Is Online Tutoring in China Here to Stay?

Source: Teachaway.com

If a tutor is defined as providing assistance to a student on academic tasks such as homework, projects, test preparation, papers, research and personal development, one might consider Confucius one of the first tutors in China. Besides establishing ethical, moral, and social standards, Confucius impressed the value of education unto Chinese civilization for millennia to come.

Nowadays, the need for tutors to help out with academic demands is ubiquitous across a nation where it would be an understatement to suggest homework dominates students’ lives. Reports that more than 60% of Chinese students aged 6-17 are sleep-deprived as a result of burdensome homework have made waves, and in 2018 China’s Ministry of Education issued regulations to limit the amount of homework given to primary school students to one hour, and 90 minutes for all middle schoolers.

Given the value of education as a major catalyst for social mobility and the necessity to ensure reliable and trustworthy online education materials, China’s EdTech potential is huge. The number of online education users reached 423 million in March 2020 at the peak of the Covid-19 pandemic lockdown, an increase of 110.2% from the end of 2018 according to the Statistical Report on Internet Development in China. The EdTech sector in China alone was estimated to reach RMB 453.8 billion in 2020, a 12.3% increased from 2019 according to a report by iiMedia Research.

Harry, a 16-year-old Chinese student attending school in Greater London who receives tutoring for maths, said he prefers online tutoring given its flexibility and interactivity, “with online tuition, I feel I can make more progress because of the games and shared whiteboard which has more exciting tools than in person. It just suits me better and I don’t have to leave the house to go to a teaching center, so I have more time for other classes”.

Steven Ji, co-founder of Sequoia Capital commented, “We are optimistic about the prospect of Chinese online education and we think that the country is expected to generate a group of education companies valued at several billion dollars … [However] It’s not an easy task to grab users from the huge cake.”

The recent influx of capital into the EdTech scene will surely be beneficial for the industry in the long run, as start-ups are forced to go above and beyond in terms of quality assurance. Securing one of the largest funding rounds in 2020 and with a leg up from the Coronavirus pandemic, Zuoyebang is one such example of a successful Tutoring EdTech venture. In an announcement on December 28th, the company confirmed its completion of a USD $1.6 billion financing round, with funds raised from investors including Alibaba Group and SoftBank’s Vision Fund, Tiger Global and Sequoia Capital China. FountainVest Partners also participated.

With 170 million monthly active users, of which 50 million use the site daily, the latest announcement comes only 6 months after a USD $750 million Series E led by Tiger Global and FountainVest. Although the precise valuation of the company is unknown, Reuters estimated USD $10 billion in September 2020. In the recent announcement, Zuoyebang CEO Hou Jianbin said the funding would likely be spent on investing in K-12 classes, the expansion of its product categories, and doubling down on competitiveness.

SEE ALSO: Chinese Edtech Startup Zuoyebang Obtains $1.6B in funding, Reigning Over Online Tutoring Market

Currently, the main competitor running against Zuoyebang is Yuanfudao, a homework tutoring APP founded in 2012, which in March 2020 secured USD $1 billion in a new round of financing that valued the EdTech company at USD $7.8 billion. Other competitors include TAL Education Group TAL.N, 17zuoye and Koolearn Technology 1797.HK.

One reason why Zuoyebang has distinguished itself above its competitors is its ability to gain users, something that often carries significant costs for education companies due to the sheer market choice available. While many tutoring companies – some of which are often British or American based – have fixated on middle-income families in first and second-tier cities, Zuoyebang seeks to rebalance education resources in China’s lower-tier cities, thereby seizing a substantial portion of the market as of yet relatively untapped.

Having started with students being able to upload their homework questions and search for answers on Zuoyebang’s AI-powered platform, the company later developed its major business into livestreaming courses as consumer preferences shifted.

Zuoyebang was even awarded an Honourable Mention by the World Economic for Excellence in Digital Disruption for its first annual 2020 New Champion Awards. Mr. Hou, a former student at Peking University and avid marathon runner who works for the company, spoke with podcast Evolving for the Next Billion – hosted by GGV Capital – about his three criteria for a great EdTech product, arguing: “One is product experience; how much learning can actually happen. Second is if the team can constantly deliver a new curriculum both in terms of content and tech. Lastly is if the business model makes sense.”

Meanwhile, an influx of Tutoring EdTech start-ups continues to raise high levels of investment and inject capital into their products. As the idea that online tutoring should be accessed anywhere and anytime gains ground, education companies will have no option but to adapt their products and services to the screens.

Tutoring, the quiet younger sibling of the dominating EdTech, has certainly come on leaps and bounds in the past 12 months, and given its trajectory, it is fair to suspect it could overtake demand for offline tuition in the near future.