KITA News and Reports
  • Investment in Startups Grow in China’s Online Education Market
    2018-10-23

    Investment in Startups Grow in China’s Online Education Market

     

    - 61 trillion won market in 2020… Need to enter into Chinese market utilizing Korea-China FTA -

     

     

    As China's online education market continues to grow at a rapid pace, some point out that it is time for Korean companies to make inroads to the market.

     

      

    According to the report titled 'Online Education Market Trend in China' issued by the Beijing Branch of the Korea International Trade Association (Chairman, Kim Young-joo) on October 24, the size of online education market in China is growing by more than 20 percent every year and it is expected to reach 61 trillion won by 2020. The factors behind this rapid growth include increased use of mobile Internet, improved service quality based on increased investment, and changes in the perception of paid Internet services.

     

      

    According to the report, the growth of online education market in China is related to the prevalence of mobile Internet. The number of mobile Internet users was 500 million in 2013, but now it is close to 800 million. According to the 'China Online Education White Paper (2017)', 70.2 percent of online education users used smartphones and it indicates that online education using mobile will be more popular.

     

      

    Large-scale investment in online education-related startups has improved competitiveness and quality of educational services and those factors have contributed to the expansion of the market. Between January and November last year, 235 investments were implemented in Chinese online education market, of which 42 cases were over 16 billion won and 120 cases were between 1.6 billion won and 16 billion won.

     

      

    VIPKID, an online English language education company established in 2013, has attracted up to hundreds of millions of dollars from angel investors for each stage of business, and the company now accounts for 55 percent of the children's online English education market. Onion Math, which had provided off-line education services, started online service in 2015 with angel investment. Since then, with the continuous investments from large enterprises such as Tencent and Legend Capital, the company has grown into the largest online math education company in China with 14 million members.

     

      

    The changes in the Chinese people’s perception of commercial services of the Internet also contributed to the growth of the online education market. In the first half of this year, the number of users who purchased paid online services from iQiyi and QQ Music has reached 300 million. Unlike the past, Chinese people’s perception that ‘the Internet is free service’ is gradually changing.

     

      

    Kim Byung-yoo, the head of Beijing Branch of the Korea International Trade Association, said, “Since Chinese regulations are not yet complete, there are some barriers for foreign companies' investment in the Chinese online education market. However, there will be more opportunities for Korean companies, thanks to the Chinese government’s direction for the expansion of reform and opening as well as the recent launch of the free trade agreement negotiation for services between Korea and China.” He also stressed, “Currently, the Chinese online education market is showing rapid growth in the areas for elementary, junior and high school students, but in the future, the language and early education fields, where Korea is highly competitive, are promising and Korean companies need to pay attention to these markets.”

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