7 Tips in Entering into China Education Market
With its 240 million K16 students (196 million in K12 schools and 42 million higher ed institutions) and their demand for good quality education, China poses enormous opportunities for international education service providers. And the fact that New Oriental and TAL, the top 2 private education corporates in China, reached a market cap of 10 billion USD also showed the confidence in China education market.
While there is immense interest in bringing education products and services into China, foreign companies are concerned with many issues, and with good reason, as no big Internet companies achieved major success in China.
Recently, we went on a 2-week business trip in the US with 40+ Chinese education/ed-tech leaders. Our journey started in New York City, through Boston, Philadelphia, Bay Area, and ended with ASUGSV summit in Salt Lake City. (Videos about China panel from the summit can be found here.)
Here are some top advice for foreign companies to enter into China Market from the delegation.
1. Be Inside
Both you and your product need to be inside China, literally. Your product needs to be inside the great fire wall otherwise your site speed will be intolerable. More importantly, you need to be connected to the local education ecosystem, to physically visit and be in the space, and to become the insider.
2. Find the new market-product fit
The biggest mistake is probably to just launch your product in China and to hope it will grow as it is in your home market. Given the existing products in China and different customer demands, your competitive advantage would be different. It is very important to find the new market-product fit in China.
3. Choose your market segment
Different market segments have different play rules. Very roughly, China eduction sector is separated into two markets. One is the formal school system, where government spent around 520 billion USD annually; the other is the 100 billion USD after-school market, which is the supplementary education services provided outside of formal school system. (Download report for more details of each market segments)
4. Understand your customer
It is very important to understand who is your customers. If your customers are students, or more precisely their paying parents, you need to understand the persona of Chinese parents — an anxious group who spends 20+% of family income on kids education to not have their children outperformed by others.
5. Manage your expectation
The market size and initial encounter with China would probably give you a ton of excitement, along with unrealistic expectation. Though rewards from China market could be very huge, it is important to be cognitive of the complexity of the market and the resources and commitment you need to allocate if you decide to enter into China.
6. Localize significantly
Expanding into China requires heavy localization, including content, features, payment, etc. You might also need to localize or re-develop your product significantly as the user scenarios might be different in China. And this could be expensive.
7. Find a local partner
This is the most given advice. The right partner can help you localize, operate, distribute, and navigate in this different culture. The fit is more important than the brand. Large companies with huge enrollment provide great distribution and operation value as a partner; but small local startups can also be great partners if you are sharing similar vision and you get more attention.