An Overview of Chinese E-Learning Market (And Why Localization Matters)


The convergence of education and technology has shaped the way we learn things, providing us tools and platforms to use on a global scale. Independent research firms have published their reports on e-learning, indicating both promising and ominous future in the sector.

According to Global Market Insights, e-learning market size is likely to grow at over 5% from 2016 to 2023, exceeding $240 billion USD. Interestingly, another EdTech research firm, Ambient Insights, claim otherwise in its recent report and said the global market e-learning market is experiencing a “steepdecline.”

So, which is which? What’s the real deal?

There are insignificant factors that contribute to the growth (and decline) of the market, and while Ambient Insights’ report could be a credible resource, industry experts and practitioners have divided opinions on these matters.

Perhaps an Uber-like solution can never be applied to EdTech (for now). To become a billion-dollar company in the sector goes beyond skills, technology, and data — it takes hard work to keep up with the trends, the life cycle of the products and understanding what consumer wants, the fluctuating world economy, plus a paradigm shift in the market itself. There are several factors to consider before any company can “shoot the moon.”

E-learning market from a global perspective

The $33 billion-dollar industry is expected to decline in the United States as well as in the international markets, but emerging digital products and models are becoming the new entrants according to Ambient Insights report.

The two largest markets that experienced negative growth rates in revenue in 2016 are the United States and China. Meanwhile, other regions such as North and Latin America, Asia, Europe and the Middle East also had negative growth rates.

Africa is the only one that had a positive growth rate of 0.9% based on a 5-year CAGR (compound annual growth rate) records.

Efficient and collaborative education in real-world setting

There’s a shift in the demand as consumers prefer to use the following types of digital products:

  • Mobile learning
  • Simulation-based learning
  • Game-based learning
  • Brain-training software

Despite being labeled as a “struggling sector,” these new entrants in the e-learning industry are contributing to the next cycle of the industry itself, including the China market.

Based on the same report, consumers are migrating to more efficient knowledge and learning transfer products where the process becomes more collaborative and interactive.

However, some industry practitioners and experts are skeptical of the effectiveness of these new entrants. There are several inhibitors such as the lack of innovation, lack of understanding in the industry and the market, having a mass production mindset or system on the digital products rather than going for quality and offering content that the students and teachers can use and among others.

Focusing our lenses on China e-learning market

According to Ambient Insights, the China e-learning market had a promising future in 2014. However, things began to change after two years; the online education experienced a “bubble burst” and a decline in revenue in 2016 because of these negative contributing factors:

  • A bulk of online companies is targeting the same demographics
  • The high rate of failures on e-learning startups
  • Decreasing venture capital funding for eLearning startups
  • Decreasing massive national digitization efforts
  • Internet giants entering the market, intimidating small players to keep up
  • Too much commoditization of digital products
  • Proliferation of cheap or free products as substitutes

One of the significant factors that drove the decline is the entrant of Internet giants in China at the same time, all of them wanting to get a piece of the growing market. While their move validates that there’s a huge demand in the market, supply exceeded that saturation began to occur, and also there were acquisitions among the players.

Ambient Insights report noted, “Baidu, Alibaba, and Tencent are the largest Internet companies in China, and they all entered the commercial eLearning and Mobile Learning markets in 2013 and 2014. Several other leading Internet companies entered the commercial learning technology market in the last two years including NetEase, Sohu, Renren, Kaixin, Jiayuan, Sina Weibo, YY, NetDragon Websoft, Youku Tudou, and Kingsoft.”

Let’s put it in the context from a western perspective: Imagine if Google, Facebook, Twitter, YouTube and Microsoft launch their respective e-learning platforms at the same time, targeting the same demographics. Of course, even a startup EdTech company, whether backed by venture capital funding or via bootstrapping (from own resources or money) will have a hard time to enter the market, let alone provide premium services because big players are deep-pocketed companies who have many resources to promote and build platforms.

These Internet giants have launched their e-learning platforms via web-based and then integrated mobile learning features as consumers move to mobile formats.

Big players in China and how they do it

The big players in the e-learning market in China are Tencent, YY, Netease, Baidu, NetDragon andamong others. Each company launched their respective e-learning platforms to supply the hugedemand few years ago before the market bubbled. NetEase is one of the most popular companies inthe e-learning market, which hosts the biggest online courses in China.

Tencent, one of the biggest tech company in China (having an edge on its instant messaging QQ) launched its first ever online education service in 2013. The company integrated a live video course feature on its QQ IM where teachers can directly send live courses to a group of students within the Group Chat, and it also supports PowerPoint presentation. It also launched Tencent Classroom, “an e-learning center that offers exam-oriented courses in language study, skill training and certification, as well as a few lessons for primary and high school students.” After two years, the members grew to approximately 34 million users.

In early 2014, YY, the leading video streaming platform in China launched its own e-learning platform The target market is the teachers or educational agencies to contribute to the content and then provide them earnings up to 100%. In 2011, it had an online platform called YY Education, taking advantage of its live stream video streaming, the teachers provide video lectures to students. According to a China-based writer at Technode, “ currently has two separate channels for TOEFL and IELTS — the prep classes for the two exams have been of the most profitable for many private education services in China. will offer all the materials for the two exams for free.”

Just last year, the mobile gaming company NetDragon tapped the online education sector backed by a $52.5 million in investment for the new mobile learning platform. After that, they were acquired by UK-based company Promethean World, the largest interactive digital whiteboard supplier.

We could go on with the big players in China like Baidu, the search engine giant also launched its platform, for companies and individuals to offer online courses. Just recently, AllChinaTech reported that, a Baidu-backed online education company recently partnered with internet TV manufacturer, Coocaa Network Technology to build an ecosystem where smart TV and online learning content converges. Just imagine online courses at the comfort of your couch at home!

So, if you’re in the EdTech sector what are the chances of getting you here inChina?

Honestly speaking, there’s so much competition going on in the local market, but as the shift to mobile learning and other modes of digital product consumption on e-learning. The first thing you need to do is to study your audience and then find the right partner to help you in the marketing research and development, including the building of strategy for localization of your product.

It’s easier said than done, but if no one can overlook the second biggest market in the world when it comes to e-learning. There are significant factors to consider when building an e-learning business in China. EdSurge shares three major lessons that EdTech businesses in the US can do if they want to enter the market: finding the right partners, determine a clear competitive edge and agreements on internal spending, risks, and goals.

When you’ve finally found the right partners, you can leverage on their skills and knowledge about the market and help build a strategy from e-learning localization of your platform to other marketing channels and tools to reach out to your audience.

One of the growing tech trends that have the potential to converge with education is the augmented virtual reality, which can be a frontier of EdTech not just in China, but also around the world.

In our next post, we will discuss how VR can affect the EdTech industry and localization in China. So, stay tuned and see what’s happening in China’s e-learning market.

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