Custom Research report Pearson by wilson.heidik

investing in knowledge A report on Chinaâ&#x20AC;&#x2122;s private education and training market for Pearson China Âť december

2014

A research service from the Financial Times

contents Page Chapter 1 Executive summary

1.1 Key findings

Chapter 2 Research scope and methodology

2.1 Research scope

2.2 Survey methodology

2.3 Overview of respondents

Chapter 3 Key findings

3.1 Summary of key findings

3.2 Overall market size estimate and methodology

3.3 Market breakdown by age

3.4 General consumer profile

3.5 Regional spending trends

3.6 Key findings by age group

3.6.1 Early education market

3.6.2 School-age education market

3.6.3 Adult education market

investing in knowledge 2014 private education report

Page Chapter 4 Skill-based childrenâ&#x20AC;&#x2122;s English

4.1 Key findings

4.2 Market overview

4.3 Overall consumer behaviour trends

4.4 Training provider preferences

4.4.1 Criteria for choice of training provider

4.4.2 Customer satisfaction

4.4.3 Future plans

Chapter 5 Skill-based adult English

5.1 Key findings

5.2 Market overview

5.3 Overall spending trends

5.4 Consumer behaviour trends

5.5 Training provider preferences

5.5.1 Criteria for choice of training provider

5.5.2 Consumer satisfaction

5.5.3 Future study plans

investing in knowledge 2014 private education report

Page Chapter 6 Test prep for overseas study

6.1 Key findings

6.2 Market overview

6.3 Most popular tests prepared for

6.4 Training provider preferences

6.5 Future study plans

Chapter 7 Childrenâ&#x20AC;&#x2122;s tutoring

7.1 Key findings

7.2 Market characteristics

Chapter 8 Professional training

8.1 Key findings

8.2 Market characteristics

investing in knowledge 2014 private education report

Chapter 9 New technology in education

9.1 Key findings

9.2 Popularity and average spending

9.3 Acceptance of online courses

9.4 Usage of mobile devices for education

Chapter 10 Outlook

10.1 Key trends

10.2 Urbanisation

10.3 Skill shortages

10.4 Online and mobile growth

Appendix Survey questionnaire

chapter 1 Executive summary 1.1

Key findings

investing in knowledge 2014 private education report

1.1

Key findings

• We estimate that the total value of China’s private training and education market reached Rmb728bn ($118.4bn)

in 2014.

• Average spending on private education is noticeably higher in the 5-6 year-old age bracket due to kindergarten

fees and in preparation for primary school, and in the 16-18 age group prior to gaokao. There is a further surge in private education spending among adult learners in their late 20s.

• Children’s tutoring is the largest private education and training market segment. We estimate that total

spending on tutoring for children aged between 7 and 18 totalled Rmb135.4bn in 2014. This was followed by adult professional training (Rmb63.6bn).

• Demand for English training is also extremely strong. 17.5% of adults and 25.9% of children aged 0-6

participated in paid-for skill-based English courses over the past year.

• Cambridge Young Learners and New Oriental were the most popular English training providers for children,

while New Oriental was the dominant English training provider among adult learners in our survey.

• Test prep for overseas study is a small but lucrative niche. Only 6.4% of adult respondents said they took an English course for foreign test prep in the past year, but among those who did, 44% spent more than Rmb10,000.

• Chinese education consumers are increasingly receptive to online learning. Almost half (49.5%) of adults who

enrolled in training courses in the past year paid for online training, while 34.8% of young learners also received online instruction. However, low connection speeds and reliability remain significant barriers to delivering education content online.

Size of key private education markets (Rmb bn)

42 Skill-based adult English

135

Test prep for overseas study

728

Overall private education market

Professional and vocational

Tutoring

30 Skill-based kids’ English

Average annual spend on private tuition in the past 12 months (Rmb)

10,275

Parents with children aged 0-6

6,581

Parents wth children aged 7-18

Adults Source: China Confidential

3,989

investing in knowledge 2014 private education report

Following on from our successful 2011 private education survey project for Pearson, China Confidential conducted a new, large-scale study of private education consumers in late 2014. This year’s report is based on an online survey of 11,001 individuals, conducted in 4Q14, covering a total of 18,115 survey subjects across all age groups. Our findings underline the importance of education in China, and the motivation among all age groups to invest in improving skills and opportunities. Based on our research and surveys, we estimate that China’s total private education and training market was worth Rmb728bn in 2014, with adults spending an average of Rmb3,989 on private education over the past year. Spending on training for children’s education was markedly higher. Parents with young children spent an average of Rmb10,275 on tuition for their children, while those with children in the 7-18 age bracket spent an average of Rmb6,581 on training during the past 12 months. Our survey results suggest that private education spending peaks at three major age ranges – 5-6, due to kindergarten fees and in preparation for primary school; 16-18, prior to gaokao (China’s national college entrance exam); and among adult learners in their late 20s, as professionals look for additional skills and qualifications to further their careers. Survey respondents showed a strong demand for skill-based English training, with 17.5% of the adult sample reporting that they had paid for a course in this category in the past year. Among school-aged children, 25.9% had attended skill-based English courses in the past year. Taken together, we estimate the total skill-based market segment to be worth Rmb71.9bn in 2014. English training for foreign exams (IELTS, TOEFL, GRE, etc.) represents a relatively small but high value market among adult learners. Only 6.4% of adult survey subjects said they took such a course in the past year, but among those who did, 44% spent more than Rmb10,000. We estimate that this market was worth up to Rmb28.5bn. Though beyond the primary focus of this report, children’s tutoring is an enormous market segment that is worth noting. Among respondents who have children in the 7-12 age group, 56.7% said they paid for a tutor in the past year. Parents spent an average of Rmb4,529 on such services in the past 12 months. We therefore estimate that the total tutoring market was worth around Rmb135.5bn in 2014. Professional training programmes also comprised a similarly large market segment, with 27% of adult respondents reporting that they enrolled in a fee-based course in this category. We estimate that the total adult professional training market (excluding MBA and EMBA programmes) was worth Rmb63.3bn in 2014. The most popular certificate courses in this category included finance, human resources and IT. Across all areas of the training market, our survey respondents showed high approval for web-based course content. Almost half (49.5%) of adult respondents who enrolled in training courses in the past year said they paid for training online. Though all age groups showed high levels of participation in web- and mobile-based training, we note particularly strong preference for such content among parents of children in the 0-6 age group. Over half (55.8%) of this group said they plan to purchase mobile education software for their children in the next year. However, low connection speeds and reliability remain a significant barrier to delivering education content online. Over a third of respondents (34.9%) chose ‘internet connectivity is not stable’ as a disadvantage of online courses. l

chapter 2 Research scope and methodology 2.1

Research scope

2.2 Survey methodology

2.3 Overview of respondents

investing in knowledge 2014 private education report

2.1

Research scope

Following on from our 2011 private education survey project for Pearson, China Confidential, a research service from the Financial Times, conducted a new, large-scale study of private education consumers in late 2014. This year’s report is based on an online survey of 11,001 individuals, and covers a total of 18,115 subjects across all age groups. Based on our consultation with Pearson, our 2014 survey focused on five key areas:

• • • • •

Skill-based children’s English Skill-based adult English English test prep for overseas study Children’s tutoring Professional training

In each of these areas, we asked respondents about their spending patterns and training provider preferences over the past 12 months, as well as their plans for the coming year. Our survey also covered respondents’ use of technology – both web-based learning and mobile applications – in their education In terms of geographic scope, the survey was targeted at urban residents of first-, second-, and third-tier cities. The surveys and research have been structured so as to be repeatable on an annual basis, in order to be able to calculate annual growth rates and to be used as a benchmarking tool for the various branches of Pearson’s education business.

2.2

Survey methodology

Our survey captured the education and training patterns of 18,115 respondents in China’s top three city tiers. The survey was administered online through an interactive questionnaire, which was divided into four sections:

• • • •

Questions for adult respondents Questions about dependents in the 0-6 age group Questions about dependents in the 7-18 age group Parents were asked to complete responses covering themselves and their children.

To ensure adequate geographical distribution in the sample group, we divided China up into seven regions. Quotas were set for respondents from individual first- and second-tier cities, while regional quotas were established for third-tier cities. A complete English version of the survey can be found in Appendix.

2.3

Overview of respondents

After a thorough data cleaning process to remove erroneous responses and extreme values, our survey data contained 11,001 qualified respondents, covering a total of 18,115 survey subjects – adult respondents who had paid for training or education for themselves over the past 12 months and the children of adult respondents to our survey for whom respondents had paid for training or education over the past 12 months. The majority of survey subjects (58.2%) were adults, while children aged 0-6 and 7-18 comprised 24.3% and 17.5%, respectively, of the overall total. The following chart shows the distribution of survey subjects in relevant subgroups, which may be a helpful reference in interpreting the analysis in this report (see chart 1):

investing in knowledge 2014 private education report

1. Overview of respondents

18,115 Survey subjects*

4,128

2,986

11,001

(24.3%) are aged 0-6

(17.5%) are aged 7-18

(58.2%) are aged 18 or over

2,690

791

2,506

1,538

6,594

2,172

(65.1%) enrolled in fee-based training in the past 12 months

(19.2%) enrolled in English courses in the past 12 months

(83.9%) enrolled in fee-based training in the past 12 months

(51.5%) enrolled in English courses in the past 12 months

(59.9%) enrolled in fee-based training in the past 12 months

(19.7%) enrolled in English courses in the past 12 months

456

770

1,732

(11.0%) took skillbased English courses

(25.8%) took skillbased English courses

(15.7%) took skillbased English courses

*Survey subjects defined as the primary subject of our survey questions and answers. These include adult respondents to our survey who had paid for education or training for themselves over the past 12 months and the children of adult respondents to our survey for whom the adult respondents had paid for training or education over the past 12 months. Source: China Confidential

In accordance with the city quotas established in our survey methodology, respondents were distributed fairly evenly across regions, with respondents in eastern China representing the largest portion of the survey pool at 24.8% (see chart 2). The age distribution of respondents in our survey was reflective of a web-based survey, with a heavy concentration in the late-20s to early-30s age group (see chart 3). Quotas were set to ensure sufficient survey respondents with dependents aged between 0-7 and 7-18. The oldest respondent in our survey was 76 years old. Gender distribution was fairly even, with women comprising a slightly higher portion of the survey pool than men â&#x20AC;&#x201C; at 50.2%. Our survey pool held relatively high levels of education, with 69.5% of respondents reporting that they had obtained a bachelorâ&#x20AC;&#x2122;s degree or above (see chart 4). The strong education background was reflected in the distribution of household incomes, which showed a pattern of middle-class and upper-middle-class survey subjects (see chart 5).

investing in knowledge 2014 private education report

In terms of industries and professions, manufacturing was the most common in our survey pool, with 15.8% of respondents choosing it as the best descriptor of their employment. 9.4% of respondents said they work in government, making it the second most common industry in our study (see chart 6). The vast majority of respondents (85.6%) indicated that they have a hukou (residency permit) in their city of residence. A majority (72%) of survey respondents have children, with a notably greater concentration in the 0-6 age group (see chart 7). l

2. Regional breakdown of survey respondents and regional and city-tier quotas and definitions used

East

South

North

Central

Northeast

Southwest

Northwest

24.8%

18.0%

16.6%

16.0%

9.6%

8.0%

7.1%

FIRST-TIER CITIES Region North East South South

City Quota Beijing 400 Shanghai 400 Guangzhou 400 Shenzhen 400

SECOND-TIER CITIES Region North-east North-east North North North East East East East East Central Central Central Central South South South-west South-west North-west North-west

City Quota Shenyang 250 Changchun 250 Tianjin 250 Shijiazhuang 250 Taiyuan 250 Nanjing 250 Hangzhou 250 Hefei 250 Jinan 250 Fuzhou 250 Nanchang 250 Wuhan 250 Changsha 250 Zhengzhou 250 Nanning 250 Zhongshan 250 Chengdu 250 Kunming 250 Xiâ&#x20AC;&#x2122;an 250 Lanzhou 250

THIRD-TIER CITIES Region Northeast North East Central South North-west/ south-west

City There were no specific city quotas for third-tier cities

Source: China Confidential

North: Beijing, Tianjin, Hebei, Shanxi, Inner Mongolia Quota 475 500 800 600 475 550

North-east: Liaoning, Jilin, Heilongjiang North-west: Shaanxi, Gansu, Xinjiang, Ningxia, Qinghai Central: Jiangxi, Henan, Hubei, Hunan East: Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Shandong South: Guangdong, Guangxi, Hainan South-west: Chongqing, Sichuan, Guizhou, Yunnan, Tibet

investing in knowledge 2014 private education report

3. Age distribution 800

No. of respondents

700 600 500 400 300 200 100 0

18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68

Q: What is your age? Source: China Confidential

4. Education level High school or lower

Vocational college 9.2%

Undergraduate degree

Masterâ&#x20AC;&#x2122;s degree or above

6.9%

6% 23.

60 .3

Q: What is your education level? Source: China Confidential

5. Individual and household monthly income Individual income

Household income

3,500

No. of respondents

3,000 2,500 2,000 1,500 1,000 500

Q: What is your individual monthly income? Q: What is your household monthly income? Source: China Confidential

b2 or 0,0 m 0 or 0 e

b1 5 19 ,00 ,9 0 99 Rm

b1 2 14 ,00 ,9 0 99 Rm

Rm b1 0 11 ,00 ,9 0 99 -

b9 , 9, 000 99 9 Rm

Rm b7 , 8, 00 99 09

b5 , 6, 000 99 9 Rm

b3 , 4, 00 99 09 Rm

b or 2,9 le 99 ss

investing in knowledge 2014 private education report

6. Top sectors in which respondents are employed

Manufacturing Government Cultural education Construction Computer, electronics Student Healthcare Trade Commerce Transportation Shop owner Finance Business services Internet-related 0

10 %

Source: China Confidential

7. Age distribution of respondentsâ&#x20AC;&#x2122; children

1,000

No. of respondents

800 600 400 200 0

Q: What is the age of your oldest child? Source: China Confidential

18+

chapter 3 Key findings 3.1

Summary of key findings

3.2 Overall market size estimate and methodology

3.3 Market breakdown by age

3.4 General consumer profile

3.5 Regional spending trends

3.6 Key findings by age group

3.6.1 Early education market

3.6.2 School-age education market

3.6.3 Adult education market

investing in knowledge 2014 private education report

3.1

3.2

Summary of key findings

• • • •

We estimate that China’s education and training market was worth Rmb728bn in 2014. Spending on training surges at kindergarten ages and just before students take gaokao and graduate school exams. Children’s tutoring was the largest segment in our market estimation, worth Rmb135.4bn in 2014. Professional training was the most valuable segment of the adult market, worth an estimated Rmb63.6bn.

Overall market size estimate and methodology

We estimate that the overall value of China’s training and education market reached Rmb728bn in 2014 (see chart 1). To reach this estimate, we expanded the average spending patterns of survey respondents based on the population recorded in China’s 2010 Census, which is the most recent population dataset available with a detailed breakdown by age. We used the 664.6m urban population total, which includes cities and towns, as this scope aligned well with Pearson’s target market and our survey pool. Since our questionnaire was delivered online, the results are representative of the portion of the population with internet access. 1. Estimated size of the Chinese private education market Age Urban population

% of respondents who took course in 2014 (%)

Average spent on training (Rmb)

Internet penetration rate (%)

Market size estimate (Rmb bn)

1-2 12,860,016 48.3 8,153 3-4 12,701,175 71.2 10,658 Internet 5-6 12,565,856 81.2 11,441 penetration 7-8 11,731,368 82.7 5,745 rate of 9-12 25,539,940 85.7 6,371 parents’ age 13-15 22,083,146 87.7 6,939 group 16-18 33,107,974 77.9 8,341 19-22 56,360,135 47.7 3,276 81.2 23-25 37,668,665 37.6 3,946 81.2 26-30 57,506,822 19.4 3,993 81.2 31-35 57,090,912 17.0 4,049 77.5 36-40 67,659,156 9.8 3,145 77.5 41-45 61,220,167 9.4 4,199 45.2 46-50 48,944,129 6.4 5,930 45.2 50 and over 147,590,806 6.0 1,675 9.6 Total

40.3 75.1 89.6 42.0 94.5 71.4 96.2 71.5 45.3 36.1 30.4 16.2 11.0 8.4 –* 728.0

Notes: Market size = Urban population x % of respondents who took course x average spent on training x internet penetration rate. *Market size estimate for ages 50 and over is excluded from calculation Sources: NBS, CNNIC, China Confidential

While web usage is widespread among urban youth, it is comparatively less common among older age groups. In order to correct for this distortion, we weighted the results based on China’s population of web users by age group, as reported by the China Internet Network Information Centre (CNNIC). For survey subjects under the age of 18, we adjusted their spending according to the internet penetration rate of their parent’s age group. Respondents who reported spending on MBA/EMBA programmes were excluded from the overall market estimation because their high course fees distorted the overall totals. Survey respondents over the age of 50 were also removed from the calculation given the small proportion of respondents over the age of 50 in our sample pool.

3.3

Market breakdown by age

3.4

General consumer profile

Our market estimates show that China’s education spending is closely related to the country’s strong emphasis on exam performance. Spending surges in advance of kindergarten and prior to the gaokao (national college entrance exam). Spending on private education remains high into the late 20s, which is typically when students seek to enter graduate and business school programmes (see chart 2).

Our survey results show that the tendency to enroll in private training programmes grows from birth until it

investing in knowledge 2014 private education report

peaks in the 13-15 age bracket, in which 87.7% of survey subjects had received paid for education in the past year. Adult enrolment rates in private paid-for education nevertheless remain high, with over 60% of survey subjects in their 20s, over 50% of survey subjects in their 30s and over 40% in their 40s receiving paid-for education or training (see chart 3). Similar to our market size estimate breakdown, the age distribution of average spending shows peaks just before major exams. The renewed pick-up in average spending among survey subjects in their late 20s highlights the importance of this age as a time to amass further graduate or professional qualifications. However, the average spending breakdown shows a considerably sharper spike in the 5-6 age group, when parents enroll their children in kindergarten prior to them starting primary school (see chart 4).

Regional spending trends

Average spending was roughly similar across Chinaâ&#x20AC;&#x2122;s seven major regions. However, there were some noteworthy variations (see chart 5). Parents of children in northern China spent an average of Rmb3,581 on early childhood education, considerably higher than the Rmb3,034 average recorded in southern China, the second highest region in terms of spending on early education. Adults in north-eastern provinces spent the most on education, with adult education spending also high in eastern provinces with highly competitive labour markets. Adult survey subjects in central provinces spent noticeably less, on average, than their counterparts in other regions. 2. Breakdown of private education and training spending by age group 100 80

Rmb (bn)

3.5

20 0

75.1

71.4

40.3

1-2

96.2

94.5

89.6

71.5 45.3

42.0

3-4

5-6

7-8

9-12

13-15

16-18

19-22

36.1

23-25 26-30

30.4 31-35

16.2

11.0

8.4

36-40

41-45

46-50

Q: How much did you spend on education and training programmes over the past 12 months? Source: China Confidential

3. Percentage of survey subjects who took fee-based courses in past 12 months 100 80 60 % 40 20 0

71.2

81.2

82.7

85.7

87.7

77.9

48.3

1-2

3-4

5-6

7-8

9-12

13-15

16-18

72.4

65.9

61.0

58.6

54.5

49.5

43.5

19-22 23-25 26-30 31-35 36-40 41-45 46-50

37.8

50 and over

Note: Survey subjects include adult respondents who took fee-based courses themselves as well as adult respondents who paid for their children to take fee-based courses. Source: China Confidential

investing in knowledge 2014 private education report

4. Average spending on courses in past 12 months 12

Rmb (000s)

10 8 6 4

10.7

11.4

8.2 5.7

6.4

6.9

8.3

2 0

3.7

1-2

3-4

5-6

7-8

9-12

13-15

4.6

6.0

5.5

4.5

4.3

16-18 19-22 23-25 26-30 31-35 36-40 41-45 46-50

3.0 50 and over

Q: How much did you spend on training programmes in the past 12 months? Source: China Confidential

5. Key regional spending patterns Ages 0-6

Ages 7-18

Adults

5,000

Rmb

4,000 3,000 2,000 1,000 0

North

North-east

East

Central

South-west

West

North-west

Q: How much did you spend on training programmes in the past 12 months? Source: China Confidential

3.6

Key findings by age group

Our survey results and analysis highlighted trends across key education submarkets and age groups. Detailed findings are elaborated on in subsequent chapters, but the headline findings across the three key age brackets were: 3.6.1 Early education market Respondents with children in the 0-6 age group reported spending an average of Rmb10,275 on private training for their child in the past 12 months. Most training services were delivered through public kindergartens and private kindergartens (see chart 6). 3.6.2 School-age education market On average, parents with children in the 7-18 age group spent Rmb6,582 on training for their child in the past 12 months. Tutoring was by far the largest segment of this market, with an estimated value of Rmb135.4bn in 2014. Skill-based English training accounted for Rmb29.5bn of the overall market (see chart 7). 3.6.3 Adult education market Our adult survey respondents spent an average of Rmb3,989 on education and training for themselves in the past year. Professional training led the field, with an estimated market size of Rmb63.6bn. The adult market for skillbased English was considerably larger than the market for skill-based English among children, with an estimated value of Rmb42.4bn in 2014 (see chart 8). l

investing in knowledge 2014 private education report

6. Estimated size of key early education submarkets

Public kindergartens

61.8

Private and publicprivate kindergartens

53.9 38.2

Private training institutions 22.7

Pre-school Kindergarten extracurricular programmes

14.2

Primary school extra5.6 curricular programmes Private and public- 2.2 private primary schools 0

Rmb (bn) Note: Early education defined as education for students aged 0-6. Based on estimated annual spending in 2014 Source: China Confidential

7. Estimated size of key education submarkets, ages 7-18 150

Rmb (bn)

120 90 135.4

85.7 30 35.1

29.5

4.6

Non-state/ private school

Skill-based English

English for foreign study

0 Tutoring

Hobby courses*

Notes: Based on estimated annual spending in 2014. *Hobby courses defined as paid-for courses taken in subjects such that are not directly related to exams or school subjects. Examples include musical instrument or art courses Source: China Confidential

8. Estimated size of key adult private education submarkets

63.6

Professional training* General skill-based English training

42.4

Training for other type of exam

31.7

Training for a foreign study English exam

28.5

Training for domestic English exam

11.2 0

Rmb (bn) Notes: Adult education defined as education for students aged 18 and over. Based on estimated annual spending in 2014. *Excludes MBA and internal corporate courses Source: China Confidential

chapter 4 Skill-based childrenâ&#x20AC;&#x2122;s English 4.1

Key findings

4.2 Market overview

4.3 Consumer behaviour trends

4.4 Training provider preferences

4.4.1 Criteria for choice of training provider

4.4.2 Customer satisfaction

4.4.3 Future plans

investing in knowledge 2014 private education report

4.1

Key findings

• We estimate that the skill-based English training

Estimated size of children’s English training market

market for the 7-18 age group in China was worth Rmb29.5bn in 2014.

• Respondents said that face-to-face classes (delivered

in person or over video chat) are the most effective methods for children to learn English.

TOTAL: Rmb34.1bn English for foreign study Rmb4.5bn

• Cambridge Young Learners was the most popular

skill-based English provider for children aged 0-6, while New Oriental was most favoured for 7-18 year olds.

• Among parents of young children (ages 0-6), price

4.2

was the most frequently cited factor in their choice of English programme (40.1%). By contrast, only 24.5% of parents with children over the age of seven said price was an important factor in their decisions.

Skill-based English Rmb29.5bn

Note: Based on estimated spending on English training in 2014 for children aged between 7-18 Source: China Confidential

market overview

For young children below the age of seven, our research shows that English training is often incorporated into broader early education programmes, making it difficult for respondents to break out specific spending on English education for their children. The picture at the 7-18 age-group level is clearer. Based on our calculation of the overall training market size, we estimate that skill-based English training in the 7-18 age group was worth Rmb29.5bn in 2014, comprising 86% of the total English education market in this age bracket.

4.3

Consumer behaviour trends

In both age groups, face-to-face instruction was the most popular method for English learning (see chart 1). Parents of older children (aged 7-18) were far more decisive in their preference, with 63% of respondents saying that face-toface instruction was the most effective way for children to learn English; all other methods polled below 10%. Among parents of children below the age of seven, non-class-based learning forms were also deemed to be effective. 27% of respondents cited nursery rhymes, songs and stories as the most effective way for kids to learn English, while a further 22.5% said educational TV programmes and cartoons were most effective. Interestingly, very few parents in both age brackets believed rote learning or exercises to be most effective. Just 5.5% of parents with older children chose completing a large volume of exercises as the most effective way of learning English, with less than 1% of parents of younger children believing this to be the best form of learning. This suggests that most parents favour a more rounded approach to English instruction for their children.

4.4

training provider preferences

In the 0-6 age bracket, Cambridge Young Learners and New Oriental were the two most popular English training providers, with the former exhibiting a stronger position in third-tier cities (see chart 2). In first-tier cities, Cambridge Young Learners, New Oriental and Disney English tied for the lead in popularity among respondents. Within the 7-18 age group, New Oriental held a commanding lead across all three city tiers. The only market in which it was remotely challenged for leadership was in third-tier cities, where 17.4% of parents said they send their child to English courses run by Cambridge Young Learners, compared with 24.6% among this cohort that send their child to New Oriental. The popularity of Cambridge Young Learners was much

investing in knowledge 2014 private education report

1. What do you think is the most effective way for children to learn English? (Ages 0-6) Ages 0-6 Face-to-face or online classes Nursery rhymes, songs, stories

39.1 26.8

Educational TV/cartoons

22.5 6.8

Picture/story books Non-professional children’s education websites

2.4

Smartphone or tablet apps 1.8 Completing a large volume of exercises

0.4

Other 0.2 0

% Ages 7-18 Face-to-face or online class

63.0

Educational TV/ cartoons

9.7

Books or storybooks

9.5

Listening to English materials Completing a large volume of exercises

9.1 5.5

Smartphone or tablet apps

1.5

Non-professional children’s education websites

1.1

Other

0.6 0

% Sample for ages 0-6 = 2,690; for ages 7-18 = 2,506 Source: China Confidential

lower in first- and second-tier cities, however. EF Education exhibited moderate popularity among parents in first-tier cities – 13.9% send their child to English classes run by EF. However, this fell to just 5.0% among parents in third-tier cities. 4.4.1 Criteria for choice of training provider The factors influencing our respondents’ selection of English training provider for their children diverged between the two broad age groups covered in our survey. Parents with young children favoured price, convenience of location and the skill level of teachers in their decision making, whereas the importance of location took the top spot among those with children in the 7-18 age bracket, followed by the influence of family/friend recommendations and the reputation of the programme (see chart 3). The importance of location in choosing training provider was most pronounced among first-tier city respondents with young children (ages 0-6), with 44% of this sub-group citing it as an important factor behind their choice of English training provider. In the older age bracket, location was somewhat less of a factor for first-tier city respondents. This may be because older children can independently make use of the better-developed public transportation systems in first-tier cities, making the issue of location less crucial for their parents. Price was a considerably more important factor for parents of young children in second- and third-tier cities than it was for other segments of the survey pool (see chart 4). Among parents in these cohorts, 42.9% and 41.7%, respectively, listed price as an important factor in their choice of skill-based English programme.

investing in knowledge 2014 private education report

2. Most popular English training providers by city tier First tier

Second tier

Third tier

Ages 0-6 Cambridge Young Learners English New Oriental EF Education ABC Children's English Disney English Best Learning Mason Education Only Edu Rise English Maxen Aston Owen Education Longman First Leap Beiwai E-Plus Other 0

% Sample size: 456

Ages 7-18 New Oriental Cambridge Young Learners English Home tutoring EF Education Only Edu Wall Street English Disney English ABC Children's English Rise English Maxen Beiwai E-Plus Owen Education Aston Longman Best Learning Mason Education First Leap Other 0

20 %

Sample for ages 0-6 = 456; for ages 7-18 = 794. Q: At which of the following organisations does your child attend English classes? Source: China Confidential

investing in knowledge 2014 private education report

3. What were the most important factors influencing your choice of skill-based English training provider? Ages 0-16 Price Convenient location Skill level of teachers Reputation Has foreign teachers Family/friend recommended Brand recognition Courses suitable for my childâ&#x20AC;&#x2122;s level Curriculum format* Promotional activities Teaching materials Institution is large-scale Mature education system Teaching philosophy Teachersâ&#x20AC;&#x2122; authentic pronunciation Customer service Learning environment English level of graduates clearly improves 0

% Ages 7-18 Convenient location Family/friend recommended Courses suitable for my child's level Reputation Brand recognition Price Skill level of teachers Learning environment Mature education system Teaching philosophy Institution is large-scale Has foreign teachers Teachers' authentic pronunciation Curriculum format* Teaching materials Customer service English level of graduates clearly improves Promotional activities 0

20 %

Sample for ages 0-6 = 456; for ages 7-18 = 794. *Online content, interactive content etc. Source: China Confidential

investing in knowledge 2014 private education report

4. Importance of price and convenient location in choice of child’s skill-based English programme Ages 0-6

Ages 7-18

Price

Convenient location 44.0

28.0 First tier

36.6

19.6

37.5

42.9 Second tier

35.4

24.1

32.5

41.7 Third tier

39.7

27.1 50

Q: What were the most important factors influencing your choice of skill-based English training provider? Source: China Confidential

Interestingly, the importance of price registered significantly lower among parents with children in the 7-18 age group. 4.4.2 Customer satisfaction Among the five most popular skill-based English provider in our survey, EF Education posted the highest satisfaction scores. Respondents gave the institution an average satisfaction score of 8.59 and an average recommendation mark of 8.51. Feedback was particularly positive in the 7-18 age bracket (see chart 5) Scores for all of the institutions in the survey were relatively high, however, and parents showed strong loyalty to most brands. In the 0-6 age group, 97.9% of parents whose children are studying at Disney English said that their child would continue in the programme over the coming 12 months. ABC English has earned strong customer loyalty in the 7-18 age bracket, with 97.1% of parents reporting that their child will continue enrolment in the coming year (see chart 6). 5. Customer satisfaction and recommendation scores for popular skill-based English programmes Average satisfaction score

Average recommendation score

Ages 0-6

Ages 7-18

Disney English

EF Education

New Oriental

Only Edu

Cambridge Young Learners

New Oriental

EF Education

ABC Children’s English

Cambridge Young Learners 0

6 Score

Score

Sample for ages 0-6 = 456; for ages 7-18 = 794. Q: On a scale of 1 to 10, how satisfied are you with your child’s English training programme? Q: On a scale of 1 to 10, how likely are you to recommend your child’s English training programme to others? Source: China Confidential

investing in knowledge 2014 private education report

6. Do you plan for your child to continue taking courses at the same English training insitution over the next 12 months? Ages 0-6 Disney English

Ages 7-18 ABC Children’s English

97.9

97.1

New Oriental

97.0

EF Education

94.7

EF Education

95.0

Only Edu

90.6

Cambridge Young Learners

90.5

Cambridge Young Learners

91.3

ABC Children’s English

New Oriental

84.2 0

60 %

100

86.7 0

100

Sample for ages 0-6 = 456; for ages 7-18 = 784. Source: China Confidential

4.4.3 Future plans Among parents of children in the 7-18 age bracket, 26% said that they plan to enroll their children in skill-based English courses in the next 12 months. Parents of young children exhibited ambitious plans for their children’s English education in the coming year. 18.6% of respondents with children in the 0-6 age group said they plan to enroll their children in English programmes offered through social institutions, while a slightly smaller proportion (17.6%) indicated their children would attend a programme offered through a kindergarten. l

chapter 5 Skill-based adult English 5.1

Key findings

5.2 Market overview

5.3 Overall spending trends

5.4 Consumer behaviour trends

5.5 Training provider preferences

5.5.1

5.5.2 Customer satisfaction

5.5.3 Future study plans

Criteria for choice of training provider

investing in knowledge 2014 private education report

5.1

Key findings

• We estimate the adult market for skill-based English

Estimated size of adult English training market

training to be worth Rmb42.4bn in 2014.

• 1,732 survey subjects aged 18 or older reported having

TOTAL: Rmb82.2bn

paid for skills-based English training in the past 12 months, accounting for 15.7% of the adult survey pool.

Test prep for domestic exam Rmb11.2bn

• New Oriental was the most popular English training

provider in our survey, with 37.9% of adult English students indicating that they took a course there in the past year.

• Reputation and convenience were the most important

factors behind students’ choice of training programme, with just 7.2% citing price as the primary reason for their choice of training provider.

• 87% of respondents currently studying English said

Skill-based English Rmb42.4bn

Test prep for foreign exam Rmb28.5bn

that they plan to continue their studies at the same institution in the coming 12 months.

5.2

Market overview

5.3

Overall spending trends

5.4

Consumer behaviour trends

Note: Adult education defined as education for students aged 18 and over. Based on estimated annual spending in 2014 Source: China Confidential

Based on our overall market size calculation, China’s skill-based English training market for adults was worth Rmb42.4bn in 2014, comprising 52% of the total adult English market.

Of the 6,594 adult survey subjects who said they enrolled in fee-based training in the past 12 months, just over one-quarter of respondents (26.2%) said they had taken skill-based English courses (see chart 1). On average, these respondents reported spending Rmb3,146.

In terms of learning environment, small classes (of fewer than 20 students) at training centres were the most common locations for students to receive skill-based English training, with 30% of respondents choosing this 1. Enrolment in fee-based adult English training vs other types of fee-based adult courses Over the past 12 months

In the next 12 months

70 60 50 40 % 30

61.5 50.5

32.9

35.5

26.2

28.9

31.3

31.6

26.0 18.1 1.9

Professional training

English training (all types)

Skill-based English training

Hobby courses*

Other test prep training

1.5

Other

Sample = 6,594. *Hobby courses defined as paid-for courses taken in subjects that are not directly related to professional qualifications or development. Q: In which feebased courses have you enrolled over the past 12 months? Q: In which fee-based courses do you plan to enroll over the next 12 months? Source: China Confidential

investing in knowledge 2014 private education report

category. Over a quarter of students conduct at least part of their learning online. 26% said they studied English through a combination of online and offline classes, while a further 20.1% said they studied exclusively online (see chart 2). When asked about the number of hours spent on English training in the past year, the majority of respondents (56.6%) fell into two categories spanning 20 to 99 hours (see chart 3). Divided out over the course of a year, this suggests that the majority of respondents spend between 20 minutes and 2 hours per week on English studies. Our survey results show that adult English students mostly pay their own tuition fees, with 82.7% indicating that they paid out of their own pockets. Only 12% said that their employers covered the cost of the course (see chart 4).

5.5

Training provider preferences

New Oriental was by far the most popular English training provider among our survey pool, with 38% of adult English students indicating that they took a course at one of its training centres in the past year. The brand was particularly dominant in second- and third-tier cities where it faces less competition. 39.4% of adult English students based in second-tier cities and 37.7% of those based in third-tier cities said they studied English at New Oriental over the past year, compared with 32.9% in first-tier cities. 2. Types of skill-based adult English courses taken

Small class*

30.0

Combination of online/offline

26.0

Online

20.1 19.2

Large class One-on-one instruction

3.1

Customised VIP programme

1.6 0

% Notes: Sample = 1,732. Among respondents over the age of 18 who had paid for skill-based English training over the past 12 months. Q: Which type of skill-based English course did you take? *Fewer than 20 students Source: China Confidential

3. Number of hours spent on skill-based adult English courses over past 12 months 30 25 20 % 15 10

28.6

28.0

18.8

18.6

5 6.0 0 Under 20 hours

20-49 hours

50-99 hours

100-200 hours

More than 200 hours

Notes: Sample = 1,732. Among respondents over the age of 18 who had paid for skill-based English training over the past 12 months. Q: In total, how many hours did you spend on your skill-based English course over the past 12 months? Source: China Confidential

investing in knowledge 2014 private education report

First-tier cities are the core market for EF Education, the second most popular English training provider in our survey. 20.1% of adult English students in first-tier cities studied at EF Education. Its popularity was far lower in second- and third-tier cities, however. Global Education and Technology Group (GEDU) was third, with 9.3% of respondents choosing it as their English training provider – it had a fairly even popularity spread across the three city-tiers. In fourth place, Wall Street English showed a relatively stronger position in first-tier markets, where 15% of respondents selected it as their study provider. 5.5.1 Criteria for choice of training provider When asked to choose the top five factors influencing their choice of English programme, respondents gave widely varying answers. Teachers’ skills, price and reputation topped the list. Respondents who studied at GEDU in the past year cited ‘teachers’ skills’ and ‘reputation’ more often than those who paid for training at other leading institutions. Compared to other respondents, GEDU students also tended to place more importance on the perceived skills progress of students who had completed courses through that programme (see chart 6). 4. Who paid the tuition fee for your skill-based adult English course? I did

Employer

Parents

Other source

.1% 4.2% 1

% .0

.7 %

Notes: Sample = 1,732. Among respondents over the age of 18 who had paid for skill-based English training over the past 12 months Source: China Confidential

5. Most popular adult English training course providers, by city tier First tier

Second tier

Third tier

40 35 30 25 % 20 15 10 5

er th O

re VI En P A gl BC is h

Lo ng

k Ta l 51

D In yna st m itu ic te

et en

N ew

O nl

W eb

h lis En g

ED U G

y Ed u W al lS En tr gl ee is t h

O N rie e nt w al Ed uc at io n

Note: Sample = 2,172. Among respondents over the age of 18 who had paid for all types of English training over the past 12 months. Q: Which of the following English training providers have you attended classes with over the past 12 months? Source: China Confidential

investing in knowledge 2014 private education report

6. Factors influencing choice of adult English training provider New Oriental

EF Education

Weber

Wall Street English

GEDU

Skill level of teachers

Reputation

Brand recognition

Convenient location

Courses suitable for my level

Price

Mature education system

Learning environment

English level of graduates clearly improves Teaching philosophy

Teachersâ&#x20AC;&#x2122; authentic pronunciation Curriculum format*

Has foreign teachers

Customer service

Family/friend recommended

Institution is large-scale

Teaching materials

Promotional activities 0

% Sample = 2,172. Q: What were the most important factors influencing your choice of English training provider? *Online content, interactive content, etc. Source: China Confidential

investing in knowledge 2014 private education report

7. What was the single most important factor influencing your choice of English training provider? Reputation Convenient location Skill level of teachers Courses suitable for my level Brand recognition Family/friend recommended Price Mature education system Curriculum format* Has foreign teachers English level of graduates clearly improves Teaching philosophy Teachers' authentic pronunciation Promotional activities Institution is large-scale Customer service Teaching materials Learning environment Other 0

% Notes: Sample = 2,172. Among respondents over the age of 18 who had paid for skill-based English training over the past 12 months. Q: Which type of skill-based English course did you take? *Online content, interactive content etc. Source: China Confidential

When asked to pick the single most important factor in their choice of English programme, ‘reputation’ and ‘convenience of location’ took the leading spots. Only 7.2% of adult English students said that price was the primary factor in their choice of training programme (see chart 7). 5.5.2 Customer satisfaction Overall, our survey respondents showed a relatively high level of satisfaction with their current training institution. 82% of the group rated their programme at 8 or above on a scale of 1 to 10. 8. Overall satisfaction with chosen paid-for adult English training programme 40 35 30 25 % 20

35.9

31.0

15.2

13.1

5 0.3

0.2

1 3 (extremely unsatisfied)

0.2

0.9

3.4

10 (extremely satisfied)

Note: Sample = 2,172. Among respondents over the age of 18 who had paid for all types of English training over the past 12 months. Q: On a scale of 1 to 10, how would you rate your satisfaction with your chosen English training programme? Source: China Confidential

investing in knowledge 2014 private education report

In order to derive a more nuanced view of customer satisfaction, we used Bain & Company’s Net Promoter Score (NPS) system to reweight the scores. In the NPS calculation, respondents who rate the organisation with a 9 or 10 are considered ‘promoters’, while respondents who choose a score of 1 to 6 are considered ‘detractors’. Respondents selecting a rating of 7 or 8 are considered ‘passive’, and therefore are not counted towards the score. To calculate the net promoter score, the percentage of detractors is subtracted from the percentage of promoters. Based on this formula, EF Education, New Oriental, and GEDU had markedly higher scores than Wall Street English and Weber (see chart 9). 5.5.3 Future study plans In accordance with the relatively favourable reviews of training programmes, the vast majority of students (87%) said that they plan to continue their studies at the same institution in the coming year. Of all 11,001 adult survey subjects, 28.9% said they plan to take a skill-based English course in the next 12 months. l 9. Net Promoter Scores for leading English training providers New Oriental

10 5 0

10 9

5 10 9

GEDU

Net Promoter Score

38.9

10 9

Wall Street English

Net Promoter Score

20.8

% 15

Net Promoter Score

43.1

Weber

Net Promoter Score

40.4

EF Education

Net Promoter Score

31.6

20 % 15

% 15

5 0

10 9

Notes: Sample = 2,172. Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Satmetrix Systems and Fred Reichheld. Q: On a scale of 1 to 10, how likely are you to recommend your English training programme to others? Source: China Confidential

chapter 6 Test prep for overseas study 6.1

Key findings

6.2 Market overview

6.3 Most popular tests prepared for

6.4 Training provider preferences

6.5 Future study plans

investing in knowledge 2014 private education report

6.1

Key findings

• The English test preparation market for adults in China

Estimated size of test prep for overseas study market

is worth Rmb28.5bn, according to our estimates.

• Training courses for TOEFL examinations were the

TOTAL: Rmb33.2bn

Most popular tests prepared for

English test prep for TOEFL (Test of English as a Foreign Language) was the most popular type of course taken, with 4.2% of all adult respondents indicating that they had taken a TOEFL-related course in the past 12 months. This ranked it ahead of the 3% that took classes in preparation for IELTS (International English Language Testing System) examinations (see chart 2). Among adult respondents, choice of exam was fairly consistent across all city tiers (see chart 3). TOEFL was more popular than IELTS among adult learners in first-tier cities than among their counterparts in lower-tier cities, with 71.1% of first-tier city adult respondents who had paid for test prep for overseas study classes signing up for 1. Proportion of survey subjects taking English test prep for overseas study classes 10 8 6 % 8.6

4 2 0

1.2 Ages 7-18

Adults

Notes: Sample = 13,987. Adults defined as consumers aged 18 or over. Q: Which of the following types of course have you/your child enrolled in over the past 12 months? Source: China Confidential

investing in knowledge 2014 private education report

TOEFL-related courses, compared with just 47.2% that had signed up for IELTS classes. Third-tier cities registered a relatively higher percentage of respondents taking classes to prepare for GRE (Graduate Record Examinations) â&#x20AC;&#x201C; the admissions exam used by most graduate schools in the US. TOEFL was also the most popular exam among school-age children, although the total number of respondents in this age group was too small (only 52) to be statistically significant. In terms of age, the survey results show that adults in the 26-30 age range are most likely to take preparation classes for foreign study exams (see chart 4).

6.4

Training provider preferences

Among test prep for overseas study providers, New Oriental held a commanding lead among our survey sample, with 34.6% of respondents studying English for foreign exams reporting that they studied at a New Oriental school in the last 12 months. This was more than double the 15.2% that studied at EF Education, the second most popular training provider in this submarket, according to our survey, with 14.3% of respondents taking English test prep classes at GEDU (see chart 5). 2. Which of the following exams are you preparing for?

5 4 3 % 2

4.2 3.0

2.8

1 1.1

0.9

GMAT

SAT

0 TOEFL

IELTS

GRE

0.4 LSAT

Note: Sample = 11,001. Among all respondents aged 18 and over Source: China Confidential

3. Test popularity among adults preparing for foreign study exams First tier

Second tier

Third tier

80 70 60 50 % 40 30 20 10 0 GRE

TOEFL

IELTS

GMAT

SAT

LSAT

Notes: Sample = 1,732. Among adult respondents that have paid for test prep for overseas study classes over the past 12 months. Q: Which of the following exams are you preparing for? Source: China Confidential

investing in knowledge 2014 private education report

4. Age distribution of adult test prep students IELTS

TOEFL

LSAT

SAT

GRE

GMAT

50 40 30 % 20 10 0 18-22

23-25

26-30

31-35

36-40

Over 40

Notes: Sample = 712. Among adult respondents that have paid for test prep for overseas study classes over the past 12 months. Q: Which of the following exams are you preparing for? Source: China Confidential

5. Most popular English training providers among adult test prep for overseas study students

New Oriental EF Education GEDU Wall Street English Weber HJ English Meten Only Edu New Dynamic Institute Longre 51 Talk VIP ABC English Other 0

% Notes: Sample = 712. Among adult respondents that have paid for test prep for overseas study classes over the past 12 months. Q: Which of the following English training providers have you attended classes with over the past 12 months? Source: China Confidential

6. Which of the following exams do you plan to seek English training for over the next 12 months?

3.0 2.5 2.0 % 1.5

2.5

1.0

1.8

1.7

0.5 0.0

TOEFL

IELTS

Notes: Sample = 11,001. Among all respondents aged 18 and over Source: China Confidential

GRE

0.7

0.6

GMAT

SAT

0.2 LSAT

investing in knowledge 2014 private education report

6.5

Future study plans

In the coming year, respondentsâ&#x20AC;&#x2122; study intentions closely mirrored patterns seen in 2014, with 2.5% of all adult survey respondents reporting that they plan to enroll in English training for TOEFL, ahead of the 1.8% that plan to sign up for IELTS training (see chart 6). Respondents plan to spend relatively large sums on their training programmes. When asked to classify their projected spending on English test prep training in the coming year, 44% said they planned to spend over Rmb10,000, with a further 28.7% planning to spend between Rmb5,000-10,000 (see chart 7). l 7. Planned spending on English test prep for overseas study courses over next 12 months

30 25 20 % 15

28.7 22.6

19.9 12.6

9.1

4.7

2.4

0 Rmb0-2000

Rmb2,0005,000

Rmb5,00010,000

Rmb10,00015,000

Rmb15,00020,000

Rmb20,00040000

Over Rmb40,000

Note: Sample = 680. Among adult respondents planning to take foreign test prep training over the next 12 months. Q: How much do you plan to spend on your training course over the next 12 months? Source: China Confidential

chapter 7 Childrenâ&#x20AC;&#x2122;s tutoring 7.1

Key findings

7.2

Market characteristics

investing in knowledge 2014 private education report

7.1

Key findings

•

7.2

Tutoring of children in the 7-18 age group comprises the largest market segment in our survey, valued at Rmb135.5bn by our estimates. Parents spent an overall average of Rmb4,529 on tutoring in the past year, notably more than on almost all other education categories in our survey. Tutoring was most common in the junior-high age range (13-15), with 70.1% of survey subjects in this age bracket who had received paid-for education having private tuition. Average spending on tutoring was highest among children in the senior-high age range (16-18), with parents in this age group paying Rmb5,747 for tutoring for their child.

Market characteristics

Although not a major focus of this report, private tutoring was very popular among our survey respondents, with spending on tutoring of children aged between 7-18 totalling Rmb135.5bn, according to our estimates, making it the largest private education market segment covered in our survey. 1. Proportion of survey subjects aged 7-18 who receive paid-for tutoring, by city tier 70 60 50

40 30

67.1

69.5

65.5

20 10 0

First tier

Second tier

Third tier

Notes: Sample = 2,506. Based on parents with children aged between 7-18 who had paid for training for their child over the past 12 months. Q: In which fee-based courses have you enrolled your child over the past 12 months? (tutoring) Source: China Confidential

2. Breakdown of recipients of paid-for tutoring by age group 70 60 50 40 70.1

% 30 20

60.4 49.0

10 0

Ages 7-12

Ages 13-15

Ages 16-18

Notes: Sample = 2,469. Based on age of respondents’ oldest child. Some respondents had more than one child. This explains why the total number of respondents to this question is lower than the total number of parents with children aged between 7-18 who had paid for training for their child over the past 12 months. Q: In which fee-based courses have you enrolled your child over the past 12 months? (tutoring) Q: What is the age of your oldest child? Source: China Confidential

investing in knowledge 2014 private education report

Among parents who paid for training for their children in the past 12 months, over two-thirds hired private tutors, with the trend relatively similar across all city-tiers; in fact, a slightly higher proportion of parents in second-tier cities paid for private tuition for their child than among counterparts in first- and third-tier cities (see chart 1). Tutoring was most common in the junior-high age range (13-15), with 70.1% of respondents with children in this age bracket who paid for training reporting that they hired a personal instructor for their child. Over 60% of the senior-high-school age group (16-18) had also paid for tuition for their child over the past 12 months. Even among younger children, private tuition is relatively commonplace. Almost half (49.0%) of parents with children in the 7-12 age group who had attended paid-for training had paid for tuition for their child (see chart 2). Our survey respondents spent an average of Rmb4,529 on tutoring over the past 12 months, notably more than on almost all other types of education polled in our survey. Spending on tutoring seemingly increases alongside the age of the child, with parents of children in the senior high group (ages 16-18) spending an average of Rmb5,747 in the past year, compared with Rmb5,169 among ages 13-15 and Rmb3,907 among ages 7-12 (see chart 3). l 3. Average annual tutoring spend by age group

6,000 5,000

Rmb

4,000 5,747

3,000 5,169 2,000

3,907

1,000 0

Ages 7-12

Ages 13-15

Ages 16-18

Notes: Sample = 2,506. Based on parents with children aged between 7-18 who had paid for training for their child over the past 12 months. Q: In which fee-based courses have you enrolled over the past 12 months? (tutoring) Q: How much did you spend on tutoring for your child over the past 12 months? Q: What is the age of your oldest child? Source: China Confidential

chapter 8 Professional training 8.1

Key findings

8.2 Market characteristics

43 43

investing in knowledge 2014 private education report

8.1

Key findings

•

8.2

We estimate that China’s professional training market was worth Rmb63.6bn in 2014, making it a relatively large segment of the country’s private education market.

27% of adult respondents indicated they had enrolled in training programmes linked to a specific professional qualification or certificate over the past year, driven by respondents in first-tier cities, reflecting the perceived value of professional qualifications in these competitive job markets. Finance was by far the most popular type of certificate training programme, with 33.9% of respondents having taken a course preparing them for a specific financial qualification over the past 12 months.

market characteristics

Though beyond the primary focus of the survey, our online questionnaire also contained questions relating to professional training. As part of our overall market size calculation, we estimate that the professional training submarket in China was worth Rmb63.6bn in 2014. Demand for professional training is growing rapidly along with China’s transition to a higher-skilled, servicesfocused economy. Our survey respondents confirmed this trend, with 27.3% of respondents indicating that they had enrolled in certificate training courses (courses preparing students for a specific professional qualification or certification) in the past 12 months, and a further 14.5% enrolling in non-certificate courses (courses equipping students with professional skills but which aren’t linked to a specific qualification or certification) (see chart 1). While professional training programmes may have previously been concentrated in China’s largest cities, our survey shows a relatively similar pattern of enrolment across all city tiers. Nevertheless, a slightly higher proportion of respondents in first-tier cities enrolled in certificate courses than in other cities, likely reflecting the ultra-competitive job market in these cities, with professional qualifications highly prized in such an environment. In lower-tier cities, there was a higher enrolment rate in non-certificate courses than in first- and second-tier cities (see chart 2). Among the 3,008 respondents who enrolled in certificate training programmes, finance was by far the most popular subject, with 33.9% of respondents having taken a course preparing them for a specific financial qualification over the past 12 months. CPA and CFA are particularly popular financial qualifications, with 17.2% and 12.7%, respectively, enrolling in training programmes to prepare them for these exams. 26% of 1. Types of paid-for professional training courses attended 30 25 20 % 15

27.3

10 14.5 5 0

2.1 Certificate course

Non-certificate course

MBA/EMBA

Notes: Sample = 11,001. Certificate course refers to a course that prepare students for a specific professional certification or qualification. Q: Which of the following types of professional training courses have you attended over the past 12 months? Source: China Confidential

investing in knowledge 2014 private education report

2. Breakdown of professional training market by city tier Certificate course

Non-certificate course

MBA/EMBA

80 70 60 50 % 40

78.2

76.7 67.7

30 39.7

43.8

36.8

10 7.7

3.1

6.4

First tier

Second tier

Third tier

Note: Sample = 4,058. Among adult respondents who have attended a professional training course over the past 12 months. Q: Which of the following types of professional training courses have you attended over the past 12 months? Source: China Confidential

3. Popularity of certificate training programmes 35 30 25

20 15

33.9 26.0

18.2

5 0

19.3

17.2 12.7

11.0

CFA

Bar exam

8.6 3.1

Finance

Human resources

CPA

Actuary

Chef

Other

Notes: Sample = 3,008. Among adult respondents who have attended a professional certificate training course over the past 12 months. Q: Which of the following types of certificate training courses have you attended over the past 12 months? Source: China Confidential

4. Popularity of certificate training programmes by city tier Second tier

First tier

Third tier

35 30 25 20 % 15 10 5 0

Finance

Human resources

CPA

Bar exam

CFA

Actuary

Sample = 3,008. Q: Which of the following types of certificate training courses have you attended over the past 12 months? Source: China Confidential

Chef

Other

investing in knowledge 2014 private education report

respondents took a human resources programme, making it the second most favoured subject, ahead of IT (18.2%) (see chart 3). The popularity of courses varied somewhat across city tiers, with a far higher proportion of respondents in more competitive first- and second-tier cities enrolling in CPA and CFA classes than among their counterparts in third-tier cities. In fact, lower-tier cities lagged behind across most certificate training categories. IT certificate programmes stood out as being more popular in higher-tier cities (see chart 4). These courses were also the most expensive, with respondents spending an average of Rmb2,852 over the past year (see chart 5). l 5. Average spending on certificate training courses over past 12 months 3,000 2,500

Rmb

2,000 1,500

2.9

2.6 2.2

1,000

2.2

1.9

1.8

1.7

Bar exam

Finance

2.0 1.4

500 0

Actuary

CPA

CFA

Human resources

Culinary

Other

Sample = 3,008. Q: Which of the following types of certificate training courses have you attended over the past 12 months? Q: How much did you spend on this course? Source: China Confidential

chapter 9 New technology in education 9.1

Key findings

9.2 Popularity and average spending

9.3 Acceptance of online courses

9.4 Usage of mobile devices for education 50

investing in knowledge 2014 private education report

9.1

Key findings

• • • •

•

9.2

Almost half (49.5%) of adults who enrolled in training courses in the past year said they took an online course. Among respondents who are parents, online training was more popular among those with young children. Respondents in third-tier cities were nearly as likely to take online courses as first-tier city residents.

34.9% of respondents who took courses online in the last year said that internet connectivity problems are a downside to web-based learning. 55.8% of parents with children in the 0-6 age bracket indicated that they plan to buy educational smartphone or tablet software or apps in the next year.

Popularity and average spending

Among survey respondents who took training in the past 12 months, a relatively high proportion said they paid for online courses (see chart 1). 1. Percentage of respondents taking fee-based online courses in past 12 months, by age group Took online courses

Took online courses including English instruction

50 40 30 49.5

% 20

34.8

36.3

31.6

26.3

23.6

10 0

0-6

7-18

19 and over

Q: In the last 12 months, have you (or your child) taken any private fee-based online courses? Q: Did these courses include English instruction? Source: China Confidential

2. Percentage of respondents participating in fee-based online courses in past 12 months, by city tier 0-6

7-18

19 and over

60 50 40 % 30 20

52.8 37.9

50.0

27.9

30.0

First tier

Second tier

29.9 21.6

10 0

47.3

37.4

Sample = 7,114. Q: In the last 12 months, have you (or your child) taken any private fee-based exclusively online courses? Source: China Confidential

Third tier

investing in knowledge 2014 private education report

Nearly half (49.5%) of adult respondents who took training indicated that they did at least some of it online. Interestingly, online training was more common among children in the 0-6 age group than it was among children aged 7-18. There was also minimal variation between city tiers, respondents in third-tier cities nearly as likely to take online courses as those in first-tier cities (see chart 2). The majority of respondents spent between Rmb500 andRmb1,500 on online training in the past year (see chart 3). Parents with children below the age of seven spent slightly less on online training than parents with older children or adult learners. 57% of survey subjects aged 0-7 spent Rmb1,000 or less on online training over the past year.

9.3

Acceptance of online courses

When asked about their willingness to use online course content, the vast majority of respondents (69.9%) said that they were â&#x20AC;&#x2DC;somewhatâ&#x20AC;&#x2122; willing to use this learning method, while only 10.8% were opposed to the idea (see chart 4). 3. Breakdown of online course spending in past 12 months Rmb1-500 100

Rmb501-1,000

Rmb1,001-1,500

7.2

Rmb1,501-2,000 10.8

14.2

12.1 80

Over Rmb2,000

14.4

18.1 23.5

23.8

22.9

% 40

37.9

31.8

31.3 20 0

19.2

13.5

19.3

0-6

7-18

19 and over

Notes: Sample = 7,032. If the respondent had not studied a 12-month course, they were asked to calculate an annual cost. Q: How much have you spent on online courses in the past 12 months? Source: China Confidential

4. Level of willingness to use online course content Very

Somewhat

% 9.6

Not very

Not at all

1.2% 19 .4%

69 .9 % Notes: Sample = 9,886. Question only asked to respondents aged 19 and over. Q: How willing are you to use online course content? Source: China Confidential

investing in knowledge 2014 private education report

5. Perceived advantages and disadvantages of online courses Advantages

Disadvantages

Lessons can be repeated

72.8

Limited interaction with classmates

63.8 63.2

No travel required

66.5

Not interactive

Convenience

65.4

Hard to remain committed

Wide selection

41.3

Instant availability

Internet connectivity is unreliable

37.6

Price

19.3 2.7

No disadvantage

1.5

Other 0.2

Other 0.1 0

34.9

Not efficient

32.3

No advantage

43.7

Sample = 11,001. Q: What do you think are the advantages of online courses? Q: What do you think are the disadvantages of online courses? Source: China Confidential

6. Educational smartphone or tablet software use and purchase intentions, by childâ&#x20AC;&#x2122;s age Yes

Use

Purchase intentions 100

100 30.1

59.1

44.2 58.7

60 %

% 40

69.9

40.9

55.8

0-6

41.3

7-18

0-6

7-18

Sample = 7,114. Q: In the past twelve months, have you used smartphone or tablet software to assist your childâ&#x20AC;&#x2122;s education? Source: China Confidential

7. Educational purposes for which smartphone or tablet software are used 0-6

7-18

80 70 60 50 % 40 30

69.9 50.8

65.9 48.9

24.5

10 0

54.5

43.2

English

Puzzles

Storytelling

34.1 21.1

Poetry recitation

18.9

Literacy

Sample = tktk. Q: For which educational purposes do you use smartphone or tablet software with your child? Source: China Confidential

23.0

16.7

Arithmetic

1.8

7.3

Other

investing in knowledge 2014 private education report

In evaluating the pros and cons of web-based learning, respondents highlighted repeatability of lessons, lack of travel time and convenience as the strengths of the medium. On the downside, they noted the lack of interaction with teachers and classmates (see chart 5). Notably, 34.9% of respondents choose ‘internet connection is not stable’ as one of the weaknesses of web courses. This serves as a reminder that although internet penetration has grown rapidly in China over the last decade, connection speeds and reliability remain an issue for many netizens.

9.4

Usage of mobile devices for education

Our survey results show that smartphones and tablets are popular delivery methods for children’s education, particularly in the 0-6 age group, where 69.9% of respondents said they had used such devices as educational aids in the past year (see chart 6). For young children, our survey responses indicate that storytelling and literacy are the most common usages. Among parents with children in the 7-18 age group, 69.9% said that they use mobile software to assist with English learning (see chart 7). Parents of young children are also more likely to buy mobile educational software in the future, with 55.8% of this group indicating that they plan to buy in the coming year, compared to 41.3% among parents with children in the 7-18 age bracket. Among those planning to purchase, over half of each age bracket said they plan to spend Rmb51 to Rmb150 (see chart 8). l 8. Amount of money that respondents plan to spend on educational software for a smartphone or tablet in next 12 months, by child’s age Rmb1-20

Rmb21-50

Rmb51-100

Rmb101-150

100 17.5

23.2

80 18.9 21.8

60 %

33.1 31.3

40 20 0

21.7

19.1

8.8

4.7

0-6

7-18

Sample = 4,651. Q: In the next 12 months, how much do you plan to spend on educational software for a smartphone or tablet? Source: China Confidential

Over Rmb150

chapter 10 Outlook 10.1 Key trends

10.2 Urbanisation

10.3 Skill shortages

10.4 Online and mobile growth

investing in knowledge 2014 private education report

10.1

key trends

We expect China’s education and training market to continue to grow rapidly in the coming years. However, the locus of new opportunities in the industry will likely shift, in line with significant changes to the country’s population and economic structure. In particular, we note the convergence of three trends – urbanisation, rising skill shortages and increasing internet penetration and smartphone ownership – as providing opportunities for growth and innovation in private education.

10.2

urbanisation

10.3

Skill shortages

The central government is actively promoting urbanisation as the key to its future economic growth model, with a target of increasing the total population holding an urban hukou (residency permit) to 45% by 2020, up from 36% in 2013. China’s leading metropolises cannot shoulder a rapid rise in population or social security obligations, however, so the focus of reforms to relax hukou restrictions has thus far been concentrated in towns and small cities. While urbanisation will increase overall demand for education services in all Chinese cities, the current policy direction leads us to predict that the most substantial growth opportunities in education and training services may occur in smaller cities and towns, where populations are growing rapidly (see chart 1) and which remain relatively untapped compared to more saturated higher-tier cities.

As part of the rapid urbanisation that is underway, China’s economy is upgrading to a higher-skilled workforce, breaking away from the cheap, low-skill labour model that has driven growth over the past two decades. The steady decline of agricultural employment is likely to quicken in the coming decade, driven by rural land reform and an emphasis on more mechanised, larger-scale farms. This is likely to propel further growth in the proportion of the working population employed in the manufacturing or service sectors. But this poses a challenge for Beijing, given the unbalanced nature of China’s education system. Despite rising demand for workers with key technical skills, the nation’s vocational schools produced a combined 4.7m graduates in 2013, down from 4.9m in 2011. Meanwhile, the number of graduates from Chinese universities rose to 6.4m in 2013, up from 6.1m in 2011. While many of these graduates should in theory be well suited for higherskilled roles, university graduates are becoming increasingly picky about the kinds of roles they take on, and employers are often frustrated by the lack of relevant job skills that many graduates have. For Chinese jobseekers, therefore, the biggest challenge is not a lack of opportunities, but whether their skills match the openings on offer. While workers with little expertise can still find low-skilled jobs at restaurants 1. Township population growth has outpaced cities Township population

Township population as a share of total urban population

500

400

300

200

100

1997

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Note: Township population includes those living in county towns Sources: China City Statistical Yearbook, NBS, China Confidential

2011

2012

No. of people (m)

City population

investing in knowledge 2014 private education report

or on factory assembly lines, employers are increasingly seeking better-qualified staff with professional skills or more advanced qualifications. China Confidential’s survey of managers at 33 labour exchanges (large-scale job centres) in late November 2014 found that demand for medium-skill workers – those with vocational or professional certification, or some technical skills – is growing the fastest, with a further 18.8% reporting the greatest increase in openings requiring highly skilled workers. Just 15.6% of respondents reported demand for unskilled workers growing at the fastest pace (see chart 2). In light of these conditions, we believe that education and training companies have emerging opportunities to focus on equipping workers with the requisite skills for China’s shifting labour market.

Online and mobile growth

Along with changes in the needs of China’s learners, there are potentially game-changing opportunities in education content delivery. China’s online population is growing quickly, with total internet penetration reaching 45.8% in 2013 (see chart 3). This trend has been accelerated by falling hardware prices and the quick uptake of 2. What kind of job openings are growing the fastest? Unskilled

Low skilled

Medium skilled

High skilled

15. 6%

2 8.

.8% 18

. 37

Note: Taken from China Confidential’s survey of 33 managers at labour exchanges in November 2014 Source: China Confidential

3. Chinese internet users and penetration rate

Number of internet users

Penetration rate

800

600

400

200

2007

Source: CNNIC, China Confidential

2008

2009

2010

2011

2012

2013

% of population

No. of users (m)

10.4

investing in knowledge 2014 private education report

smartphones. According to the China Internet Network Information Centre (CNNIC), 500m Chinese had access to the internet through their mobiles at the end of 2013, compared with 618m that had access to the internet through their personal computers. Moreover, smartphones are becoming the dominant mobile platform – 88.1% of total mobile handsets shipped in China during the first four months of 2014 were smartphones, up from just 50.4% in August 2012, when the ministry of industry and information technology first began to collect the data (see chart 4). Although we expect traditional classroom and individual face-to-face education to continue to account for the majority of private education spending – and to remain the key revenue driver for education providers – for the forseeable future, online courses offered through computers and mobile devices can open doors to new and under-exploited or untapped markets. Our survey results show a significant willingness to use online course content, with just 10.8% of respondents opposed to the idea. Furthermore, there appears to be little variation in terms of online education habits among respondents in different city tiers, with third-tier-city-based respondents to our survey nearly as likely to take online courses as those in first-tier cities. Although this new wave of online education consumers may have relatively low budgets – or may be reluctant to pay for online content – web delivery is likely to become an increasingly important and popular platform for education providers in coming years. l 4. Smartphones as a percentage of total mobile phone shipments Smartphones

Feature phones

100 80 60 % 40 20

Au g12 Se p12 O ct -1 2 N ov -1 2 De c12 Ja n12 Fe b13 M ar -1 3 Ap r-1 3 M ay -1 3 Ju n13 Ju l-1 3 Au g13 Se p13 O ct -1 3 N ov -1 3 De c13 Ja n13 Fe b14 M ar -14 Ap r-1 4

Sources: Wind, China Confidential

Appendix Survey questionnaire

investing in knowledge 2014 private education report

survey questionnaire Background questions Q1. Which is your city of residence? (select from multi-level list) Q2. Do you have a hukou for your city of residence? a) Yes b) No Q3. What is your gender? a) Male b) Female Q4.

What is your age? a) Under 18 (Exit questionnaire) b) 18-22 c) 23-25 d) 26-30 e) 31-35 f) 36-40 g) 41-45 h) 46-50 i) Over 50

Q5.

What is your education level? a) High school or lower b) Vocational college c) Bachelor’s degree d) Master’s degree e) Advanced degree (above Master’s)

Q6. What is your individual monthly income? Q7. What is your household monthly income? Q8. In which of the following industries do you work? (If the list has more than one choice related to your work, please choose the most suitable. If none of the following choices describes your work, please choose ‘other’.) (SC) a) Government b) Transportation c) Catering and tourism d) Construction e) Manufacturing f) Media, publishing and advertising g) Healthcare h) Cultural education i) Public sector j) Commerce k) Computer and electronic equipment l) Finance m) Internet n) Research o) Entertainment p) Domestic security q) Cosmetic services industry r) Business services s) Trade t) Military u) Agriculture v) Fisheries w) Timber/forestry x) Mining y) Sports z) Shop owner (Skip to Q10) aa) Student (Skip to Q10) bb) Housewife (Skip to Q10) cc) Unemployed (Skip to Q10) dd) Retired (Skip to Q10) ee) Other (Please specify:__) Q9. What is your position? If the list has more than one choice related to your position, please choose the most suitable. If none of the following choices describes your position, please choose ‘other’. (SC) a) High-level government manager b) Professional (lawyer, accountant, consultant, doctor etc.) c) General government official d) Manager of a private enterprise e) High-level SOE manager f) Regular employee at private enterprise g) Middle-level manager of an SOE h) Marketing staff/ salesperson

i) j) k) l) m) n) o) p) q) r) s) t) u)

Regular employee at SOE Service assistant High-level manager of a foreign or jointventure company Manual labourer Middle-level manager of a foreign or jointventure company Farmer Staff of a foreign or joint-venture company Entertainer Engineer, scholar or researcher Self-employed Teacher or professor Athlete or coach Other (Please specify:__)

Q10. Do you have a child? a) Yes b) No (Skip to Q14) Q11.

How many children do you have? a) 1 b) 2 c) More than two

Q12. Do you plan to have another child? a) Yes b) No Q13.

What is your child’s age? a) 0-6 (directed to Form B) b) 7-18 (directed to Form C) c) Over 18

Q14. In the past 12 months, which of the following have you spent money on? (MC) a) Travel b) Investment c) Education or training d) Purchase of a home e) Purchase of a car f) Luxury apparel g) Other (Please specify: __) Q15. Which of the following do you plan to spend money on in the next 12 months? a) Travel b) Investment c) Education or training d) Purchase of a home e) Purchase of a car f) Luxury apparel g) Other (Please specify: __) Q16. Please fill in the proportion of family spending in each category. (Total should equal 100) a) Daily expenses b) Education c) Travelling and leisure d) Investment e) Savings f) Loan repayment g) Other Survey form S: Ages 18 and up S1. In the past 12 months, in which fee-based training programmes have you enrolled? (MC) a) English training • Skill-based English • English for foreign study exam (e.g., IELTS, TOEFL, GRE, GMAT, SAT, LSAT) • English for domestic exam b) Professional training • Certificate training (e.g CFA, CPA) • Non-certificate training • MBA/EMBA c) Hobby courses (e.g., music, art, sports, etc) d) Training for another exam e) Other (Please specify:__)

S2. In the past 12 months, how much have you spent on these training programmes? S3.

Who paid your tuition fee? (MC) a) I did b) Employer c) Parents d) Other source

S4. (SC)

Why did you choose to take a fee-based course? a) b) c) d) e) f) g) h) i) j)

S5.

Which type of course did you take? (SC) a) Online b) Combination of online/offline c) Large class d) Small class (fewer than 20 students) e) One-on-one instruction f) Customised VIP program g) Other (Please specify)

Work requirement Improve skills Career change To move to a better company Future career development Personal interest To increase my salary Improve resume/CV To earn a promotion Other (please specify)

S6. Q: In total, how many hours did you spend on this course in the past 12 months? (SC) a) Under 20 b) 20-49 c) 50-99 d) 100-200 e) Over 200 S7. Which of the following English training providers did you enroll in classes with? (If you’ve already completed your course, please respond based on your most recent course). (SC) a) New Oriental b) EF Education c) Weber d) GEDU e) Wall Street English f) Only Edu g) New Dynamic Institute h) Longre i) Meten j) 51 talk k) VIP ABC English l) HJ English h) Other (Please specify: __) S8. What were the most important factors in your choice of English study programme? (MC) a) Price b) Recommendation of friend or family member c) Promotional activity d) Courses are suitable to my level e) English level of graduates clearly improves f) Reputation g) Teachers’ skills h) Teachers’ pronunciation i) Foreign teachers j) Mature education system k) Teaching materials l) Location convenient m) Good curriculum n) Customer service o) Brand recognition p) Teaching philosophy q) Large-scale institution r) Learning environment s) Other (Please specify:__)

investing in knowledge 2014 private education report

survey questionnaire (cont.) S9. Of the factors you listed, what is the single most important? S10. On a scale of 1 to 10, how satisfied are you with your English training programme? S11. On a scale of 1 to 10, how likely are you to recommend this programme to others? S12. In the next 12 months, do you plan to continue your studies at the same training institution? a) Yes (Skip to S14) b) No S13. Why have you chosen not to continue your studies there? (MC) a) I have already reached my study goal b) I plan to study at another training institute c) I don’t plan to continue studying d) The training institution is not suitable for me e) I have not made clear progress f) Too expensive g) Curriculum is not interesting h) Teaching staff keep changing i) Teaching methods are inadequate j) Inconvenient location k) Price has increased l) Teaching materials are not suitable for me m) Other (Please specify:__) S14. What was the single most important factor influencing your choice of English training provider? (SC) a) Price b) Recommendation of friend or family member c) Promotional activity d) Courses are suitable to my level e) English level of graduates clearly improves f) Reputation g) Teachers’ skills h) Teachers’ pronunciation i) Foreign teachers j) Mature education system k) Teaching materials l) Location convenient m) Good curriculum n) Customer service o) Brand recognition p) Teaching philosophy q) Large-scale institution r) Learning environment s) Other (Please specify:__) S15. How did you find your English training provider? (MC) a) Online search engine b) Social media recommendation c) Online advertisement d) Street sales e) Campus representative f) Acquaintance g) Telemarketing S16. In the next twelve months, which fee-based training programmes do you plan to enroll in? (MC) a) English training • Skills-based English training • English for foreign study exam (e.g,, IELTS, TOEFL, GRE, GMAT. SAT, LSAT) • English for domestic exam b) Professional training • Certificate training (e.g., CFA, CPA, etc)) • Non-certificate training • MBA/EMBA c) Interest training (e.g., music, art, sports) d) Training for another exam e) Other (Please specify:__) f) I do not plan S17. In the next 12 months, how much do you plan to spend on these courses? a) Rmb0- 2000

b) c) d) e) f) g)

Rmb2,001-5000 Rmb5,001-10,000 Rmb10,001-15,000 Rmb15,001-20,000 Rmb20,001-40000 Over Rmb40,000

B4. In the past 12 months, how much did you spend on this course?

S18. In the past 12 months, did you pay for online training? a) Yes b) No (skip to S21)

B5.

S19. Did your online course include English training? a) Yes b) No

B6. Outside of kindergarten/primary school classes, how many training programmes does your child attend?

S20. In the past 12 months, how much have you spent on this online course? a) Rmb1-500 b) Rmb501-1,000 c) Rmb1,001-1,500 d) Rmb1,501-2,000 e) Over Rmb2,000

B7. On average, how many hours of private training does your child attend each week?

S21. How willing are you to use online training programmes (SC) a) Very b) Somewhat c) Not very d) Not at all S22. What do you think are the strengths of online training? (MC) a) Convenience b) Price c) Selection d) Instant availability e) Repeatability of lessons f) No travel required g) No strengths h) Other (Please specify:__) S23. What do you think are the weaknesses of online training? (MC) a) Not very interactive b) Little interaction with classmates c) Hard to remain committed to d) Not efficient e) Internet connectivity is not stable f) No weaknesses g) Other (Please specify:__) Survey form B: Directed at respondents with children in the 0-6 age group B1. Are you familiar with your child’s education expenses? a) Yes b) No (not included in sample) B2. In the past twelve months, have you enrolled your child in fee-based training programnes? a) Yes (continue to B3) b) No (skip to B21) B3. In the past 12 months, which of the following fee-based training programmes/institutions have you enrolled your child in? a) Public kindergarten (answer B3a) b) Private or public-private kindergarten (answer B3b) c) Kindergarten extra-curricular programme d) Private institutions e) Preschool f) Private or public-private school (answer B3b) g) Primary school extra-curricular programme h) Other (Please specify:__) B3a Does your child attend a dual-language kindergarten? B3b Does your child attend an international school?

Which type of course did you take? (SC) a) Online b) Combination online/offline c) Large class d) Small class (fewer than 20 students) e) One-on-one instruction f) Personalised VIP course g) Other (Please specify:__)

B8. At what age do you think children should begin studying English? B9. What do you think is the most effective way for children to learn English? (SC) a) Face-to-face instruction (either in person or via video chat) b) Educational TV/cartoons c) Non-professional children’s education website d) Smartphone or tablet application e) English story books or picture books f) Listening to English nursery rhymes, songs, stories, etc. g) Completing large volumes of exercises h) Other (Please specify:__) B10. Which of the following best describes your child’s current English training situation? a) My child is not currently enrolled in an English training programme, but he/she has in the last 12 months. b) My child is currently enrolled in an English training programme. c) My child is currently studying in two English training programmes d) My child is currently studying in more than two English training programmes. B11. At which of the following does your child attend English courses? a) Disney English b) Longman c) New Oriental d) Cambridge Young Learners e) Only Edu f) EF Education g) Rise English h) ABC Children’s English i) Maxen j) Mason Education k) Best Learning l) Owen m) First Leap n) Aston English o) Beiwai E-plus p) Other (Please specify:__) B12. Which of the following is the publisher of your child’s main textbook? (SC) a) Oxford b) Cambridge c) Longman d) Pearson e) McGraw-Hill f) Riverdeep-HMH g) Macmillan Publishers h) Curriculum drafted by the trainer i) Beijing Foreign Language University (New Concept) j) Other (Please specify:__) k) Not sure

investing in knowledge 2014 private education report

survey questionnaire (cont.) B13. Which of the following factors were the most important in choosing your child’s English programme? (choose up to 5) a) Price b) Recommendation of friend or family member c) Promotional activity d) Courses are suitable to my level e) English level of graduates clearly improves f) Reputation g) Teachers’ skills h) Teachers’ pronunciation i) Foreign teachers j) Mature education system k) Teaching materials l) Location convenient m) Good curriculum n) Customer service o) Brand recognition p) Teaching philosophy q) Large-scale institution r) Learning environment s) Other (Please specify:__) B14. Which single factor is the most important? B15. On a scale of 1 to 10, how satisfied are you with your child’s English programme? B16. On a scale of 1 to 10, how likely are you to recommend this programme to others? B17. In the next 12 months, do you plan to continue at the same training institution? a) Yes (Proceed to B19) b) No B18. Why have you decided not to continue your child’s training at this institution? (MC) a) My child has achieved his/her goal b) I plan to change to another training institution c) My child will not continue his/her studies d) Classes at this institution are no longer suitable for my child e) My child is old enough to take other courses f) My child did not progress in his/her courses at this insititution g) Too expensive h) My child shows no interest in this institution’s classes i) Teaching staff keep changing j) Instruction quality is poor k) The institution is too far from my home l) The price increased m) The curriculum is not suitable for my child n) Other (Please explain:__) B19. What were the major factors in choosing your child’s training English programme? (choose up to 5) a) Price b) Recommendation of friend or family member c) Promotional activity d) Courses are suitable to my level e) English level of graduates clearly improves f) Reputation g) Teachers’ skills h) Teachers’ pronunciation i) Foreign teachers j) Mature education system k) Teaching materials l) Location convenient m) Good curriculum n) Customer service o) Brand recognition p) Teaching philosophy q) Large-scale institution r) Learning environment s) Other (Please specify:__) B20. How did you find your child’s training programme? a) Online search engine b) Social media recommendation

c) d) e) f) g)

Online advertisement Street sales Campus representative Acquaintance Telemarketing

B21. In the next 12 months, where do you plan for your child to take fee-based training courses? (MC) a) Public kindergarten b) Private or public-private kindergarten c) Kindergarten extra-curricular programme d) Private institutions e) Preschool f) Private or public-private school g) Primary school extra-curricular programme h) Other (Please specify:__) B22. In the next 12 months, how much do you plan to spend on your child’s educational training? a) Rmb0-2,000 b) Rmb2,001-5,000. c) Rmb5,001-10,000. d) Rmb10,001-15,000 e) Rmb15,001-20,000 f) Rmb20,001-40000 g) Over Rmb40,000 B23. In the past 12 months, did you use a smartphone or tablet in your child’s education? a) Yes b) No (Skip to B27) B24. If you already use a mobile device for your child’s education, which types of training software do you have? a) English b) Literacy c) Story-telling d) Poetry recitation e) Arithmetic f) Puzzles g) Other B25. In the past 12 months, have you purchased educational software for a smartphone or tablet? a) Yes b) No (Skip to to B27) B26. In the past 12 months, how much have you spent on educational software? a) Rmb1-20 b) Rmb21-50 c) Rmb51-100 d) Rmb101-150 e) Rmb150 B27. In the next twelve months, do you plan for your child to enroll in a fee-based online training programme? a) Yes b) No (Skip to B30) B28. Will this course include English training? a) Yes b) No B29. In the past 12 months, how much did you spend on this online course? a) Rmb1-500 b) Rmb501-1,000 c) Rmb1,001-1,500. d) Rmb1,501-2,000. e) Over Rmb2,000 B30. In the past 12 months, how was your spending on your child distributed? (Total should equal 100) a) Toys b) Books c) Clothes, food etc. d) Educational training e) Entertainment f) Travel

g) h)

Short-term study abroad Other

Survey form C: Directed at respondents with children in the 7-18 age group C1. Are you familiar with your child’s educational expenses? a) Yes (proceed to C2) b) No (excluded from survey) C2. In the past 12 months, did you enroll your child in a fee-based training programme? a) Yes (proceed to C3) b) No (skip to C21) C3. In the past 12 months, which fee-based training programmes/institutions have you enrolled your child in? (MC) (Respondents choosing ‘d’ or ‘e’ will be prompted to answer C11-C21) a) Public-private or private school (answer C3a) b) Tutoring c) Hobby courses d) Skill-based English e) English for foreign study exam (e.g., IELTS, TOEFL, GRE, GMAT, SAT) f) Other (Please specify:__) C3a. Does your child attend an international school? (Yes/No) C4. (SC)

Which kind of school does your child attend? a) b) c) d)

Provincial City District Unspecified

C5. In the past 12 months, how much did you spend on your child’s training programme? C6.

Which kind of course did your child take? a) Online b) Combination of online/offline c) Large class d) Small class (fewer than 20 students) e) One-on-one instruction f) Customised VIP programme g) Other (Please specify)

C7. Outside of school classes, how many training programmes does your child attend? C8. On average, how many hours of private training does your child attend each week? C9. What do you think is the most effective way for children to learn English? a) Face-to-face instruction (either in person or via video chat) b) Educational TV/cartoons c) Non-professional children’s education website d) Smartphone or tablet application e) English story books or picture books f) Listening to English nursery rhymes, songs, stories, etc. g) Completing large volumes of exercises h) Other (Please specify:__) C10. Which of the following best describes your child’s current English training situation? a) My child is not currently enrolled in an English training programme, but he/she has in the last 12 months. b) My child is currently enrolled in an English training programme. c) My child is currently studying in two English training programmes d) My child is currently studying in more than two English training programmes.

investing in knowledge 2014 private education report

survey questionnaire (cont.) C11. At which of the following organisations did your child take English training? a) Disney b) Longman c) New Oriental d) Cambridge Young Learners e) Only Edu f) EF English g) Rise English h) ABC Children’s English i) Mason Education j) Maxen k) Wall Street English l) Best Learning m) Owen n) First Leap o) Aston p) Beiwai E-Plus q) Taught at home r) Other (Please specify:__) C12. Which of the following is the publisher of your child’s main textbook? (SC) a) Oxford b) Cambridge c) Longman d) Pearson e) McGraw-Hill f) Riverdeep-HMH g) Macmillan Publishers h) Curriculum drafted by the trainer i) Beijing Foreign Language University j) New Concept k) California English l) Other (Please specify:__) m) Unsure C13. What were the primary factors in your choice of English programme? (MC) a) Price b) Recommendation of friend or family member c) Promotional activity d) Courses are suitable to my level e) English level of graduates clearly improves f) Reputation g) Teachers’ skills h) Teachers’ pronunciation i) Foreign teachers j) Mature education system k) Teaching materials l) Location convenient m) Good curriculum n) Customer service o) Brand recognition p) Teaching philosophy q) Large-scale institution r) Learning environment s) Other (Please specify:__) C14. What was the single most important factor? C15. On a scale of 1 to 10, how satisfied are you with your child’s English training programme? C16. On a scale of 1 to 10, how likely are you to recommend this programme to others?

C17. In the next 12 months, do you plan to continue at the same training institution? a) Yes (Skip to C19) b) No C18. Why do you plan to stop studying at this institution? a) My child has achieved his/her study goal b) I plan to change to another training institution c) My child will not continue his/her studies d) Classes at this institution are no longer suitable for my child e) My child is old enough to take other courses f) My child did not progress in his/her courses at this institution g) Too expensive h) My child shows no interest in this institution’s classes i) Teaching staff keep changing j) Instruction quality is poor k) The institution is too far from my home l) The price increased m) The curriculum is not suitable for my child n) Other (Please specify:__) C19. What were the primary factors in your choice of English programme? a) Price b) Recommendation of friend or family member c) Promotional activity d) Courses are suitable to my level e) English level of graduates clearly improves f) Reputation g) Teachers’ skills h) Teachers’ pronunciation i) Foreign teachers j) Mature education system k) Teaching materials l) Location convenient m) Good curriculum n) Customer service o) Brand recognition p) Teaching philosophy q) Large-scale institution r) Learning environment s) Other (Please specify:_____) C20. How did you find your child’s English language training provider? a) Online search engine b) Social media recommendation c) Online advertisement d) Street sales e) Campus representative f) Acquaintance g) Telemarketing C21. In the next 12 months, which of the following training programmes do you plan to enroll your child in? (MC) a) Private or public-private school b) Tutoring c) Hobby courses d) Skill-based English e) English for foreign study exam (e.g., IELTS, TOEFL, GRE, GMAT, SAT) f) Other (Please specify:__) g) I don’t plan to enroll my child in a training programme

C22. In the next 12 months, how much do you plan to spend on education and training programmes for your child? a) Rmb0-2,000 b) Rmb2,001-5,000. c) Rmb5,001-10,000. d) Rmb10,001-15,000 e) Rmb15,001-20,000 f) Rmb20,001-40,000 g) Over Rmb40,000 C23. In the next 12 months, do you plan to enroll your child in an online training course? a) Yes b) No (Skip to C26) C24. Did this online course include English training? a) Yes b) No (Skip to C26) C25. In the past 12 months, how much did you spend on this online course? a) Rmb1-500 b) Rmb501-1,000, c) Rmb1,001-1,500. d) Rmb1,501-2,000. e) Over Rmb2,000 C26. In the past 12 months, how was your spending on your child distributed? (Total should equal 100) a) Toys b) Books c) Clothes, food etc. d) Educational training e) Entertainment f) Travel g) Short-term study abroad h) Other C27. In the past 12 months, have you used smartphone or tablet software for your child’s education? a) Yes b) No (end survey) C28. If you already use a mobile device for your child’s education, which types of training software do you have? a) English b) Literacy c) Story-telling d) Poetry recitation e) Arithmetic f) Puzzles g) Other C29. In the past 12 months, did you purchase education software for a smartphone or tablet? c) Yes d) No (end questionnaire) C30. In the past 12 months, how much did you spend on educational software? f) Rmb1-20 g) Rmb21-50 h) Rmb51-100 i) Rmb101-150 j) Over Rmb150

Disclaimer Neither FT China Confidential, a unit of the Financial Times, nor any of its directors, servants and employees represent nor warrant the accuracy or completeness of, and will not accept any responsibility or liability whatsoever for any use of or reliance upon, the contents of this report. This report is for information purposes only, and is not or not intended to be, nor shall constitute any offer or solicitation to buy or sell any stock, shares or other securities or financial products, or any official confirmation of any transaction. The material in this publication is protected by international copyright laws. Our client agreement and copyright laws prohibit any unauthorised copying or redistribution of this publication, including forwarding by email, to any individual or other third party. Any violation of these restrictions may result in personal and/or corporate liability. The client acknowledges that FT cannot provide the client with any advice on dealing in specific investments and accordingly FT is not providing any such advice or making any recommendation to the client on the merits of buying or selling or otherwise dealing in particular investments. © The Financial Times Limited 2014. “China Confidential”, “FT” and “Financial Times” are trade marks of The Financial Times Limited.

A research service from the Financial Times