The market for massive open online courses in China

A quick update and illustration regarding online education in Chapter 9.  South China Morning Post published an article this morning about massive open online courses (MOOCs) which are increasingly popular in China.

If you are from North America you have probably heard about a couple MOOCs including edX and Udacity.  The SCMP piece noted that Chinese University of Hong Kong is “committing” (does that mean developing?) some classes to the Coursera platform, which was founded by two Stanford professors last year.  For reference, Khan Academy is probably the best known as it has served more than 200 million classes and Wendy Bao cited it specifically in her interview as a future model for education in Chapter 9.

While millions of students are enrolled in these classes globally, it is difficult to track and measure the Chinese matriculation in terms of marketshare because, unfortunately the GFW (Great Firewall) blocks most of these sites.

What are the opportunities then?  What can be done about this?  Are there any domestic startups? From the SCMP piece:

NetEase, a leading China-based internet technology company, said that the number of open course subjects had doubled from last year to the present 12,000. It reported 4.6 million subscribers via PCs and smart phones and about one million student visits a day.

However, John Zhang, co-founder of mainland-based online career and recruitment consultancy Guolairen.com said open courses delivered by internet portals simply served as a “media platform”.

In contrast, he said Mooc platforms provided students with a classroom-setting learning experience and opportunities to receive credit and recognition for their work. Already five subjects provided via Coursera had been recommended by the American Council on Education.

“This is a moment of historic significance in higher education because Mooc is not just a complement to existing higher learning, it opens up a new era of online teaching,” Zhang said.

Guolairen.com which unveiled its own Mooc platform in a low-key launch in October, the first on the mainland, has recorded 35,000 enrolments for 200 courses from 100,000 sign-ups.

Zhang said the company would invest US$30 million in its Mooc platform over the next three years, in co-operation with leading international universities such as Harvard, Columbia University and MIT, to provide a specialised platform for career-minded Chinese youth.

Potentially large numbers

Upon looking at the Guolairen ( 过来人) site right now, it is not very obvious that MOOC is a central part of this portal.  In fact, it is currently geared towards job-seekers, primarily for new graduates (including info about cover letters and interviews).  Thus, if 过来人 is the go-to model, it may be too early to declare any domestic market leader yet.

Again, as I remind readers repeatedly (for good reason), it is incredibly easy to get caught up when big numbers are thrown around or when it comes to potential customers in the middle kingdom.

What are some actual estimates for clientele in this segment?  At the tail end of Chapter 9 I note the following data:

Yet for those willing to face these technical challenges, the financial rewards could be lucrative.  According to one recent estimate, up to 380 million people in China will “need high-quality education and training resources across the country” from 2012 to 2017.1 And a large percentage (~30%) of these people are expected to utilize online services and tools, creating a potential market worth an estimated $11 billion in revenue.  However, to temper any get-rich-quick enthusiasm, the amount of investment into Chinese education companies fell to $46 million in 2012, less than a quarter of the previous year.2 Why?  David Chen of AngleVest – a venture capital group focusing on angel rounds – noted that “the timeframe for growing an education business can be drawn-out, and a challenge for fund managers who have to achieve returns by a specific date.”3 Thus once again, while there is potential revenue there is also required patience for returns on investment.

In addition to infrastructure issues another challenge that MOOCs may face are cultural stigmas attached to learning from non-traditional, non-accredited sources (also discussed in Chapter 9).  This may change though, as the country develops and the middle class begins to seek ways of self-help and autodidactism (e.g., their upcoming Wikipedia generation).  For what it is worth, my current employment is involved on the periphery of this industry, though not at the scale of an MOOC though.  If you are looking to work in this area I would keep your eyes open and try to attend events like 500 Startups or Barcamp Shanghai to find young techy entrepreneurs wanting to create a domestic MOOC.

Odds and ends

I mentioned it several times in Chapter 9, but there are roughly 300 million English learners in China primarily because of institutional inertia at this point (e.g., taught from primary school on up).4  And while there has always been some amount of resistance to teach this subject due to factors like nationalism, over the past few weeks I have noticed a number of op-eds published in a few national newspapers which for me, is a first.

For instance, about 10 days ago, Zhang Shuhua, a CPPCC deputy and head of the Intelligence Research Committee said that Chinese education was facing an unprecedented “destructive” crisis because of the English language requirements.  Another more recent one is from today’s China Daily which discusses reform and removing English requirements from core curriculum and examinations for college majors that do not use it (such as Chinese literature researchers).  While this probably will not be changed over night, it is something to also keep you eye on.  Or maybe you can capitalize off this nascent sentiment and create training centers for those niches.

Via Sinocism

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  1. Tencent Eyes Growing Online Education Market in China from Caijing []
  2. China Investors: We Don’t Need No Edukation from The Wall Street Journal []
  3. Ibid []
  4. Chinese Learn English the Disney Way from The Wall Street Journal []

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