Page 414 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
Private Tutoring and Extracurricular Activities China, offers classes for little ones as young as three
years old, including language, math, music and art
Private tutoring is a part of the shadow education (Low). After-school tutoring is the largest segment of
system, as it is offered outside the mainstream the non-formal education market in China, totaling
education system. The private tutoring industry has $90 billion in 2015. It is estimated that 57 percent of
emerged following the extensive standardization of Chinese K12 students are committed to 1.5 - 2 hours/
the education sector. This standardization essentially day of after-school tutoring, with 40 percent of parents
refers to the provision of examination preparation spending $750 and 15 percent investing $1,500 per
services to students to help them score well in entrance year on extracurricular tutoring for their kids. After-
tests. Traditionally, private tutoring service providers school tutoring is expected to grow at a compound
employed the classroom teaching methods. However, annual growth rate (CAGR) of 14.28 percent during the
advances in technology and growing awareness among period 2016-2020 in China. This is based on two major
consumers about modern methods of learning have factors - the abolition of the one-child policy and an
necessitated the incorporation of the Internet and increase in family expenditures on education. China
digital methods into the teaching process (R&M). One has the largest K12 population in the world and the
regulatory change in China that is seen as benefiting government’s abolition of the one-child policy will help
after-school tutoring providers is a revised law China maintain this metric (Hui).
preventing for-profit private schools from participating
in the compulsory nine-year early education system. Kaplan and Princeton Review offer adult education
The policy went into effect in 2017. The change sent a classes in areas such as computer programming and
shudder through China’s swelling network of private finance. Their China-based counterparts offer courses
schools. But Credit Suisse analysts called Tomorrow for working adults, particularly online. New Oriental
Advancing Life (TAL) and New Oriental, two private also has a segment catering to young professionals.
education institutions, “almost immune to the revision,” Tarena International focuses primarily on professional
since their offerings are after-school, extracurricular and education services, with a specialty in information
outside compulsory system (Low). technology. Tarena’s model weaves together in-person
and remote online teaching. One driver in the market is
The fight to get accepted into college, particularly the growing enrollment in graduate schools. An increase
a top-notch college, is fierce in China. Thus, the in the number of enrollments in graduate schools is
preparatory education industry is in a golden age directly related to the number of students enrolling
according to a recent Deloitte report, with early for tutoring services. According to China’s Ministry of
childhood, K12 (kindergarten through grade 12) and Education, the number of students enrolled in higher
vocational education cumulatively highlighted as education has increased dramatically. In the early 1990s,
the major growth point in the future. The 2016 report the enrollment growth rate in higher education was
projects the sector will expand in China at a 12.7 percent over 5 percent, but the enrollment rate increased to over
compound annual growth rate to generate revenue of 30 percent by 2015. By the end of 2015, the number of
nearly $440 billion in 2020. Deloitte’s study points to graduate students in China’s labor market was close to
four major factors that have spurred China’s educational 7 million (MRR).
golden age. Those include favorable governmental
policies, technological innovation, a “rapid increase With a booming ESL (English as a second language)
of social capital flowing into the education industry” market, an obsession with English, and a growing
and non-education industries investing in the sector. economy, China’s newest generation of parents is
A good portion of those education benefits go to obsessed with providing their children the best money
Chinese students heading for overseas schools. Deloitte can buy. In this case, it’s a native-speaking English
said in a separate report that the number of outbound teacher starting in pre-school, all the way through TEFL
international students from China rose to 520,000 in (teaching English as a foreign language) and SAT tutors
2015, up from 280,000 just five years earlier. About for Chinese high school students bound for international
40 percent of these private education institutions are universities. Ten years ago, about one fifth of China’s vast
focused in larger cities in the eastern part of the country, population was studying English. China was already the
but working to extend their reach. New Oriental, which world’s largest market for English language study in
calls itself the biggest private-education provider in 2006, with English language books accounting for over
414
Private Tutoring and Extracurricular Activities China, offers classes for little ones as young as three
years old, including language, math, music and art
Private tutoring is a part of the shadow education (Low). After-school tutoring is the largest segment of
system, as it is offered outside the mainstream the non-formal education market in China, totaling
education system. The private tutoring industry has $90 billion in 2015. It is estimated that 57 percent of
emerged following the extensive standardization of Chinese K12 students are committed to 1.5 - 2 hours/
the education sector. This standardization essentially day of after-school tutoring, with 40 percent of parents
refers to the provision of examination preparation spending $750 and 15 percent investing $1,500 per
services to students to help them score well in entrance year on extracurricular tutoring for their kids. After-
tests. Traditionally, private tutoring service providers school tutoring is expected to grow at a compound
employed the classroom teaching methods. However, annual growth rate (CAGR) of 14.28 percent during the
advances in technology and growing awareness among period 2016-2020 in China. This is based on two major
consumers about modern methods of learning have factors - the abolition of the one-child policy and an
necessitated the incorporation of the Internet and increase in family expenditures on education. China
digital methods into the teaching process (R&M). One has the largest K12 population in the world and the
regulatory change in China that is seen as benefiting government’s abolition of the one-child policy will help
after-school tutoring providers is a revised law China maintain this metric (Hui).
preventing for-profit private schools from participating
in the compulsory nine-year early education system. Kaplan and Princeton Review offer adult education
The policy went into effect in 2017. The change sent a classes in areas such as computer programming and
shudder through China’s swelling network of private finance. Their China-based counterparts offer courses
schools. But Credit Suisse analysts called Tomorrow for working adults, particularly online. New Oriental
Advancing Life (TAL) and New Oriental, two private also has a segment catering to young professionals.
education institutions, “almost immune to the revision,” Tarena International focuses primarily on professional
since their offerings are after-school, extracurricular and education services, with a specialty in information
outside compulsory system (Low). technology. Tarena’s model weaves together in-person
and remote online teaching. One driver in the market is
The fight to get accepted into college, particularly the growing enrollment in graduate schools. An increase
a top-notch college, is fierce in China. Thus, the in the number of enrollments in graduate schools is
preparatory education industry is in a golden age directly related to the number of students enrolling
according to a recent Deloitte report, with early for tutoring services. According to China’s Ministry of
childhood, K12 (kindergarten through grade 12) and Education, the number of students enrolled in higher
vocational education cumulatively highlighted as education has increased dramatically. In the early 1990s,
the major growth point in the future. The 2016 report the enrollment growth rate in higher education was
projects the sector will expand in China at a 12.7 percent over 5 percent, but the enrollment rate increased to over
compound annual growth rate to generate revenue of 30 percent by 2015. By the end of 2015, the number of
nearly $440 billion in 2020. Deloitte’s study points to graduate students in China’s labor market was close to
four major factors that have spurred China’s educational 7 million (MRR).
golden age. Those include favorable governmental
policies, technological innovation, a “rapid increase With a booming ESL (English as a second language)
of social capital flowing into the education industry” market, an obsession with English, and a growing
and non-education industries investing in the sector. economy, China’s newest generation of parents is
A good portion of those education benefits go to obsessed with providing their children the best money
Chinese students heading for overseas schools. Deloitte can buy. In this case, it’s a native-speaking English
said in a separate report that the number of outbound teacher starting in pre-school, all the way through TEFL
international students from China rose to 520,000 in (teaching English as a foreign language) and SAT tutors
2015, up from 280,000 just five years earlier. About for Chinese high school students bound for international
40 percent of these private education institutions are universities. Ten years ago, about one fifth of China’s vast
focused in larger cities in the eastern part of the country, population was studying English. China was already the
but working to extend their reach. New Oriental, which world’s largest market for English language study in
calls itself the biggest private-education provider in 2006, with English language books accounting for over
414
