face-to-face teaching offered by traditional institutions that requires a person to spend certain time on learning, online vocational education makes it possible for a person to learn at any time any place by making use of spare time. It caters to people’s pace of life and at the same time improves the learning efficiency.
Online vocational education industry will inevitably develop better, thanks to the constantly advancing Internet and big data technology, coupled with vocational education’s such features as strong practicality, users’ willingness to pay, easy development of online learning habits by users, etc.
(ii) Analysis on disadvantages
- Large industry disparity
One of vocational education’s main features is that it is impossible to copy and use content resources for online education only suited to an industry for other industries. For example, there is no possibility of applying civil service exam courses to medical courses, and it is true of applying judicial exam courses to accounting ones. Content resources cannot be reused among them, and with regard to various industries, teachers’ cost and teaching pattern also differ greatly. For example, IT training’s main teaching pattern is “knowledge teaching plus practical operation”, while the main teaching pattern for judicial exam courses is knowledge impartment and case analysis. These two teaching patterns differ greatly from each other.
As for practitioners, it is a must to hire a specific teacher for the online education targeting at a certain industry as it is impossible to share a teacher in different projects. The market size of each field differs, with bigger players including civil servant exam, medical examination, constructor exam and others, as well as smaller players involving psychology, human resources and others, making it difficult to form a market of billions of Yuan. Therefore, vocational training does not have evident advantages in multi-industry operation.
- Very important teachers
“Teacher” is one of the key factors in choosing a training institution, because the more difficult the exam is, the more important a teacher is. The popularization of the Internet amplifies the role of teachers infinitely. Teaching quality will be what learners talk about.
Take judicial exam as an example, some learners “complain” online that there are many teachers responsible for judicial exam training whose teaching quality is unsatisfactory. It is even impossible to find a satisfactory teacher for some disciplines. For example, almost all judicial exam training teachers responsible for jurisprudence, science of civil law, administrative law and other subjects have such bad habits as verbiage, unclear language and weak logic. Such teachers spend a lot of time on listening to verbiage, undoubtedly wasting learners’ time and directly their money.
(iii) Analysis on opportunities
Unlike K12 and higher education, online vocational training and learning will be the first segment to overthrow traditional education. That is closely connected with vocational training’s group — adults’ high acceptance of online education and stronger affordability. It is not only possible for online education to overthrow face-to-face training, but which has been a reality for some industries.
As time goes by, more and more people accept online education, so online vocational training will have a bigger share, suggesting that more and more industrial trainings will be overthrown by online education. For now, more and more money is poured into online education to develop products and training market, and online vocational education and training will be likely to have a share of 40%-50% in the upcoming three to five years as an increasing number of users pay attention to online education. Traditional face-to-face teaching industry will be likely to be relentlessly eliminated if it does not actively welcome this revolution.
But industrial features determine the process. For example, very complicated IT training cannot be easily overthrown by online education, because it is of great difficulty for online education to replace offline centralized teaching and answering. But traditional classroom teaching pattern is constrained by commonly unskilled teachers, so the chance for O2O to be adopted is great. At this point, integrating IT into face-to-face training will be crucial for improving the quality of education and training.
(iv) Analysis on threats
Attention has gradually been paid to online vocational education with the appearance of investment bubbles and risks in K12. But for now, there is no complete value chain formed in vocational education market just like language learning and K12 markets. At present, well-performing companies offer teaching mainly in the form of “off line plus online” and most of companies that teach totally via the Internet still attract users with free teaching before they find a profitable way, such as Uniquedu’s “teaching bar” and Xsteach. In other words, vocational education needs to cooperate with other learning patterns before becoming completely “online”.
Online vocational education must center a segment to form core competitiveness and avoid the product homogeneity of K12.
II. Method of breaking through the dilemma in online vocational education
Changes in online vocational education were not noticed by people as O2O became a highlight of online education in 2015.
Unlike O2O, projects relating to vocational education are never money-consuming and they seek for a commercial model at the outset. In April 2015, SUNLANDS posted a revenue of RMB 78.4m of March 2015. The revenue of March 2015 reported by Luo, Haixue and Duia is RMB 64m, RMB 12.4m and RMB 2m respectively. SUNLANDS did this for longstanding online education company China Distance Education Holdings Ltd. Any company will be now likely to join the list of “being overthrown” by accident.
The fundraising for online vocational education is little reported, but a lot of funds still actually go toward it. For example, 100.com purchased Edu24oL operating for over 10 years only at a price of more than 100m Yuan and benefited from a lot from this deal.
Coincidentally, TANGEL announced in June 10 that it was to buy the stake of 60% in EMERALD EDUCATION in cash. According to the deal, the seller’s whole evaluation stoods at RMB 525m based on its net profit of RMB 35m of 2015. Emerald Education’s online education is targeted at vocational education for adults and the focus is also placed on one IT segment – mobile Internet and digital entertainment.
Hejun Business School has been listed and traded in the new OTC market. It is also engaged in online education and changes traditional classroom teaching into the model of online and offline interaction. Its financial data for the past three years show that it generated a revenue of 7.8806m, 11.514m and 30.5627m Yuan in 2012, 2013 and 2014 respectively. Online education shall be an important component in this school.
Online financial and economic education school Gaodun announced that it has concluded a cooperation agreement with KE.QQ to provide full training courses for financial and accounting certificates. Obviously, Tencent’s strong distribution ability and enormous traffic on PC and mobile terminals are key factors that attract these two parties to cooperate.
IBEIFENG has raised a lot of money. Some IT training institutions are conducting large fundraisings (e.g. Maiziedu, JikexueYuan, Wyzc, etc.). The aforesaid information demonstrates that online vocational education is a black horse for online education and public companies similar to TEDU will appear in the field of IT training alone and their income and market value will exceed those of TEDU someday.
The market pattern of online vocational education has not yet been fixed, so companies still have a lot of opportunities as long as they master how to break through the dilemma.
- Breaking through the dilemma by focusing on large markets
The whole market reserve is very large, and being good at seeking for hot fields and competitive market is the insight and consideration that companies must have. For example, almost 80% of graduates manage to take the civil servant exam only for a few “secure jobs”. So there are many training institutions for public servants, such as Huatu, Offcn, etc. How to occupy the large stock market is a problem that must take into account to have a position in the civil servant exam training industry.
- Occupying the market vacancy to break through the dilemma
Occupying the market vacancy does not mean grabbing the existing market. To date, the market is fixed in many aspects, so it is very difficult for you to disturb the pattern and seek a place for survival. On the contrary, it is easier to explore some emerging segments. For example, some markets to be explored include automobile, art, cartoon and music trainings, etc. And some IT and enterprise trainings are market vacancies to be occupied with ease.
- Breaking through the dilemma of quality courses
If video courses are always developed in a conventional way, there is no vitality for online education. Traditional video courses are rather clamorous and boring, so they are hard to learn. Instead, some short quality cartoon courses are more delicate, profound and easy to understand.
But according to the survey conducted by China Online Education Research Institute, there are fewer cartoons suitable for online vocational education. It is generally believed that adults are the audience of vocational education, so what are needed are courses with sufficient contents not too delicate courses. In reality, that is a wrong concept. The output form of videos is also crucial, because it has a great effect on the playback amount of video, learners’ understanding and the number of users.
- Breaking through the dilemma of the unique channel
Good products need a good marketing channel. There is no doubt that a salable network path or strong offline agent is a great wealth for publishing vocational education. So, online education is not just the competition of product, but the war of fighting for channels.
At present, the Chinese government has strategically attached great importance to vocational education, a tera-scale market. Inevitably, a group of vocational education companies that find a way to break through the dilemma will seize this opportunity and lead the industry, thus creating many famous enterprises and public companies.
- Part IV – II Analysis on Segments of the Online Vocational Education
- Part V – I Overview of the Investment and Fundraising of the Online Education in China of 2015
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.