However, against the backdrop of the COVID-19 pandemic outbreak, the e-learning market in China experienced a surge in market demand. With the school summer break commencing in July 2020, various online education institutions entered the battleground of recruiting students for extracurricular tutorials. The competition is intense since the online education market in China is filled with a large number of players, and the market share gained by each player is fairly small. The bottleneck of achieving profitability has not been loosened, according to Caixin. China’s e-learning market looks for more in-depth development and more complex technology to promote the next round of development.

The e-learning market’s competitive landscape has taken its initial shape with K12 online education sector growing rapidly

After 20 years of devious development, China’s e-learning industry realized large-scale monetization with the support of “live-streaming” in 2017. In 2018, with the initial formation of the competitive landscape and the intervention of the government, the online education industry began the initial stage of maturity. Market competition in 1st tier cities is saturating, while 2nd tier cities became the new battleground. 

Data Source: Statista, Market size of online education in China is growing as more players enter the market

As of 2018, the online education market in China reached 251.76 billion yuan, and the number of paying users reached 135 million. The major players in the online education market in China are Yuanfudao, Zuoyebang, Xue’ersi, and Baicizhan. Higher education and vocational training account for 75% of the total market share.

The K12 education sector in China has grown rapidly, and its share has almost doubled in the past 6 years. K12 online education apps also occupy a far larger share in terms of the number of MAU in all fields of education. As of November 2018, the top three e-learning apps with leading MAU are all K12 online assignment-based apps. This is probably related to the “excessive assignments tactic” in many elementary and middle schools in China, wherein students are encouraged to hone their skills with an abundant amount of homework.

Data Source: iResearch, K12 e-learning is growing in market share   

It is also worth noting that in 2018, online education has also been officially included in the scope of supervision of the education industry. The Chinese government has issued national standards and evaluation schemes for online courses, in which engagement is listed as an important dimension.   

Under quarantine, the online education market in China revitalized, but the core issues remain unresolved  

Due to the COVID-19 pandemic, schools of all types were postponed following the Chinese Ministry of Education’s notices. From February 10th to 28th 2020, the Chinese Ministry of Education issued a series of notices to provide guidance and measures to prevent and control the pandemic in the field of education.

Data Source: Baidu Index, Searches for online education surged during self-isolation period (Jan.- Feb. 2020, varies by cities) in China

Searches for online education on Baidu surged from late January to early February 2020. Moreover, searches for online education applications on the Apple Store, such as Zuoyebang and Xue’ersi, also increased significantly during this period of time. Yuanfudao, a leading online education platform, had advertized heavily on CCTV channels during COVID-19, leading to an increase of searches on the app store. 

Data Source: Qimai.com, Searches for Zuoyebang, Xue’ersi, and Yuanfudao searches on the Apple Store rose significantly during the COVID-19 self-isolation period. Zuoyebang remained the most popular online education application, whereas Yuanfudao showed the most dramatic growth thanks to its massive advertisements during the self-isolation period.

Despite market growth, homogenization, rough user experience, and fuzzy results still remain the core issues that hinder in-depth expansion of the online education market in China. With the intensification of homogenized competition, injecting huge capitals to boost growth has gradually weakened, whereas promoting growth through word-of-mouth and operation have received more attention. Online science eduation in China has lagged behind English tutoring, however we look at how COVID-19 boosted this market.     

Education System for Sciences in China is exam-oriented and routine   

The education system for sciences in China is  routine-oriented. From Year 1 to Year 6, students study Maths as a compulsory subject. After students enter secondary schools, all have to study Biology in Year 7, Physics in Year 8, and Chemistry in Year 9, in this order. Basic skills of Computer Science are taught from Year 7 to 9. These subjects are also tested in the Senior High School Entrance Examination, along with Chinese, Maths, English, Moral Character, History, Geography, PE.

When students enter Year 10 study, they have not yet chosen their orientation. Hence, students have to study all the subjects until Year 11, when they choose between either arts or sciences. Subjects under the sciences stream are Physics, Chemistry, and Biology, along with Chinese, Maths, and English. Students who chose the sciences stream don’t need to study arts subjects (Politics, Geography, and History). In Year 12, students continue to study the subjects under their chosen path.

In the College Entrance Examination, science students are tested on Physics, Chemistry, and Biology, along with Chinese, Maths, and English for the written part. It’s worth noting that arts students and sciences students work on different maths exam papers in the college entrance examination. Generally speaking, science education in Chinese high schools are fairly routine and exam-oriented, wherein students practice heavily on designed questions.

Limited scope of science education in schools gives birth to China’s online science education market; online Maths education market burgeoning

Due to the limited scope of science education in China, some parents will get their children involved in extracurricular learning clubs, such as robotics and coding. The ages of children attending such extra-curriculars is getting younger. In recent years, there are increasingly more K12 online sciences education platforms for the youth, especially online Maths education platforms.

The market segment and course types provided by online Maths learning platforms are quite similar, reflecting fierce competition in a homogenous market.  

By October 2018, there were four financing activities in the K12 online programing education sub-sector and 11 in online Maths learning sub-sector. 7 out of 11 suppliers gained capital, and most of them have large amounts of capital with over 10 million RMB. Compared to the online English learning market, which was developed much earlier and has entered into saturation, online maths education and programming training have become the hotspots of capital.

Zuoyebang, Xue’ersi, and Yuanfudao are the three leading online education platforms. However, instead of specializing in sciences education, these platforms provide full-disciplinary learning guidance services for elementary and middle school students. Yangcong Xueyuan (Onion Academy) is a leading online education platform focusing on K12 sciences education in China. Chengzhangbao is focusing on the training of children’s logical thinking and mathematical logic.

An interesting phenomenon is that people tend to enroll in classes across different platforms. Although these platforms are offering similar products and services, they still have minor differentiations regarding human resources, technology, user management, and foci of study.  

The prospect of online education market: An investment opportunity?

While there still remain core issues to solve in the online education market, we have seen emerging trends these years. The majority of online education platforms in the market offer an integrated solution to students, i.e. a comprehensive range of subjects, after-class homework, tutors, and online communities. There are increasingly more platforms specializing in science education, especially Maths learning, which are attracting significant investements. Moreover, the market has witnessed emerging trends of programing learning in early ages and adults learning data analysis for vocational needs.  

Data Source: YouGov, A survey results show that code/programming training starting from primary school as well as data analytics training and STEM education are considered to be the key accelerators for education development in Shanghai, China.    

Third-party (B2B2C) online education platforms, such as CCtalk, Tencent classroom, jioayu.taobao.com, which focus on adults education, also displayed a competitive advantage over traditional platforms in the market. Such platforms generally do not provide courses directly, but assume the role of middlemen, allowing the free inflow of a diversity of course types. They partner with educational institutions or individual teachers on one side and deliver content to end-users on the other.

The courses provided by these platforms varied from e-commerce marketing, Java to interior design, to name just a few. While the traditional B2C online education players tryied to differentiate in various segmentations, such platforms, backed by their Internet parent companies, aim at covering all usage scenarios and leverage online traffic to enter the market.

It’s expected that the growth rate of the online education market in China will remain at about 20% in the short term, with higher education and vocational training continuing to lead the market. However, there were many e-learning companies undergoing a state of loss, including Liulishuo and 51Talk. Loss is common in the e-learning market in recent years. However, the rate of loss has narrowed, and profitability is not indefinite. 

 In the future, online education companies are expected to achieve profitability, but the premise is to solve the fundamental problems of rough user experience and unpredictable results in order to further realize the survival of the fittest, increase market concentration, and ensure steady growth.

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This article The online education market in China is in a critical period is the first one to appear on Daxue Consulting - Market Research China.

Full transcript below:

Hello everyone, welcome to China paradigm, the show powered by Daxue Consulting where we interview seasoned entrepreneurs and experienced managers in China about their business and experience in the country.

Matthieu David: Hello everyone I’m Matthieu David the founder of Daxue Consulting and its podcast China Paradigm and today I am with Gordon Dumoulin. You are the founder of three companies and one of them being food, one being education with your wife. You have been in China for more than 10 years now, more specifically in Beijing. The first company we are going to talk about is in the food business, it’s called Dumoco – if I pronounce correctly – and it’s focusing on ingredients, very rare ingredients with specific effects on health, memory, basically health – how it can affect your health and I have a lot of questions about it. This is not a small market in China when we talk about health and ingredients to eat, we always think ingredients for traditional Chinese medicine and we talk about a Chinese herbology market which is about 150 billion to 200 billion USD of which 15%-20% is exported. It is growing. In some way, there is a paradox. The sales volume is growing but the number of TCM doctors and TCM health buddies are actually decreasing when we look at the numbers. It has been decreasing until 2010 and now, since then, it’s increasing again but still not at the level it was in the 1990s. So, it’s a very interesting segment because we have interviewed a couple of people before who were in health supplements and I believe you are very close to this market (learn more about the health supplement market in China).

The second business you are contributing to – because I understand that it was initiated by your wife – is education, Easton Bridge Education. So, it is based in Beijing, providing education centers in China such as English teaching and also art, science, and so on in Beijing to – I would say those upper middle class, middle class Chinese who are living in Beijing. I will have a lot of questions about this market too later on. Thank you, Gordon, for being with us. Would you mind telling me, if you want to add anything about the introduction of your two businesses and tell us more about what you do?

Gordon Dumoulin: Yes. Thanks for inviting me. It’s a nice opportunity to talk more about China, about doing business in China, and also about understanding China more. As you introduced very well, first I’m from Holland, the beautiful city of Maastricht in the South of the Netherlands and I’m living since 2009 in Beijing. Indeed, I’ve been doing the business with Chinese natural ingredients market called Dumoco. I set up the business myself in 2009 – operational 2010 and actually that came from a more Chinese natural ingredients market course or race. I have always been in the food business when I was living in Europe and when I moved to China some people and some business relations were asking me about some specific ingredients for traditional Chinese medicine and when you start a new business you need to take all the business what you can get to start up. So, I dived into some specific Chinese natural ingredients market and then I expanded to a wider range of natural ingredients. Basically, it’s indeed like you mentioned, related to ingredients for traditional Chinese medicine, functional herbs in which they come in many ways. We can use them for herbal teas, we can extract them, we can make powders and many of those are indeed coming into supplements. So, what we do here at Dumoco, we have different ways. First of all, we have our own export of different natural ingredients to Europe, to the States, Australia and to some other countries. Secondly, we do consultancy for the Chinese herbology market, Chinese companies, Chinese herb farms, cultivations, and also processing companies to consult them in quality control, which is usually expected in Europe and the type of quality control which is expected. So, we also do consultancy works in different provinces in China. The most important in this way is – as you mentioned, it’s a very interesting segment. You specified a little the TCM and also the TCM doctors, but we should look at more widely that – especially Chinese natural ingredients. Functional, medicinal, herbal ingredients are not only used in TCM. Actually, when we go to the States, in Europe, we go to many pharmacies, even to supermarkets and to other shops where you see many kinds of supplements, for sleeping, for being active, for focusing and for many other things. Actually, these are all already related to ingredients for traditional Chinese medicine, but not only to TCM, in Europe, but we have also had – now it’s much less –, many herbal remedies and still, today learning from our grandparents and even from our parents, that take these herbs or take ginger with lemon whenever you have a cold. So, there are many relations in this aspect, and the marketing, the model of marketing in recent decades, is that, of course, many modern fashionable companies who are doing supplements, but at the end of the day it’s all about the Chinese herbology market, it’s all about tradition and the history in this (learn about the push for Chinese medicine during the Covid-19 crisis).

Matthieu David: So, something I understand now, your market is overseas right, and you represent some producers from China, you help them to get the certification, do it the right way and you export their production overseas.

Gordon Dumoulin: Yes, yes. So, there are two ways, we do consultancy for Chinese companies. We help them in – among others quality control also in some export how to do business overseas and secondly, we have our export department where we have distributors in Europe, in the States, other countries who sell our products, which we manufacture in corporation with our partners in China.

Matthieu David: I understand that some of your people you know, wanted your help to buy those products in China because you were in China. What is surprising me is you have been able to also actually get the producers as clients for consulting to understand how to manage those productions and to export. Would you mind telling us more about how this articulated? Was it from the beginning that you were advising them and supporting them in production or was it in a later stage? How did you get this knowledge and how did you do it and how a foreigner can help them to do – to produce something they are used to producing.

Gordon Dumoulin: Actually, you are a link on both sides. You benefit from both sides. First of all, when you talk about the Chinese side, how you do business in general – we all know that. Its relation, you build up relations. So, at the beginning of 2010, I took night trains – 70% of my time going from one Chinese herb farm to another (learn more about China’s agricultural strategy). Going to productions who extract botanicals or pulverize to powders and you focus these people and it’s a way of doing business in China that – we hear there are many ways – also in the media, but it’s true it’s always about the win-win corporation. You also have to think about either your supplier or your customer, how they can benefit, and how you can benefit. Because if one doesn’t benefit, the relation will not last. So then it’s a natural growth that – of course with some people, you have a better relationship than with others, but you want to help them to improve because also for my benefit, because I’m buying products from them, so I want them to improve, so I can sell better products to my clients in Europe.

On the European side of the American side – European side they feel comfortable because Gordon is in China and I can speak a little bit the same language. And for many people in Europe or outside China, China is very far away and very unfamiliar so they don’t get a comfortable feeling, so this is what I can bring to them, and transparency is a very big word in this – because we are transparent. Our customers in Europe, they know the Chinese herb farms, they know the productions. They know everything. While many other people in the States or Europe, they try to hide because China is their treasure, so they say okay we deliver products, but we don’t tell you where or how – just the product is good.

But we did it the other way around. We are transparent and we build on trust. We built trust from all sides. So, it’s more like a community where we are in one way or the other the glue and the control and also trying to improve the whole community that everybody gets better in this way – and everybody makes money of course.

Matthieu David: I see. Talking about the product. When you talk about Chinese Chinese natural ingredients market, would you mind being more specific about what it is and especially what’s the difference between having supplements, what is the difference between ingredients for traditional Chinese medicine

 – CTM – one thing I didn’t say about Chinese medicine, Chinese traditional medicine – the World Health Organisation, WHO said, they accepted Chinese traditional medicine as a medicine and in June 2019 – the very recent was last year so I believe that may change a little bit your business and the perception of your natural ingredients by the West. By overseas markets. Would you mind sharing some more about Chinese natural ingredients market and how different they are?

Gordon Dumoulin: Yes. I’m not sure if this influenced the West, but I can explain a little bit more about TCM in general, I will not go into details. TCM, in general, it’s a different philosophy at looking at health. It’s also a more preventive way of looking at health. I’ll give you some examples. For example, they – a lot of people here in Beijing – eat radish after eating and you know when I just came here I said I’m full – I don’t want to eat radish or I’m not in the mood for radish. I better have dessert or some French teas but I looked it up, a radish has specific substances which make the probiotics start working. So, digesting your food. This is the same for nuts and seeds. You see Chinese people all over China and they eat a lot of seeds especially after dinner. And this is for the same reason. Chinese dates, the tribe dates they are often eaten before dinner because it lessens your appetite, so you don’t eat too much. So, in many ways subconsciously even many Chinese people will not have the straight answer why they do that, because it’s a tradition but generally eating or food in China is much more closely related to health and this is also coming back in TCM. In TCM there are many preventive measures, now, of course, you have many medicines which hardly exist in Europe and then you really talk about medicines concentrated syrups and other things, but the link is coming to supplements because supplements in Europe they have also a prevention. You don’t get sick, you have to eat vitamins, tablets every day or you have to drink lavender tea at night because you sleep well. So, there are many ways that you prevent something to happen. This is also in TCM – the value and WHO indeed appraised the TCM as being a medicine but is a different way and I don’t think it’s fully comparable. When you go to Chinese hospitals for example, usually for acute diseases which need to kill something and so to say in your body, you take a killer and it’s usually a Western medicine and you are cured. While –when you are for example having symptoms of something, you feel uncomfortable or you are having headaches or different kinds of symptoms, people often tend to look more to Chinese medicine to see how they can reduce the symptom. Not only to the medicine but to treatments and to behavior. So, the doctors will also tell you how to behave – the same as in Western societies, run more, walk more, do more exercise, sleep early, etc.

Matthieu David: I had a question about Chinese herb farms. Finding factories in China in some way it’s linked to overseas. It’s linked to foreigners and even that – finding the right factories, understanding the factories, how to work with them – it’s not easy. A lot of people struggle with that and you have been able to connect with entities which are Chinese herb farms which are much more remote, usually, I believe don’t speak English and I don’t believe they are used that much to export. Is my analysis correct and if it is – how did you handle it?

Gordon Dumoulin: Yeah first of all it is correct. The first question is actually why people are having problems finding the right partners, the right companies, right suppliers is – first of all, you have to be there. Like I said in the beginning, at the first year I spent 70% of my time in night trains really going to the countryside, visiting many companies, visiting also many Chinese herb farms and look – many were not qualified so –

Matthieu David: How did you find those Chinese herb farms. You can get a train to go to the countryside and then what do you do? How do you prepare?

Gordon Dumoulin: Oh, first we do some research.

Matthieu David: So, research how do you do it because it seems so unclear, so remote, so local – would you mind sharing a bit more?

Gordon Dumoulin: Yeah, I mean we are not going to the local, local Chinese herb farms – we are not going to a local farm whose producing vegetables for their village, but we are going to specialized Chinese herb farms because we are looking for the Chinese natural ingredients market. I’ll give you an example – for example, ginseng root which is familiar to many Western people, the area of the ginseng root in China is in Jilin province. Actually, at the border of North Korea so the famous mountain Changbai mountain is actually the homeland of the ginseng, so you study first. To come back a little early before I went to China, I didn’t know anything about the Chinese herbology market. So, I studied day and night, learning more about ingredients for traditional Chinese medicine, also studied – actually very simple, spending time on the internet talking to people, trying to find out – okay where is this, where is that? So, it’s also about relations, you talk to somebody and they know. Okay, we have a good company that has a plantation for ginseng. So, you take the train or the plane and you fly to Jilin, and you have a look around and you are amazed every day because you learn and then you find out this whole city is all about ginseng. And it is not the only plantation, there are 120 other plantations. So, you go to study more and you go to study more.

Of course, I have also Chinese people with me, who spoke Chinese at that time, because I didn’t speak and I still don’t speak very well, but they can communicate with the local people and we can find out more relations, more companies how to find out, but it takes time and you have to be here.

Matthieu David: So, your clients in the West, would you mind describing a bit more – are the restaurants? Are they more individuals? Are they doctors who are using it for traditional medicine?

Gordon Dumoulin: No, the majority are supplement manufacturers. So, the majority are – there are even big companies who produce actually natural supplements. Then, some of them are also cosmetic companies who are producing natural skincare (learn more about natural skincare market in China). So, we cannot supply to individuals because the quantities are too small because when somebody needs one kilogram and we have to fly that over, it will be very expensive for people. That’s why we also work with distributors. We have distributors in different countries like in the Benelux, in Germany, in France, Spain and we work with them – but they usually also of course target the larger companies and like I said, most is going into supplements, syrups, tablets, capsules, products like this and I think about 10 -20% maybe into skincare (learn more about the skincare industry in China).

Matthieu David: It’s more and more interesting what I’m discovering because I have – we are used to talking to people who are doing import and export businesses, but not at all in  Chinese natural ingredients market, not at all in food from China, but more from factories and we see plenty of people in this industry. So, I believe your business is very unique and your position is very unique. I’d like to understand more about – because you said transparency is very important – your clients know where the farm is. How do you handle the transparency on pricing if they know so much about the sourcing and so on – how do you work on the pricing?

Gordon Dumoulin: We move on the pricing together with our suppliers here in China. So, they know what we are asking in Europe and we also discuss this together. We don’t have any exclusivity, so our model is – actually, we have our own brands and that’s the local brand, so the end-users at the end of the day do not know where it’s coming from. Our distributors they know. If we have a very big customer who wants to visit a plant or wants to visit a plantation – he’s most welcome. They can come but we have to deal and we have the agreement with the suppliers that they know our customers and they will not touch our customers and even – so actually we put the security and that sounds strange for many Western people – we put the trust with the Chinese suppliers as – to be honest, I haven’t been cheated in 10 years. So, if any customer from Europe – and they know for example from which factory it’s coming, or even from which plantation – they need for example ginseng for an herbal tea if they would contact the Chinese herb farms directly the first phone call is coming to us. This guy is calling and how should we handle this? So, it’s in a way a matter of trust we can put and to be honest – we don’t have any legal agreements with this, because you don’t want to go into legal anywhere, so it’s a matter of trust and it’s again about relations what I said before. You build up relations with the people, you show them trust, you show them support, mutual support from both sides and a feeling that we are here to stay and we are going to make a good relationship together and also a pleasant relation together, for the purpose that we can sell and we can have some market.

Matthieu David: I understand. I feel that you are acting like an agent for them, an agent who will actually manage their exports and their overseas relationship. Does it make sense to say so?

Gordon Dumoulin: In one way yes, in one way, yes, but even some of them are large companies. They even have their own export department, so it’s not the only one – we are not working only with small companies, we are working with some leading companies in China for plantation, for processing and even there we have our relations and we do our own business with our own branding. We have good relations and we also support them as I said in the consultancy, in improving their processes and our processes together.

Matthieu David: You are involved in another business I mentioned initially, which is education. Business called – Easton Bridge Education. To give an idea to people listening to us how big this industry is – it is said that private schools account for 35% – let’s say 1/3rd of the total number of schools in China in 2018. So, it’s massive. I believe that the number of private schools in proportion is much higher in China than in Europe for instance. 53 million students are studying in private schools in 2018. That’s also a very fragmented market and when we look at the English language learning market for 2018 globally, China represents a third of it. Like 29-30% of the total. Final thing is that education for kids is one of the segments of the market where parents want to spend. They are eager to spend. When we look at some statistics in Shanghai, so private bilingual schools on the time of education of the kid, parents who were affluent could spend 100 – 200 thousand USD – of course, that’s over many years, but that’s a sizeable amount of money that Europeans, for instance, are not spending. Most Europeans don’t spend, even the affluent ones in Europe. Would you mind telling us more about what you do in the education business in Beijing and a bit more about your clients as well? I’d like to know if what I just described corresponds to what you see.

Gordon Dumoulin: Yes, actually the education has been also born from a – in a natural way. Like you mentioned my wife – we started up Dumoco together 10 years ago. She is from Beijing and at that time she was not my wife yet and we set up the business and we were business partners. She helped me and as we all know the business at the start is a difficult one, so we were fighting for Dumoco for the extract, for the Chinese natural ingredients market, and for the export network and at one point we were – living in the outskirts of Beijing and we had an office at the time, a small office and so my wife at that time said – there are two kids here on the floor and they want to learn English from a foreigner and me was a European mindset, focused and I didn’t study for this and I don’t want to do this, I need to spend time on Dumoco, and then I came to one of my first confrontations of Chinese ways of thinking because she showed me the balance sheets and she said – you still want to pay me or not? So, that was a good one and so she – so I said actually its good. Let them come and we can teach them at the weekend. So that was actually her education. She’s an English teacher, she has an English teaching degree and her passion, her dream is her own school – her own English school (learn more about China’s language school industry).

So, we started this for two kids and we expanded, we rented an apartment here in the Tongzhou district in Beijing and fast forward we 8-9 years later we had a full program in our apartment, so we rented another apartment, ran a full program. Especially in the weekend, and also after school – with me teaching in the weekend to support her and she taught during the week and we had two other teachers and since last summer we moved – we found a corporation and an investor also with a license because we were not actually official, so we found an investor with an education license, we moved to where I’m sitting now, we moved to a new school – 400 – 500 square meters, with also more teachers and now we have about 150 – 200 students running and besides that we are doing international summer camps. So, in the past year, we have organized summer camps to Boston, to London, to Holland. Last winter, just in time before everything was closing – to Singapore. So, this is – yeah this is in a nutshell where we came today.

Matthieu David: I see – what you do is an education center based in Beijing and also education – how do you say that? Education travel?

Gordon Dumoulin: Yeah, we call it winter camps, summer camps, English summer camps, so we find corporations with schools abroad, in the US, Europe, Singapore last winter and then we send them on training there together with some – of course with some other educational culture tourism natural aspects as well.

Matthieu David: How would you describe your clients? Are they very wealthy? Are they affluent? Are they themselves parents have degrees or the opposite, they want the best for their kids because they don’t have degrees? How would you describe them? How would you qualify them?

Gordon Dumoulin: We have many different kinds of clients, of course, you need to spend – I mean they spend quite a lot of money on English courses. Usually average you spend for a 60-hour course as frat you spend about – and then you are not expensive, this is for normal smaller schools you spend between 1 -1.5 thousand USD per kid and then you are talking about group classes. When you have one to one classes you spend even more, but many of them – we are building actually also a very large social environment because most of the parents are here so we get to know them and when it’s clicking we are eating together and drinking some wine –we see that many – of course first of all people need to be able to afford, because some of them taking three classes and then they also have a piano class in the music school and they have an art class in the art school – so they are quite filling, but many of them are entrepreneurs, they have their own business in many different ways, in many different sectors. Some of them work – I would call it the upper-middle class because – no actually the whole middle class. We have some lower – we also have a girl she’s living in a village; she’s coming by bus really 45 minutes by bus, just to spend 45 minutes here and they’re really struggling for this, the parents – both are really struggling for this but the average is middle class. The upper class will have their own really higher private education because then it’s what the price counts – so I would call it you know, average middle class and to be honest, the middle class in China is doing very well and is very much comparable to European middle class – I think you know as well and even in some ways better off in terms of spending power. On what can be spent. So, yes, the clients are all families, most of them all go to public schools and the children go to public school and to our education center based in Beijing. I have a son of 7 years old, he’s going to public school here and many of our kids are his classmates, at least in the same school and to be honest, just as an example how still rare it is also – I’m living really in the outskirts of Beijing, my son is in a public school and this is – it’s a huge public school, I think about 1500 students and I’m still the only foreign parent in the whole school. So, it’s also like an imagination for the listeners that you’re still a minority as so to say but a blissful minority. It’s not something negative at all. But you get close to the people, you get close to the residents in the compound, also with the school – the school has its social factor in this.

Matthieu David: What are the parents looking for? Are they looking for opening the mind of their children? Are they looking for core competencies like English – being fluent in English, or are they looking also now and because the education market may be more mature than before – are they looking maybe also to learn how to play a piece of theatre? How to learn instruments? How to do liberal arts, drawing, and so on? What’s your perception of it and the evolution of it over the last 10 years? My perception and I’d like to know if you agree with that is that – 10 years ago it was much more about core skills, learning English – learning maths, learning whatever core subjects and now it opening up to the drawing, dancing, music instruments, playing theatre. Is my understanding correct? Do you see that with your clients?

Gordon Dumoulin: Yeah, I see that and you are correct. It’s more – you have specific courses, when you talk about English, you have specific courses but our general courses have the aim that the students and the kids are able to express themselves and they feel comfortable to express. We do – in our education center based in Beijing, we do many ways, we play Shakespeare, we have many jokes, we do games and all in English and it’s all about that they can feel more comfortable in expressing themselves. I don’t correct them every time when they make a mistake. Let them talk, let them express, let them speak – and this trend what you just mentioned is correct, people are looking for – you know, kids who are more able to express themselves, to be more diversified in many ways, also internationally that they learn more. We also talk a lot about cultures in other countries so they learn more about this. I’m amazed about what the kids know here about other cultures in comparison to what I learned in Europe about China which was a big mystery at that time. But I’m amazed at what they already know and I want to give it a more attaché that they also see and feel. So, yes and then we have specific courses also of course – I mean for example when a kid needs to have an exam for a certain school, for example, Cambridge or Toefl or things like that, we have specific courses to prepare them for this, so there’s also, of course, a specific target course and then we have the general language course.

Matthieu David: I see, so still you feel that there’s a functional need for education to pass the exam, but it’s opening up to more liberal arts and more non-core skills. One other thing you are mentioning on your LinkedIn profile – it’s a bit another topic, but you say change is inevitable. You have written that – why do you say so, because I wanted to ask you because Peter Drucker who is a consultant we look into a lot at our company Daxue consulting, invented the name of strategy and business, is saying – what’s in common with all entrepreneurs? It’s not their education, it’s not where they come from, it’s not their social background, what they have in common is that they think change is positive. They see change as full of opportunities when none entrepreneurs would see change as a threat. As something which is threatening their position. So why are you writing change is inevitable?

Gordon Dumoulin: Because first of all this – how you look at it, it doesn’t matter. Whether you take it positive or as a threat, but I do believe that change is inevitable. We have a very – unfortunately not a lot of positive situations today, all over the world because of the coronavirus but change is inevitable and that’s what I learnt also here in China. Indeed, in Europe, many people see change as a threat, but in China, you have to change, you have to adapt. There is a certain – I don’t call it negativity, there’s a certain nervousness that you need to improve, you need to change, or this doesn’t work so we need to go another way. There’s always something happening and this is also coming to my third passion what I’m doing, I’m also doing a blog of 5iZ – actually started, I’m no longer on LinkedIn. For me, it’s cross-cultural awareness about different cultures and different societies what the change is there, and what are the differences there. And so, what I learned in China – change is inevitable, but I also see that in other societies that this applies also to other societies and if you see it as a threat it holds people back and societies as well.

Matthieu David: I wanted to talk about 5iZ as you mention it, and especially about the name, I found it very interesting and shows how deeper you know China. You named 5iZ because China is not talking about North, South, West, East only – but also North, South, West, East, and Centre like Tiananmen being at the center of China and the center of the world. Would you mind telling us more about what does it mean for you?

Gordon Dumoulin: Actually it has been – you know, before I went to China I was most of the time in expert management jobs, so I traveled for about 15 years all over the world, meeting many cultures and doing business there, coming to the homes and so you know – culture was always a passion for me and seeing different cultures, and I had been in China before I had moved here, also many times but just being here for a week is something else and plunging in a black hole and start to live here. And China gave me – China as a country, as a society gave me so much learning that you can look at things in so many different ways. We have been brought up which is normal, as Chinese have been brought up here and Europeans have been brought up in Europe, you always have some kind of mindset in the culture and the society where you grow up, and this is natural and this is normal. And having the opportunity to live here, spend time here in a practically almost Chinese environment it was really – I’m very grateful having that experience and banging many walls because you have your own mind-set and like everybody is stubborn and everybody wants to have their right. So, you have many different learning experiences about how people think and how other people can think and approach new things. So, it’s very important that people start to realize all over the world that there are many differences in culture and cultural intelligence in how to do things. Also in business and when we go then into the business side you have many fantastic models on how to do business, but at the end of the day, it’s about feeling the people and about feeling the country and also knowledge about what worries those people – what is their daily life. What’s it all about and how they approach problems, and opportunities as well. How they teach their kids, how they live at home. I’ve been grateful in this and I wanted to share that and coming back to the name, 5iZ – yes center is a very basic thing which I feel also a little now. You know I mean – all the changes happening for example today – also with the virus, but Chinese society 10 years ago and today is completely different almost. You go through many changes and you learn to be more resilient. You learn to be calmer and tackle problems, threats, or opportunities in a calmer, resilient way and if it doesn’t work – fine, you go to the next opportunity.

Matthieu David: It’s close to 1 hour, I have a few questions to end the discussion. The first one and I often ask these questions – what books inspired you the most when understanding about China?

Gordon Dumoulin: For me, one book generally, not only about China – and I read it last year, I’m still reading it again – it’s The Silk Roads, from Peter Frankopan. It’s a fantastic book about the history and about the world history but through a very different perspective and the message what you learn there is that the history what we learned as a kid, in our society is very different from the kid in another society. Such as China or anywhere in the world. And so, this is a book I really recommend – also in understanding China. First of all, you cannot understand China completely – no one understands China, you don’t understand France – I don’t understand France completely – you all have these few items which characterize a country but this is nothing to make this diverse society clear because it’s very diverse. So, just for the perspective – read this book and know that you know nothing about the country. So be objective when coming here.

Then some other books – first of all, there are many books about how to do business, how to be successful, get your things, e-commerce – digital retail, new retail – all this. Read those books, some of them are great but it’s not about understanding China, it’s about understanding the market because China is a society and its people. This is what I’m always telling many people – because people want to know about China – I say why do you want to know about China? Because I want to do business – I say either you find a good local partner, then you don’t need to understand China. If you want to understand China you need to know the culture, you need to spend some time, you need to read about it. Few books that I have on this one is – first of all, a very old one and but still, it grasps a good feeling, its Red Star Over China – from Edgar Snow. Red Star over China- he was an American, he was actually the first foreigner who met Mao Zedong and this story gives you an insight also how people think and we are not talking about the historical events, but how people think and many thoughts are still applied today – how people think in terms of the collectivity of pragmatism in many – the many characteristics which are not defined, but which indicate as the characters of Chinese society is coming back. Secondly, I think – I don’t know if people have seen the Wandering Earth – the movie, the Chinese science fiction movie, a great one last year – I’m not sure if it’s not Netflix already – because I don’t have Netflix here, but read his book, it’s from Liu Cixin, he is one of the biggest science fiction writers in China – so in general, read either fiction or non-fiction biographies if you want to learn about China more.

Matthieu David: If I say more, The Three-Body Problem is written by him as, well right?

Gordon Dumoulin: Yes, exactly.

Matthieu David: And it has been popularised by Obama who read it before it was published and The Dark Forest the other one which was – yeah – I think he’s buried in Peking University and he was the first one – maybe the only one, but he was the first one I’m sure to be the member of the Chinese communist party and he lived in China all over the different periods of China, including during the controlled evolution. What are the most surprising success for you in China and the most surprising failure in China you have witnessed? I’ll give you an example of mine – I’m very surprised how e-commerce developed, because when I arrived people were paying cash at the front door when they get delivered and they didn’t want to use their credit card and now it seems that they use their phone to pay with a QR code that could be scanned with another number, taking more money than what you really want to pay. So, it’s a change I wouldn’t have expected to go so fast and so far.

Gordon Dumoulin: Yes, coming to your example this is very true and we always think about Chinese 10 years – 15 years ago with piles of cash because they wouldn’t trust anything else and they wouldn’t trust other people – while this is totally gone in 10 years, in less than 10 years even. But yes – I mean the daily change, as an example the daily changes that are happening – but also the daily changes and the daily speed what’s happening to yourself. You are really coming in to – you are forced to keep moving, to keep moving either by new regulations, by new opportunities, other companies like you say the new retail is coming. We are forced today, we are forced today with the quarantine or the confinement – our school has been closed for 2 months because we are not allowed to open and we don’t want to open because we want to be safe. We are already working, we have now our video classes at the weekend, we have our online classes. My wife is teaching almost the whole day online classes. We have set up an online library – we all did this in a matter of weeks. As for the surprising success is indeed the fast change which is happening and that you can adapt to that. So actually, this success is not more like business success, but it can come out in the business – the success is that you must break yourself open. You must be more adaptable and you must be more wide looking in things which you might be stuck in the business – for example, you have been doing business for 10 – 15 years at home or Europe or even here in China and you say I cannot do anything else. This is what it is. No, this is not true, even within your own business you can innovate. You can differentiate. As for the speed of differentiation of innovation is stimulated – also even forced upon you because – not forced in a negative way but you go with the flow, and you also want to lead some of those flows. So, this is I feel really a success in myself that you are much more wide – open-minded in doing business.

Matthieu David: Last question – what do you read to stay up to date on China? What are your sources? I believe that’s a common question for foreigners – what kind of sources can they use? It’s hard to read the Chinese newspapers, even for people who have a very good Chinese level HSK 5 or 6 – it could be hard. So, what are the other sources you are using to stay up to date on what’s going on?

Gordon Dumoulin: First of all, I think – of course, you have some English language – like China Daily, Global Times – many people see these newspapers often as not very objective but actually there are many interesting articles and there are many insights which can teach you more about China. Also, about society, also about governance. Some more other sites – there’s also one site – it’s called Sixth Hong and they have some social articles, articles about society, about what’s moving the people and different kind of aspects, they touch these topics and you have similar sites of this like RADI China, Sub China – so you actually have different sites where you can find – so to say non-mainstream insights of China. Because the mainstream – people know but there’s actually – it’s not very interesting because it’s always coming back to the same, and it doesn’t give you an image of society and when you want to do business here or when you want to be interested or when you are interested in China, you need to know more about the people and what’s moving the people – because they are your customers or your suppliers and you also want to trust your suppliers. So, try to find some other news agencies which diversify the news. Of course, go to my blog, I post almost every day different things about Chinese society. LinkedIn is also a fantastic medium with many people telling their own experiences and their own insights and so – this is usually the sources what I’m using, and then, of course, you have the Chinese twitter – Weibo, you have WeChat where you find the trends, what’s happening in China.

Matthieu David: What’s the link for your website?

Gordon Dumoulin: 5iz-China.com.

Matthieu David: Thanks Gordon for your time, thank you very much it was very instructive, very interesting to see how you have been able to develop your business on natural ingredients, a very unique business I believe. I wouldn’t have the chance I think to interview someone who has been able to go into this industry which looks very, very local. Thank you everyone for listening and stay safe during these times of virus outbreak. I hope you all stay safe.

Bye, everyone.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

Do not hesitate to reach out our project managers at dx@daxue-consulting.com to get all answers to your questions

This article China Paradigm transcript #98: Doing business in the blossoming Chinese natural ingredients market is the first one to appear on Daxue Consulting - Market Research China.

World Health Organization described China’s response to COVID-19 outbreak as the “most ambitious, agile and aggressive disease containment effort in history”. China’s early isolation and the resulting drop in contact between people helped to reduce cases. The government is not the only body to take swift actions, businesses, schools and individuals also played important roles in preventing the spread of COVID-19. Hence, the learning points are widely applicable. That is why Daxue Consulting examined 50 measures of how China suppresses COVID-19.

NO AND LOW CONTACT

1. SEPARATING STUDENTS IN DINING HALLS

In schools, students had plastic dividers during school meals to prevent cross infection. Some schools divided students lunch periods so fewer students eat at a time.

2. ENFORCED SOCIAL DISTANCE IN SCHOOL

Some primary schools used a creative way to enforce social distancing between students. They had students wear ‘distance hats’ to maintain a distance of one meter from one another.

3. MASKS IN PUBLIC TRANSPORTATION

During the epidemic, the National Health Commission required people to wear masks on public transportation. In addition, the National Health Commission suggested people disinfect their hands after using public transportation.

4. MASKS ARE REQUIRED IN SHOPPING CENTERS

All the employees in shops must wear masks when they are on duty. Guards check consumers’ masks and health code at the door.

5. MASKS ARE REQUIRED BY RESTAURANTS

People without masks cannot enter most restaurants during the epidemic. This measure helped Chinese people to form the habit of wearing masks every day.

6. RESTAURANTS PROVIDE ENVELOPES TO PUT MASKS IN

To prevent masks from getting contaminated on restaurant tables, many restaurants provide envelopes for customers to set their masks down.

7. LIMITED NUMBER OF PEOPLE ALLOWED ON ELEVATORS

It is easy to spread COVID-19 in elevators. Hence, many Chinese office buildings limited the number of people in elevators at one time. Also, plastic is used to cover elevator buttons and the plastic is changed every day. Some office buildings even provide toothpicks or tissue for people to press elevator buttons.

8. BANKS OFFER DISPOSABLE TISSUES TO TOUCH DOOR HANDLES OF ATM

During the epidemic, many banks offered tissues outside each ATM’s door for clients to use when touching door handles.

9. DIDI’S TAXIS PROTECT PASSENGERS BY INSTALLING PLASTIC FILM

From early February, Didi installed protective plastic film in the back of taxis to protect both drivers and passengers. Simultaneously, both passengers and drivers need to wear masks in the car.

10. DELIVERY PEOPLE NOT ALLOWED IN RESIDENTIAL BUILDINGS

According to the policy of local governments, residential areas have a designated area for temporary package storage. Customers shall pick them up by themselves. Contactless delivery reduces the risk of contagion.

11. ONE METER DISTANCE BETWEEN PEOPLE IS REQUIRED WHEN STANDING IN LINE

In correspondence with local government’s regulations during COVID-19, shoppers need to keep 1-2 meters distance from each other when standing in line. To nudge consumers into standing at least one meter apart, stores labeled standing spots.

12. OFFICES ALLOW FLEXIBLE WORK SCHEDULES

Many Chinese companies allowed flexible work plans during COVID-19.  When the situation was serious, only a few employees worked at their offices. Besides, during the epidemic, many companies required employees to work remotely in China. As the situation improved, more employees could work from offices.

Source: Daxue consulting and Dragonfly Group, Impact of the COVID-19 epidemic on the organization and HR within French and French-speaking companies established in China

13. NO SHAKING HANDS IN BUSINESS SETTINGS

To abide by the recommendation to stay 1 to 2 meters from each other, the member of CPPCC National Committee, Yang Zhaoming, advocated that people should use the Chinese traditional greeting way to pat each other on the back or bow instead of shaking hands.

Source: Oriental Daily, How China suppresses COVID-19 report by daxue consulting. Members of the CPPCC National Committee greet each other.

14. THE CENTRAL BANK ENCOURAGED NO CASH PAYMENT

Cash can spread the virus easily. Thus, the People’s Bank of China advised people to use more non-cash methods, especially mobile payments.

15. IMPLEMENTING LOW-CONTACT MEASURES IN RESTAURAUNTS

Another way of how China suppresses COVID-19, was shortening the opening time of restaurants to reduce the crowded traffic. Some restaurants in China offer public chopsticks and spoons to use on shared dishes.

MASS DISINFECTION

16. DISINFECTING PUBLIC TRANSPORTATION

In terms of public transport, the way of how China suppresses COVID-19 included disinfection of public transportation vehicles once a day after operation. Besides, in buses and subway, commonly touched hard surfaces also were disinfected.

17. DISINFECTING COMMERCIAL STORES

In retail industry in China, the disinfection of commercial stores, focusing on the surface of tables, door handles, ground, and walls was obligatory.

18. DISINFECTING COMMUNITIES BY COMMUNITY STAFF

Following the guideline released by Beijing Center for Diseases Prevention and Control (疫情防控中心), commonly touched objects such as stair railings and door handles should be disinfected by chlorine concentration of 250-500mg/L or 75% ethanol once a day.

19. DISINFECTING IN SCHOOLS

The National Health Commission and the local Municipal Health Commission required teachers and staff to disinfect schools.

Source: Sina news, How China suppresses COVID-19 report by daxue consulting. Schools in Miyun thoroughly disinfected every classroom

20. HAND SANITIZER AVAILABLE IN PUBLIC PLACES

People can disinfect their hands in some public places with free sanitizer.

21. SANITIZING PHONES IS ADVOCATED

As people use mobile phones every day, it is easy for the virus to adhere to the surface. Medical experts suggested people to disinfect phones 2-3 times a day by disinfectant wipes.

22. CARRYING DISINFECTING WIPES IS RECOMMENDED

Chinese medical experts suggested carrying some disinfecting wipes every day so that they could sanitize their hands at any time

EDUCATE, TEACH, AND ENCOURAGE

23. PUBLIC ANNOUCEMENTS TO ADVOCATE SELF-PROTECTION

It is quite common in China to see the posters in streets to advocate mask wearing and hand washing. The purpose of the measure is to generate a strong awareness of self-protection.

24. POSTERS WITH HAND WASHING INSTRUCTIONS

In many public places, there are posters released by the local Municipal Health Commission to show hand washing instructions to teach the scientific way of washing hands.

25. PROPAGANDA ON HOW TO DISPOSE OF USED MASKS

People have the awareness of wearing masks which is an effective way of self-protection, as well as protecting others. However, how to deal with the waste masks is also a major issue. If used masks are not disinfected before being discarded, it could contaminate hands again.

26. DISSEMINATE THE KNOWLEDGE OF COVID-19 BASICS AND PREVENTION

Local governments propagandized the prevention measures of coronavirus by street posters that include:

• Introduction of COVID-19
• How the coronavirus spreads and prevention
• COVID-19 symptoms
• What to do if you show symptoms

27. DAILY TEMPERATURE CHECKS FOR PUBLIC TRANSPORTATION STAFF

In terms of public transportation, the way of how China suppresses COVID-19 was measuring of employees’ temperature. Besides, wearing masks and disposable gloves was obligatory. However, the duration of enforcing this measure differs city by city based on the severity of the local outbreak.

28. SCHOOLS RELEASED ONLINE COURSES

During the epidemic, all Chinese schools were closed for 2+ months and students had to stay at home. In order to make sure that course progress would not be disrupted by COVID-19, the Department of Education released a policy which required  schools and universities to launch online courses.

29. OVERSEAS CHINESE DONATED MASKS TO CHINESE HOSPITALS

When the epidemic was arising in China, the amount of masks available was inadequate. International students donated money and masks to China.

30. CHINESE EMBASSY ARRANGED AIR LINES TO BRING INTERNATIONAL STUDENTS HOME

Due to the coronavirus outbreak overseas, many flights were cancelled. This led to a large quantity of Chinese travelers stuck in foreign countries. Thus, the Chinese embassy arranged flights to bring them home.

31. AUTOMATIC VISA EXTENSION FOR FOREIGNERS

The Chinese government took foreigners in China into account as well. As traveling became unsafe during the pandemic, the Chinese government automatically extended all visas for two months if they expired.

POPULATION CONTROL

32. PEOPLE WHO REJECTED EPIDEMIC PREVENTION MEASURES WOULD BE PROSECUTED FOR LEGAL LIABILITIES

People who have been in an epidemic region/city or closely contacted people with suspected/diagnosed cases had to accept temperature tests and centralized or home-quarantine for 14 days. If someone refused to give their information or accept body temperature tests, it would count as a crime of endangering public safety.

33. LOCAL GOVERNEMNET LAUNCHED HEALTH CODES

Citizens could generate the personal health code through mobile apps in China, WeChat public account and QR code. The health code served as an electronic voucher for individuals to enter or leave cities. There are 3 types of them:

1. Red: Need to be quarantined for 14 days
2. Yellow: Need to be quarantined for 8 days
3. Green: No need quarantine and free to enter any public places.

34. RESTAURANTS AND ONLINE FOOD DELIVERY PLATFORMS SHOW THE BODY TEMPERATURE OF STAFF

Restaurants and online food delivery platforms in China launched many measures to ensure the food safety.

Temperature tests for delivery people and restaurant employees twice a day, disinfection of delivery boxes, wearing masks at work and contactless delivery service were very important during the epidemic. These measures had a great contribution to how China suppresses COVID-19.

35. MEASURES IN RESTAURANTS, BARS, NIGHTCLUBS REQUIRED BY LOCAL GOVERNMENT

The main measures of how China suppresses COVID-19 in public places were: limiting the number of tables and diners, reducing the placement of tables and chairs, and increasing the distance between tables. Testing the body temperature of every consumer was also obligatory.

36. BODY TEMPERATURE CHECK AND PASSES ARE REQUIRED BY OFFICE BUILDINGS

Guards check body temperatures at the entrance of office buildings in China. Delivered goods are in designated places at the entrance under the unified management and control. The air conditioning system in office buildings was turned off during the epidemic. All employees working in office buildings need to apply for passes, people from outside need to register personal information at the entrance.

37. LIMITATING THE NUMBER OF TOURISTS

Online booking tickets helped to control the number of tourists in China in certain time period. The number of tourists in every scenic spot could not exceed 30% of its largest capacity. Tour groups cannot have more than 30 people. Indoor tourist sites were all closed.

38. BAIDU LAUNCHED CORONAVIRUS INFECTION MAPS

Chinese search engine, Baidu launched the “fight against pneumonia” map to let users know the latest and accurate information in real time. People can have a better understanding of the of the epidemic situation in each city by using the map

39. MEASURES TO MANAGE ACCESS/EXIT OF COMMUNITIES

When people come from other provinces or countries, they have to register travel info in their communities. Before entering a community, guards measure the temperature of every individual according the regulation of local governments. Some communities required residents to apply for pass codes on WeChat mini program.

40. CHECKING BODY TEMPERATURE BEFORE ENTERING STORES

According to local government’s policy, testing body temperature before entering stores is important to protect customers and employees’ safety.

41. MEASURING PASSENGERS’ TEMPERATURE BY THERMAL CAMERAS IN TRANSPORTATION STATIONS

Transportation stations, including subways, railways, and airports, have infrared thermometers. The system automatically detects the temperature of passengers when they pass security checkpoints.

42. MINI PROGRAM TO TRACK PEOPLE’S TRAVEL HISTORY

The China Academy of Information and Communications Technology (CAICT) launched a mini program to track everyone’s travel history in past 14 days to see if they have been places seriously affected by COVID-19.

43. REGISTERING ON A “HEALTH CLOUD SYSTEM” BY QR CODE TO ENTER SHANGHAI

Passengers who entered Shanghai shall apply for on-line health registration on the “health cloud” system.

44. QR CODES TRACK PEOPLE’S POTENTIAL CONTACT WITH THE CORONAVIRUS

After scanning the QR code, passengers would know if they had close contact with suspected cases. They get the information by text messages to self-quarantine at home if they had.

QUARANTINE MEASURES

45. ARRANGING CENTRALIZED QUARANTINE IN HOTELS FOR PEOPLE FROM FOREIGN AND DOMESTIC EPIDEMIC REGIONS

According to the Chinese government’s policy, people coming from domestic epidemic areas and all overseas areas should stay under the quarantine in hotels for 14 days. Doctors record their body temperature twice a day during quarantine. On the thirteenth day, they need to take a virus test. If their test results are negative, they can return home.

46. IMPLEMENTING HOME-QUARANTINE FOR PEOPLE FROM HIGH-RISK REGIONS

People from overseas and domestic high-risk regions should stay under the quarantine for 14 days at home.

 Groups which meet the requirement of self-quarantine at home:

1. Over 70 years old
2. Children
3. Pregnant women
4. Living alone

Doctors and police measure their body temperature twice a day. Also, there are door trackers on their doors. If doors open over 1 cm during the home-quarantine period, the police will be notified.

Source: Laiyuan, How China suppresses COVID-19 report by daxue consulting.

47. LOCAL GOVERNMENT GIVES OUT GUIDELINES IN DIFFERENT LANGUAGES

China’s local governments gave out guidelines in different languages, so every foreigner in China understood what rules they should follow. Besides, the National Immigration Administration of the PRC gave out Chinese-English bilingual handouts of Laws observed by foreigners in China.

48. DISINFECTING THE TRASH OF QUARANTINED PEOPLE

Every community set up a temporary garbage collection point to place garbage generated by quarantined people. The local Landscaping & City Appearance Administrative Bureau sent staff to disinfect the garbage before delivering it to incineration plants.

49. MASS TESTING

In June 2020 China has completed a mass testing programme in Wuhan. Authorities in Wuhan have found more than 200 asymptomatic cases of the new coronavirus. Testing helps to find asymptomatic cases and people with an early stage of decease and put them under the quarantine.  

50. FINES FOR PEOPLE WHO DO NOT COVER THEIR NOSE AND MOUTH

Even though people must wear masks, many do it in a wrong way. Since April 2020 anyone who doesn’t cover their nose and mouth when coughing or sneezing will be fined.

KEY TAKEAWAYS

Digital technology was integral to containing COVID-19

Chinese government effectively identified cases and controlled the population by using Location Based Services (LBS) and big data technology. Also, big data platforms release real-time data about COVID-19, which is helpful to ease the public panic. At last, those technologies will continuously contribute to China’s public administration in the future.

The government & businesses educated the public on hygiene and social distancing tactics

Chinese local governments widely used signs to guide people to follow regulations during the epidemic. This nudged people on public transportation and in shops to keep a distance of 1-2 meters from one another.

Acting early was the key to contain COVID-19

Once COVID-19 was recognized as contagious, China took immediate measures to reduce population flow, such as the lockdown of Wuhan in January. Many cities and provinces took emergency control measures before discovering any COVID-19 cases. Those measures limited the spread of COVID-19 and gained time for follow-up actions. In addition, China’s capable of rapid response is important to managing public crisis.

Many COVID-19 prevention measures were decided on the city or province level

Chinese local governments took steps according to the different situation of provinces and cities. Also, the duration and enforcement are not uniform in different regions and communities. The advantage is that local governments can respond to the epidemic quickly according to the specific circumstances of each region. The downside is that China lacks a unified plan and supervision, which lead to the inefficiency of some measures.

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Educational technology is an often overlooked global phenomenon. In 2015, global EdTech companies took in more than $2.98 billion across 442 deals, and global EdTech funding jumped a whopping 58% in 2015 from the previous year. The global market is projected to grow at 17.0% per annum, to $252 billion by the year 2020. Asia is seeing the fastest growth in investment into the sector; China, in particular, is the largest EdTech market.

According to the Statistical Report on Internet Development in China, the number of online educational users in China reached 423 million as of March 2020, an increase of 110.2% from the end of 2018. The EdTech sector in China is estimated to reach RMB 453.8 billion in 2020, a 12.3% increase from the previous year, according to a report by iiMedia Research. As a response to the coronavirus outbreak, many EdTech start-ups have captured the opportunity to increase its presence in China and competed to gain popularity among students with attractive course offerings and discounts.

With over 400 million students, China is the world’s largest market for educational technology. While the education market in China still has much room to improve, especially in terms of formal integration of technology into classroom settings, many companies have successfully taken advantage of opportunities for digitizing education in China. EdTech landscape in China focuses on virtual tutoring, but there are a number of other EdTech start-ups that have successfully penetrated the EdTech landscape in China.

These are a few of the most innovative start-ups of the Chinese EdTech landscape –  from robotics to tutoring, to innovative educational technologies. We also explore which of these start-ups have gained a competitive edge during the coronavirus outbreak.

EdTech platforms in the Chinese education market

Yuanfudao (Yuantiku)

The platform focuses on K-12 learning and its products include AI-enabled virtual classes, live tutoring, and apps for homework support. A start-up founded in 2012, Yuanfudao has raised US$1 billion in a new round of funding in April as a response to the coronavirus outbreak led by Hillhouse Capital and its previous investor Tencent Holdings. This puts its valuation at around US$7.5 billion, making it one of the most valuable ed-tech start-ups in China.

In 2015, it launched Yuantiku, an online question bank. This app strategically takes advantage of the test-taking focus of the education system in China. Yuantiku is an online education product that provides material of previous years examinations for students and an exercise database that also provides tailored exercises to improve testing efficiency.  Some tests available include: National College Entrance Exam, post-grad entrance exams, tests for civil servants, first-level constructor exams, law counselor of enterprise exams, securities qualification exams, and more. More than 13 million Chinese junior high and high school students utilize the app, where hundreds and thousands of apps are aggregated to prepare students for the college entrance exam.

With such a huge database like this, its no surprise that two-thirds of Yuantiku’s staff is dedicated to research and development. Leading engineers and researchers are also hired for the application’s “little ape” search and “ape teaching” assistance to further develop its artificial intelligence methods in more effective learning methods. However, since its release, there have been public debates regarding its promotion of the heavy test-centric culture that has already been criticized in China. Questions of whether this kind of application is positive for the social health for Chinese educational society is still something to keep in mind with Yuantiku.

17zuoye

17zuoye, translating to “yi-qi-zuo-ye” or “homework together” widely recognized as the largest online educational platform in China. It is a three-party intelligent education platform for students, parents, and teachers. As of February 2018, 17zuoye has served over 60 million users and 120,000 schools by offering homework solutions to instructors, students, and parents. The platform aims to improve learning efficiency and efficacy and transform student homework from offline to online.  In the same year, the company also raised over $250 million, and intends to expand into the middle school and high school sectors, and continue to lead the the educational technology market in China.

Their mission, state on their website, is to “make education a more beautiful experience” by “utilizing advanced education technology, quality educational content, and continuous educational enthusiasm” in order to “provide more efficient and beautiful products and experiences for K12 stage schools, families and social education scenes, opening a new era of intelligent education.”

VIPKid

Valued at $3 Billion in 2018, VIPKid is one of the hottest applications for online English tutoring in China. The company pairs English tutors from the United States or Canada with Chinese students for one-on-one English tutoring geared for children 4 to 15. Through a live video tutoring platform, parents can book a session for their children with tutors, who can upload videos of their lessons. The English teachers are considered hourly-paid independent contractors.  Currently, VIPKid claims to have over 700,000 paying students and more than 80,000 registered teachers based in North America on the platform.  The company also raised $500 in 2018, suggesting a wave of growth in the Chinese EdTech industry, and across Asia more broadly. 

The app released followed their launch of the desktop version, and the app is a handy tool that lets students see previous feedback from teachers, upcoming schedules, and personal profile. Teachers can review their student sessions, a number of classes taught, and how minutes teaching completed. It also comes with a messaging area and notifications that can alert teachers and students of their upcoming tutoring sessions.

The platform rapidly took actions to support education in response to China’s school closures in late January due to the coronavirus outbreak. VIPKid’s first step was a launching 1.5 million free online math and English classes for children aged 4 to 12, and they prioritized students in Wuhan, the epicenter of the outbreak. They also launched free live-stream and recorded classes on eight major streaming platforms in China.

DaDaABC

DaDaABC has become one of the most successful intelligent English learning platforms for children in China. Founded in 2013, the company had earned over 15 awards and recognition in 2016. They’ve also collaborated with a number of top media companies in China, including Baidu, People’s Daily, and Tencent.

DaDaABC developed an English training system focused on one-and-one online tutoring while encouraging kids to have with their instructors during their practice. As an English tutoring platform, DaDaABC is often compared to VIPKid, but the company does not require their native English teachers to have a North American accent like VIPKid.  As a partner of the American TESOL Institute (ATI), they also offer online training courses for aspiring English instructors worldwide.

Makeblock

Makeblock is one of the most creative companies on our list. Founded just 6 years ago in 2013, the start-up uses Robotics as its primary educational tool, teaching kids coding, engineering, and other basic AI technologies. The package includes do-it-yourself robotic kits that will be manually assembled by students, who then also write simple lines of code to control their robots.

Makeblock is a global leader in STEAM education solutions (Science, Technology, Education, Arts, and Mathematics). The company provides hardware, software, content solutions, and even top-notch robotics competitions. Their products have over 8 million users worldwide, in over 140 countries, by over 1,600 channel providers. Makeblock has been the recipient of seven international awards, including the International Design and Excellence Award, the Reddot Design award, and the CES Innovation Awards in 2018.

As part of its global STEAM on Board Initiative for K-12 educators, Makeblock launched their “at-home resources” in March to adapt to online education with the pandemic. Initially designed to support local professional learning needs of STEAM and computer science teachers, the program now allows all educators and parents around the globe to teach and learn STEAM concepts with their free software, mBlock.  

CCtalk

CCtalk is the multifaceted online learning platform for Hujiang EdTech, another leading company in the Chinese education market. Hujiang was founded in 2001, as a BBS (bulletin board service) community offering online courses, but has since then expanded to offering a wide range of online educational programs, including international and domestic exam prep, foreign language instruction, professional skills training, and even more. CCtalk is a real-time interactive education platform that provides independent knowledge educators and sharers with comprehensive online education tools and platform capabilities, providing informative content and a community environment for learning.

Contrary to popular thought, not every EdTech platform in China is solely based on English tutoring. CCtalk provides a variety of educational tools and abilities both in live, recorded, and group formats. The platform allows teachers to utilize and create educational widgets, including a two-way digital whiteboard, digital hand raising, a multiplayer video that guaranteed teacher-student synchronization, desktop sharing, live PPT-like courseware, and playback functions. CCtalk university provides training for their iteachers, and the CC talk platform itself serves as a great platform in helping teachers attract more new users, and increase revenue from their courses.  The platform has been widely highlighted as a leader in educational innovation, allowing teachers to develop and utilize their own widgets and share them with others on the platform.

Changing Edu

Changing Edu is an O2O (online to offline) educational service app-maker connecting students, parents, and teachers to facilitate after-school learning services. Parents can post inquiries regarding tutoring services, and the mobile service app helps connect tutors to students. The Chinese EdTech company uses an online platform to make offline matches for one-on-one, at-home tutoring services. The company also plans to launch virtual, remote educational services, and other live streaming and expert Q&A services this year on their platform. The platform currently operates in 11 cities, including the larger cities of Shanghai, Beijing, Shenzhen, and Wuhan.

To accommodate for at-home learning during the coronavirus, Changing Edu launched a “Six-week learning contract” initiative for personalized one-on-one teaching. After the six-week learning period, students can apply for a full refund if they are dissatisfied. They also provided a free online teaching platform for self-employed teachers and smaller educational institutions in the industry. Among Chinese society, it seems that this platform has gained popularity among users after the outbreak.

Huikedu Group

Founded in 2010, the Huikedu Group includes the “Huike Education Group” and the “Huike Science Research Institute.” They are the largest partner with higher institutions in China, offering cutting-edge educational technology and products to higher education and vocational education services. The group also cooperates with national goals to develop mobile internet, cloud computing, big data, internet marketing, and other innovative information technology into educational services.

Huideku has reached a unicorn valuation of $1billion. Its focuses are in partnering with enterprises to provide customized educational products. It has developed online courses and R&D labs on tops such as AI and robotics. Additionally, the group also partners with overseas schools to provide overseas educational programs such as exchange programs, language training, and career development.

Supporting at-home learning during the coronavirus pandemic, but what happens next?

The coronavirus outbreak has hampered the supply chain of many industries such as tourism, retail and much more. It could be said that the EdTech sector has been one of the “winners,” seeking opportunities to gain popularity in China in support of local education. Yuanfudao, VIPKid, Makebloc, and Changing Edu have made noticeable initiatives in response to enhance students’ at-home learning. Yuanfudao is one of the top online education apps with a weekly active user YOY growth of 21 times from February 2019 to February 2020. The education app leading the industry is Xuuersi, with a 50 times YOY growth. Its daily active users exceeded 10 million, with many new users from second, third, and fourth tier cities.

With the future uncertain, the most popular educational functions are short commitments, such as one-month subscriptions for a couple lessons or short interactive videos. However, doubt remains as to whether surge demand for EdTech fueled by quarantine measures will last. Schools will eventually reopen, and users are not guaranteed to stay permanently. Indeed, how people value and view the online education market has been revolutionized, yet the question of the longevity of these platforms remains.

Educational technology in China: Takeaways

Educational technology in China has not only seen tremendous growth in recent years but also shows no sign of slowing down in the booming education market in China. With these 8 being amongst the hundreds of EdTech start-ups across China, global markets should realize the innovative ways in which China utilizes digital tools to enhance students’ education in China. This phenomenon also stems from cultural factors, as Chinese society has always vigorously upheld education as one of its core cultural and social values. It is important to make a note of how China has integrated this value with the realm of technology and innovation, While tutoring applications remain the bulk of EdTech companies in China, our list has noted a number of creative EdTech start-ups that utilize a variety of online tools and out-of-the-box educational services. Western markets should be highly alert to the EdTech landscape in China, especially due to the large demand for foreign language tutors. This market is sure to see extended global communication, as language teaching and cross-border education become increasingly in demand with the enhancement of EdTech.

Author: Julia Qi

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This article 8 Chinese EdTech start-ups leading the global educational technology industry is the first one to appear on Daxue Consulting - Market Research China.

The number of students going abroad is mounting every year as increasing numbers of Chinese students are looking for an experience overseas. Between 2008 and 2016, the number of students studying abroad had increased from 179,800 to 544,500 showing overwhelming growth. In 2017 alone, 608,400 students left China for overseas study. This fast growth has been developing since 2010 and has been growing year on year. Today, China is the largest source of international students and is expected to grow. Yu Minhong, the founder and CEO of the New Oriental Education and Technology Group as well as a member of the Chinese People’s Political Consultative Conference’s National Committee, estimates that the number of students studying abroad will peak at 700,000 to 800,000 each year. However, the coronavirus outbreak has caused Chinese students to re-evaluate their study abroad plans, gradually initiating a shift in destination preferences and post-grad decisions.

Why is China’s study abroad rate increasing?

The price of student exchanges has also become increasingly more affordable as the booming economy has allowed more parents and students to meet these heavy costs. This has allowed more Chinese students the opportunity to go overseas in order to increase their chances of employment after graduation. This is especially important as 2010 brought a higher percentage of unemployed graduate students causing students to look for ways to differentiate themselves in the job market. Many students, however, despite the abroad experience often return home with the compound annual growth rate (CAGR) being 14.9% for returnees and 11.7% for students going abroad. This is as many students intend to go back after studying or find the job market overseas too difficult with them often having lower revenues. The government also offers incentives to returnees in China with them having better opportunities in larger cities which they would not have been able to access without foreign education.

Chinese students studying abroad: Destination preferences

Due to China’s massive population, it sends more students abroad than any other country and this number is still rising. This is seen with growth in the number of returning Chinese students overtaking the number of students studying abroad in 2016. The United States (US), however, has been the preferred destination for many Chinese students with it remaining the top destination year on year.  The quality of a US education is reputable and many Chinese students study in the US may hope to stay and live there after graduation in order to enjoy the lifestyle of a developed country. Further, many Chinese international students prefer to study in English speaking countries with the US, Australia and the UK making up approximately 60% of outbound students. China is also the largest source of international students in many countries with Chinese students accounting for 30% of students in America, Canada, Australia and New Zealand.

However, what may have been a popular destination could be fading due to the pandemic and various political clashes (such as trade war).

According to a report on the economic impacts of the pandemic published in April by the US-China Economic and Security Review Commission, a host of issues can reduce Chinese demand for higher education in the US in the following academic year. These include delays or cancellations of US entrance exams in China, travel restrictions, and the perpetuating uncertainty of when US college classes will be in-person. The economic impacts could be severe as nearly a third of all tuition payments to US public universities stem from international students. Also, cancelled university recruitment events in China and inability to work with local recruitment agencies could further contribute to the decrease in enrolment (learn more on how the coronavirus has impacted Chinese students’ study abroad decisions).

Prior to the coronavirus outbreak, there has already been a decline in enrolments from Chinese students in US schools, most of which are part of the larger picture of rising Sino-US political tensions. For instance, visa refusals have been a common problem facing Chinese students. As such, the development and job opportunities back home prove to be attractive reasons for the drop in Chinese students seeking to settle overseas after graduation, which was 85.4% in 2013 but 79.4% in 2016.

Other countries are also increasing their awareness in China as they gain market share slowly and Chinese students are ready to assess new destinations. It is clear, however, that English speaking countries have an added advantage to attract Chinese students who want to better their English speaking skills. Some regions have become more popular with East Asia and the Pacific taking a significant portion of Chinese students with the convenience of location. This is with Japan as the 4^th most popular country and South Korea as the 6^th most popular country in 2016.  This is also with Chinese students accounting for 57.3% of international students in Japan and 49.3% of students in South Korea. Many students also studied in Hong Kong due to its proximity.

Why do Chinese students study overseas?

Chinese students abroad: Social, personal and professional benefits

When surveyed it was found that 82.5% of companies and employers give returnee employees privileged treatment. A CCG survey found that almost half of the Chinese students surveyed who studied abroad believed that they were more competitive than their peers who studied at domestic universities. This is proven true with 20% of companies promoting returnees faster and 17.5% preferring returnees for core positions and 50% of state-owned enterprises claiming that they welcome returnees into core positions. These figures alone show the importance employers place on abroad studies with these high percentages indicative of the professional benefits provided to those with an overseas degree.

Another benefit this provides for Chinese citizens the influence abroad education has on Hukou. Hukou is strict and complicated household registration system which also doubles as a domestic passport that regulates the Chinese population both socially and geographically. It determines factors such as where a person can live and work, where their children can go to school particularly so if they belong to a rural area and the social welfare benefits they can receive. Returnees from abroad studies get a more flexible Hukou transfer policy which helps them settle down in tier 1 cities and gives them more opportunities in terms of experience and salary. Further, preferential policies are also provided by the government to get returnees to start a business by providing grants and incentives such as free or discounted offices or tax-free cars. This is in order to attract Chinese talents back to China.

Besides the social and professional benefits provided by organizations and the government, there are personal benefits for Chinese students who go on exchange. This is evident as 64% of Chinese international students pursue abroad education in order to enrich their personal experience. This includes improvement of their English skills, the knowledge they gain of a different culture, overseas life experience and an international network. These benefits can be gained by any student studying overseas but English based exchanges are particularly beneficial for Chinese students who have been studying English throughout a school. This is as it gives students a chance to gain practical experience in a different environment that makes them more employable in the long run. Other than Chinese and Spanish, English is one of the most widespread languages in the world. It has gained increasing importance with English being an official language in at least quarter of the world, with 400 million people speaking English as their first language and 1 in 5 people being able to speak or understand some English. The role of English in China cannot be understated especially as it is integral for professionals to compete within the business environment. This is illustrated with parents understanding this importance as they start English education early in order for their children to start off more competitively, thereby spiking the demand for English teachers in China.

Another major benefit is also the waiving of the Gaokao entrance exam. Gaokao is the test undertaken by high school students in order to study at university and it is known worldwide for being an extremely difficult and stressful exam. The test has been said to determine the course of a student’s life and is the only way to enter university. The supply of university spots is also known for not meeting demand- making the pressure on high school students enormous. Those who previously did not anticipate abroad studies and those determined to study overseas do not need to pass Gaokao which takes a significant amount of stress off of students.

Chinese studying overseas: Criteria for students picking universities

As studying abroad is very important for students and parents a lot of thought goes into picking the university and country they will be studying at. A big determining factor to consider is the country itself. This requires evaluating the country itself by its size, population, economy and development degree. Chinese people prefer countries which are bigger and have a larger population, higher economic power and the development degree which makes the US the most popular country to go to. Some students are also concerned about the culture of the country itself.

Further, the school awareness in China that is the school’s brand reputation is very important. This is evident with 61% of students in a survey conducted by WSE choosing school reputation as the top consideration of school selection, with the success rate following at 48%, school location at 40% and expected income level after graduation being at 39%. This is as about 80% of international Chinese students go back to China after graduation which makes the school’s awareness and reputation important when considering job prospects in the future.

Moreover, the ranking itself is very important with many different versions of school rankings applying in China to help students and parents make decisions. This includes the QS World University Rankings and the Academic Ranking of World Universities and ranking in the top 100 is very beneficial to students wishing to return to China.

Additionally, the curriculum offered by the school itself is vital. This is with weight in decision making relating to the design of the curriculum, the composition of it, the availability of course choice, the quality and exclusivity of each course and even the internship opportunities that the school supports.

Lastly, whilst all of the above is extremely important, the cost is often a major determining factor. This includes the cost of tuition, living expenses and scholarships available. As such, many students go to Hong Kong for further study due to the lower expense and some European countries provide free public education for the same reason. This is evident with 45% of students being concerned about the cost of studying abroad, compared to only 27% of parents. Cost is especially important as 89% of students traveling abroad self-finance their study so they are very receptive to scholarships or less expensive locations.

International education: How do Chinese people look for information to choose the right university?

Chinese study abroad agencies and specialized education companies are important in helping students to pick countries and universities to study abroad at. They offer a broad range of services to students and help foreign universities and programs get more visibility among students. Due to the services offered, student’s families are willing to a pay a large amount of money for these services which include counseling services on programs, assistance in preparation, application and admission processes, test preparation, English classes as well as international study tours. The Beijing overseas service association also can help abroad institutions to select good partners among agencies to promote institutions in China.

Further, as stated, online information is very important with Chinese students spending a significant amount of time looking at the best destination, university ranking and application process. As such, a good online presence is essential for an overseas university- especially if it is not a top ranking one. Particularly, 31% of students depend on social media when researching for their study destination. They also look to the alumni network for recommendations and feedback as students trust advice from those who have attended the school itself. As such, it is important for universities to have good ambassadors as Chinese students want to hear about the university in a more personal and informal way.

Trends in types of study undertaken by Chinese students

The types of study undertaken by Chinese students themselves vary with the type of study they undertake. This is with Master and Bachelor degrees at the forefront of reasons for going overseas for study, with other avenues collectively making up the remaining 31%. There is, however, a preference for longer study programs over shorter ones. This is with slower growth for shorter study options in comparison to the faster growth experienced by Bachelor and Masters degrees. This is as shorter exchanges are not as popular with Chinese students who prefer to spend the duration of their program overseas with four or two years being favored over a few months.

There are also trends evident in the degrees undertaken by Chinese students. This is with both engineering and business management as the most popular degrees chosen by students. However, in 2016 subjects shifted as more students paid attention to their own preferences over parental preferences and what is expected of them. This was evident as the Center for China & Globalization reported a decline in 2016 with students studying engineering, computer science and IT, math and statistics and social sciences, whilst the number of students who chose to study business management, foreign language and literature and education increased. Further, it was mentioned that subjects relating to business management, trade and corporate management and finance have increased as development in China has created more demand for professionals in these fields.

Market difficulty in China for student exchanges in lesser-known countries

Consulting agencies specializing in overseas programs still promote the US and other popular speaking countries such as the UK, Canada and Australia. As such, standing out from those countries can be quite challenging for smaller countries. This is as knowledge of the country studied at and a school’s ranking is very important for students. This is due to the implications it has for the employability of students, especially those wishing to return to China. Further, social recognition and prestige also play a role beyond professional necessity which can also be a determining factor for parents and students, especially from tier 1 cities.

Study abroad: The Belt and Road Initiative and its effect on Chinese international students

According to Forbes, the Belt and Road Initiative will affect 60% of the world’s population with the participation of 76 countries from Asia, Africa and Europe. The trade and infrastructure undertaking is thought to be one of the most ambitious undertakings in human history and is viewed as ‘a sort of 21st-century silk road’. Along with connecting through trade, Beijing currently offers 10,000 places each year for students who come from countries within the Belt and Road Initiative with China attracting more than 200,000 students from 64 of 68 Belt and Road countries in 2016. Further, since 2013 when the launch of the Belt and Road initiative took place, Chinese students have also flocked to Belt and Road countries with 24 educational agreements being signed between some of these countries since April 2017. This initiative opens up substantial and wide opportunities to educational bodies of countries within the initiative, with the Chinese government wanting to strengthen both educational and trade bonds between countries.

Opportunities for brands wanting to enter the Chinese market

Chinese students prefer English speaking countries in order to improve their English as it is a must-have skill in the work environment with 60% of Chinese students currently going abroad to the US, Australia and the UK. As a result, this increasing need for English helps leverage English speaking countries for exchanges as a whole – not just the top destinations sought by students. This is seen as Chinese students are now exploring new countries for overseas studies. There is, however, due to the Road and Belt Initiative, an opportunity for growth for many more educational organizations and countries to attract Chinese students using the initiative as leverage to strengthen the appeal for Chinese students. This is especially where educational organizations are not within the top 100 or are as well known to Chinese students. This awareness in China is particularly important as going abroad is meant to enhance employability and employment opportunities which cannot be achieved without businesses being aware of the educational organization. Further, an emphasis on the social and personal benefits students are looking for, along with strengthening programs in the more popular university courses, will help make organizations stand out to students. Most importantly, recognition by the Chinese Ministry of Education of the degree and the university itself is necessary for recognition and desirability among the Chinese.

Moreover, there are opportunities for educational organizations that are located in less expensive countries or areas should highlight their desirability and more expensive schools should offer scholarships in order to appeal to students who are self-financing their abroad study. However, it is also important to note that the urban middle classes are also estimated to increase; a McKinsey survey in 2015 found that there were 10 million affluent households with more than 300,000 RMB, and it is estimated to be 18 million by 2020. These households were mostly found in tier 1 to 3 cities but tier 4 to 5 cities were found to be steadily increasing their income. This growth in disposable income and wealth among cities is likely to have a positive effect is on expanding the number of students studying abroad and providing opportunities for more countries than in the past. Although there have been recent declines in Chinese students studying in the US as well as more returnees upon graduation, studying abroad is still a reflection of social mobility and status. The UK sits behind the US as a top destination, with pursuing a master’s degree as an attractive choice with its one-year program considering costs and study requirements. In the coming years, we may see a larger shift in the preference of university destinations among Chinese students in light of the recent events.

See how COVID-19 has impacted Chinese students’ aspirations to study and work abroad.

Author: Jessica Farrell 

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Competitive analysis is defined as identifying your competitors and evaluating their strategies to determine their strengths and weaknesses about those of your product or service. Daxue provides you with the tools needed to win in a market full of players.

This article Education elsewhere: China seeks out exchanges in other countries is the first one to appear on Daxue Consulting - Market Research China.

Different types of preschools in China

There are two kinds of preschools in China, each with their different purposes. The combination of preschool and kindergarten contributes to children’s preparation for elementary schools.

Public kindergartens & preschools

Public kindergartens in China have two forms that are distinguished by organizers and funders. The first type is the government-built public preschools that gain funds from the government and are supervised by local governments. The other type is self-funded preschools that raise funds as enterprises and are managed by the local education department. These two kinds of kindergartens both play roles in benefiting people by charging low expenses, decreasing financial strain on families. These schools aim to help children prepare for elementary school, so teachers teach basic manners and knowledge. However, such preschools recruit limited students each year.

Private kindergartens & preschools

Unlike public preschools, private kindergartens created by privates aim to make a profit. Such preschools can be regarded as supplements to public preschools, allowing more students to attend preschools. Private kindergartens also have two types: ordinary and high-key. Ordinary private preschools aim to solve the difficulty of enrollment that many children face when trying to enroll in public preschools. The other kind is high-key preschools. High-key kindergartens usually hire foreigner teachers to teach students, allowing students to enjoy a bilingual environment from early childhood. Meanwhile, high-key preschools pay attention to children’s overall development. However, the expenses of private preschools are usually much higher than in public preschools.

Top 10 kindergartens in China

[Source: eol “Top 10 kindergartens in China”]

Trends of the preschool market in China

As China’s economy expands, parents have more and more economic power to give their children a better education. Thus, many types of preschools have emerged.

International kindergartens are popular

Currently, parents are willing to send their children to international kindergartens. Such preschools hire foreign teachers to teach students. They not only teach from the textbook but also organize extracurricular activities like baking and scientific experiments. Although such schools cost upwards of 200,000 RMB per year, numerous parents still hope their children can enjoy high-quality educational resources. In Zhihu, a writer shared her daughter’s experience at an international kindergarten in Beijing. The international kindergarten helped children learn self-care. Children learn to make requests, ask for help, and express their own opinions.

Preschools plus the internet are in trend

As institutions benefit from increased digitalization, preschools utilize the internet to help manage and improve interactions among children, parents, and teachers. Children can use online platforms to obtain up-to-date information while interactive games help children learn in a fun way. Come Chinese parents are used not to being involved in their children’s kindergarten lives. However, those apps can allow them to know what their children learn in class as well as monitor their performance. Also, such platforms benefit kindergarten teachers. They can use online platforms to arrange courses and deal with educational administration.

Many parents take their children to extracurricular preschools to avoid losing at the starting line

In addition to regular preschool classes, parents also send their children to various extracurricular preschools. Those parents believe that learning more after class can make their children more excellent. Children can consolidate the knowledge they gain at school. Additionally, they can learn many new skills outside regular classes. Codemao Kids, a programming learning website for children, enlightens kids through games, exercising their critical and creative abilities.

Issues of the preschool market in China

Although the preschool market in China has enjoyed success, it still faces some issues. Limited seats induce a competitive enrollment process, and bare teacher welfare makes the industry lack talented professionals. Also, occasional scandals trigger societal anger and disappointment in preschool education. These problems disturb the development of the preschool market in China.

Competitive enrollment

A limited numbers of kindergartens causes difficulty in enrollment. During the enrollment period every year, a competitive process unfolds at kindergartens. Parents stay up waiting in line to sign their children up. Limited quotas in those public schools and expensive tuition create a difficult situation for parents.

Lack of talented professionals

An increasing amount of children necessitates higher requirement of professional teachers. The Center For Education Policy of Southwest University estimated that China needed near 4 million professional kindergarten teachers in 2021, while the gap was 2 million. Kindergarten teachers can only earn a low income. Also, kindergarten teachers’ social status is low, so few people with higher degrees are willing to work as kindergarten teachers. Thus, it is hard to make up this gap in a short time.

Scandals spark the societal outrage

Abuse and bulling occasionally happens at kindergartens and causes tremendous harm to children’s physical and mental health. It also triggers society’s anger toward the management of kindergartens. In 2017, a case at RYB kindergarten child abuse shocked Chinese citizens. The kindergarten teacher, by the name of Liu, harmed four children, inducing mental harm on those children. Influenced by this case, the stock price of RYB slumped 38.41%. This event exposed the incomplete management of the kindergartens. It led to an appeal to strengthen management and train more highly qualified teachers.

[Source: Weibo People’s Daily “People express anger to child abuse”]

Uncertainty during the coronavirus outbreak

As older students in secondary schools can autonomously conduct e-learning during the quarantine period, it can be difficult for parents to navigate education for their little ones, in preschool especially. The main issues surrounding online teaching apps is that there is a lack of supervision, an improper learning atmosphere, and that teachers are unfamiliar with online learning. As it takes time for educational implementation and adaptation, preschools in China need to address potential concerns from parents, such as their decreased confidence in the schools’ handling of the initial outbreak and the transition to in-person classes as the situation eases.

The preschool market in China is bright

After evolving over the years, the preschool market in China has made significant progress in improving children’s education and enriching the content of kindergartens. Children are the future of a country, so preschool education is essential. Although the preschool market in China contains many difficulties, the market scale is continuously enlarging. With the development of more sound policies, the future of the preschool market in China is still promising.

After evolving over the years, the preschool market in China has made significant progress in improving children’s education and enriching the content of kindergartens. Children are the future of a country, so preschool education is essential. Although the preschool market in China contains many difficulties, the market scale is continuously enlarging. With the development of more sound policies, the future of the preschool market in China is still promising.

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Whiteboards in China area necessary education tool

The Ministry of Education (MOE) increases investment of teaching whiteboard in China 

In recent years, the national and local governments have continuously increased the investment in basic educational equipment. The upgrade of equipment has provided technical support in education.

The MOE requires schools to install certain teaching equipment including teaching whiteboards instead of blackboards. Whiteboards allow teachers to project vivid pictures and videos to enrich class. Both students and teachers can avoid the harmful health effect of chalk dusks by using smart whiteboards. Meanwhile, the MOE emphasizes that the government will strengthen the promotion of modern education equipment in remote regions.

For the past three years, the cost of teaching equipment increased stably, according to MOE’s statistics. In 2018, teaching equipment and instrument spending reached 551 billion yuan.

[Data Source: MOE “Annual Expenditure on Teaching Equipment & Instruments”]

Whiteboards are necessary in various industries.

In addition to education, whiteboards also apply to a lot of industries. The commercial market has a huge potential. The uses of whiteboards have expanded to conference rooms, smart medical treatment, smart Party construction and more commercial uses. Users can make their communication more effective and efficient through whiteboards.

Baidu Index shows economically developed area’s are more likely to search about whiteboards, where people usually can afford high-end products. Thus, high-end whiteboards have promising future in the Chinese market as more people and school systems have spending money.

[Source: Baidu Index “Whiteboard inquiries Geographical Distribution”]

Main competitors of the whiteboard market in China

Popular whiteboard brands in China

The whiteboard market in China is matureing. According to qiang100.com, most popular whiteboard brands are local brands. Most of them are stationery companies and do not treat whiteboards as the main products.

Deli and Ziwei Star are two representative whiteboard brands in China. Deli is a well-known trademark but focuses on stationery sales. In contrast, Ziwei Star concentrates on teaching whiteboard sales but brand awareness is lower than Deli.

 [Source: TMall “Product Information of Deli and Ziwei Star”]

Deli represents the company which sells whiteboards well but regards whiteboards sale as one product line.

Deli is the biggest stationery brand in China. It office supplies and customized products as well as distribution, installation, after-sales service in a one-stop service. Deli’s sale and service net covers the whole China. People can get access to Deli’s products in retail stores and online stores.

Ziwei Star specializes in whiteboards in China

Ziwei star is a whiteboard brand in China concentrating on whiteboards, but the brand is not famous. Its public information can only be found in the official TMall store and JD store.

The rise of interactive whiteboard products influences the sales of the whiteboard products in China.

Electronic whiteboards are now competing in the traditional whiteboard market. The leading electronic whiteboards in China are HiteVision, CVTE and SMART.

HiteVision

HiteVision has been cultivating “HiteVision” brand products since 2000. It has mastered the key technologies and huge marketing channels in the industry. Thus, it holds a large market share in the interactive whiteboard market in China and plans to expand into the overseas market.

[Source: HiteVision website “The HiteVision Interactive Whiteboard”]

CVTE

CVTE is an intelligent interactive solution provider with display and control technology as the core. It is the second-largest interactive whiteboard producer in the Chinese market. One of its product line, Seewo, provides interactive whiteboards and relevant software to help with teaching. The other product, MAXHUB, applies to meeting scenarios in various industries.

SMART

SMART is a foreign company originated from Canada. It is similar to CVTE, providing smartboards to both education and business meetings. It is worth to emphasize that SMART has a product called Kapp. Kapp allows people to read the content written in a whiteboard wherever readers are.

[Source: SMART “SMART Kapp”]

What to know about the whiteboard market in China

Companies have their unique advantages and are able to catch hot spots and take measures to prevent possible risks when expanding the market.

Core competencies stimulate customers’ brand choice.

Core competencies refer to the resources that can bring companies comparable competitive advantages, they can make products gain the stable profits in the market. Deli’s core competency is its brand reputation in the Chinese market. While Deli is a reliable choice, Ziwei Star may have deeper core competencies due to being specialized in whiteboards.

Whiteboard demand increased after the Coronavirus

Based on the Baidu Index, the search volume of the whiteboard and its relative keywords had a sudden rise after the Chinese new year. That period is the Spring Festival in China and the quarantine due to Coronavirus. People cannot go outside and whiteboards become useful tools for teaching and meeting.

[Source: Baidu Index “Whiteboard Search Index”]

Creating some interesting uses of products draws consumers’ attention. Seewo’s official Weibo indicates that it ever posted a video that created a scratch ticket in its product and gained 1,100 likes.

The Thirteenth Five-Year Plan standards for the whiteboard industry in China.

Environment-friendly development is required.

The plan encourages producers to produce green products. The government will supervise the production from the design to recycling to strengthen the whole product life cycle green management.

Import tariffs increase costs.

Most whiteboard brands are local brands and their prices are not expensive. Import tariffs will influence import products’ pricing and induce a series of regulation issues.

How Daxue Consulting can help

As a professional marketing research consulting firm, we have rich experience in multi-industry market research and we use multi-methodology to satisfy customers’ requirements. We can help you investigate the market elaborately to locate your product and explore expansion strategies.

If you have any question or want to have further discussion with us, just contact us at dx@daxueconsulting.com.

Author: April Peng

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Data Source: JJL Overseas education, Country Distributions of Chinese Students Studying Abroad

Data Source: MOE, Number of Chinese Students Studying Abroad from 2009 to 2018

How COVID-19 impacted Chinese students studying abroad, and why it is important

When discussing studying abroad, the focus is often on the benefits of the individual students. However, the exchange of students in foreign countries is beneficial to society in many ways, especially in fostering and attracting talents. Hence, the negative impact of COVID-19 on Chinese students’ willingness to study and work abroad will inadvertently impact foreign industries if it manifests as a smaller talent pool for key industries.

In the ’90s, self-funded studying abroad became popular, triggering the boom of Chinese students abroad. Until 2011, most Chinese students who chose to study overseas stayed overseas after graduation. At that time, China’s economy was not as robust as now, so living in flourishing countries seemed to be more attractive for ambitious young professionals. Those overseas Chinese worked hard and make great contributions to overseas countries’ development, working in booming industries like tech in Silicon Valley.

Starting in 2008, when the global financial crisis broke, more Chinese students went back to China to contribute to the country’s development. The current overarching trend is that the amount of Chinese students abroad is growing faster than the amount of Chinese workers abroad.

National Bureau of Statistics’ report indicates that more Chinese went back to China, and the trend was rising since 2008. In 2017, the rate that Chinese students returned to China was 79%, over 74% compared to 1987. In 2018, nearly three-quarters of Silicon Valley tech employees were foreign citizens.

[Data Source: Chyxx “The Rate That Chinese Students Returned to China”]

Data Source: National Bureau of Statistics of China, Number of Overseas Students that go Back to China After Graduation

The trend of Chinese overseas students leaving the country after graduating is also reflected in the US visa statistics. In the year 2000, the ratio of student to temporary work visas for Chinese citizens in the US was around 1:2. Come 2015, the year when Chinese studying in the US peaked, there were 12 student visas for every temporary work visa issued to Chinese, a 1:12 ratio. In 2019, this number has dropped to 1:3 due purely to the shrinkage of student visa issuances.

Data source: US Department of State, US temporary work and study visas issued to Chinese nationals 2000-2019

Trends of the the overseas Chinese students after COVID-19

According to our mini-survey, there is evidence that COVID-19 has impacted the willingness of Chinese students to study and work abroad. However, most of students do still insist on their former plans. 22.6% participants changed their plans to study overseas, causing some impact on study-abroad market in China.

Data Source: Daxue consulting COVID-19 student impact survey: Chinese students abroad’s plans

Data Source: Daxue consulting COVID-19 student impact survey: Reasons Why Students Give up Studying Abroad/Working Abroad

Few Chinese students give up studying abroad

Although facing so many difficulties, only 2.6% of participants decide to abandon study abroad. Many students share that they cannot control the trend of the virus, but can keep positive to face difficulties. Maybe they will choose to extend the enrollment time of their programs but not give up studying abroad. Additionally, more Chinese students may study abroad in the future since numerous people didn’t get jobs this year.

More people lose interest in working overseas

Working overseas after graduation used to be popular, but now the situation is different. Daxue’s mini-survey shows that before the virus, 91.6% had at least a little interest in working abroad. However, after the outbreak of the Coronavirus, 20.3% expresses no interest in working abroad, increasing over 11.18% than before. One reason is that the virus causes a decrease in job opportunities. Some comments also show that many Chinese students feel disappointed in western countries’ poor handling of Coronavirus. Thus, more students realize that they prefer to work in China.

Data Source: Daxue consulting COVID-19 student impact survey: Participants’ Interests in Working Abroad before and after COVID-19

COVID-19 caused various worries for Chinese students studying abroad

The sudden virus disturbed people’s ordinary lives, especially students. Caught in the middle of this are students in foreign countries away from family, hence Chinese students studying abroad also met many difficulties.

Chinese students currently studying abroad were mostly concerned with finding a way home, and their healthcare.

Due to the outbreak of the Coronavirus around the world, almost all countries shut schools, forcing all students to take classes online. With flights grounded and schools closed, many graduates worry about whether they can go back home before their visas expire. Students staying abroad are also afraid that they cannot get guaranteed medical service if they get sick abroad.

Meanwhile, there is increased in discrimination against Asians in many western countries. Chinese students around the world are facing discrimination, in the form of slurs, attacks and avoidance, all while many Chinese abroad felt disappointed by how few westerners took the virus seriously. Meanwhile, the potential economic recession causes difficulties in seeking jobs. Various companies stop hiring and even laying off many employees. On May 18^th, The Mercury News reported that the Bay area laid off over 100,000 employees over eight weeks.

Data Source: Daxue consulting COVID-19 student impact survey: Worries of Chinese students abroad during COVID-19

Students who returned back to China also faced challenges

Some students returned to China, but they still met frustration. The pandemic influenced both their physical health and mental health. Students are hard to communicate with professors and classmates effectively because they are in different time zones. 77.65% of the mini-survey participants complain of a decrease in class quality. They also face degree certification issues when looking for jobs in China as they didn’t stay abroad to complete education. There is a requirement of students to study overseas for at least six months to get degree certification. Fortunately, now, MOE commits that their certification will not be influenced considering this unusual situation. Those students also are concerned that they cannot find ideal jobs as the current employment environment is poor in China.  44.7% of respondents say that they have lost an internship or job opportunity abroad during the pandemic.

 Data Source: Daxue consulting COVID-19 student impact survey: Worries of Chinese students who came back to China during COVID-19

Incoming Chinese students studying abroad were concerned about whether they can start their program on time

The Coronavirus outbreak also influences incoming Chinese students studying abroad. Firstly, applicants cannot take tests like TOEFL, IELTS, and GRE in China, resulting in their incapability in applying for programs. Thanks to many universities’ policies, many of them got these tests waived. What worries them now is whether they can get visas and start their programs on campus on time. Notably, Chinese students studying in the U.S. are concerned about whether they can have eligibility to look for internships there. Only after staying in the U.S. for at least nine months are they are eligible for curricular practical training, meaning they can have part time jobs and internships. The limitation may make international students lose opportunities if they are starting programs with online courses.

Regarding international students’ predicament, many schools issued policies to help. Many schools allow students to defer to have more time to apply for visas. For example, Case Western Reserve University offers two options for incoming students who are unable to arrive at school on time. One is that students can defer to Spring 2021. The other option is to take online courses that contain a 25% discount on tuition in Fall 2020. Then, students can attend classes on campus in Spring 2021.

Data Source: Daxue consulting COVID-19 student impact survey: Worries of COVID-19 of incoming Chinese overseas students

Chinese students who plan to study abroad in the future also hesitated to apply

Plenty of Chinese students apply for overseas schools every year. However, this year, they meet many dilemmas. They are supposed to take their required tests now, but test centers cancelled tests. Some students planned to do summer research in overseas schools, but are currently unable to get visas and fly to those countries. Also, many Chinese students who got offers this year decide to defer their enrollment. They would like to attend schools next year. Providing that schools keep the class sizes to ensure program quality, the admission size next year may shrink. Of the students who were hoping to study abroad in the future, nearly half are receiving less support from family and peers in studying abroad, and nearly a quarter say they are now less interested in studying abroad.

Data Source: Daxue consulting COVID-19 student impact survey: Worries of Chinese Students Who Plan to Study Abroad in the Future

Most students are still positive about their overseas plans

The sudden COVID-19 outbreak changed people’s lives, and many students are reconsidering their plans. However, life still goes on despite uncertainty. Though external factors like cancelled tests, grounded flights, and worried parents may seem discouraging in the short term, a majority of Chinese students maintain their plans to study abroad.  Despite that COVID-19 impacted Chinese students abroad in many ways, the long term trend is that less Chinese stay abroad after graduation, this may contribute to that trend.

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Matthieu David interviews Guillaume Rué de Bernadac, Founder & CEO at Académie de Bernadac. Etiquette is a tool that any person should possess whether they use it in professional interactions or social ones. In China, royal etiquette is a subject of interest and more and more people are enrolling for courses. How does Académie de Bernadac service the need for royal etiquette on the Chinese market? How do they market their service and how are the courses structured? Find out the answers to these questions and many more by listening to the interview.

• 0:15 Guest introduction
• 2:30 Académie de Bernadac – a brief company presentation
• 5:10 What prices and services does Académie de Bernadac offer?
• 8:03 More details about the size of the company
• 10:28 Royal Etiquette classes – why clients may enjoy them for different reasons
• 13:54 Why is Tier 1 of royal etiquette the most popular set of classes?
• 15:33 Adapting to the Chinese market – how have the lessons changed to accommodate Chinese culture?
• 19:00 Selling luxury – the brand of a product is all about emotions
• 20:17 Do clients apply etiquette outside their professional lives?
• 22:18 Adapting the lessons for luxury brands the function on the Chinese market
• 27:30 How does technology mesh with the heritage component of luxury brands?
• 28:57 Using live streaming for open advertisement
• 31:09 Best practices to get the most out of livestreaming
• 32:51 The importance of the Zhihu QA platform for Académie de Bernadac?
• 35:53 Specifics: how does Académie de Bernadac use Zhihu?
• 42:06 Misperception – how is French culture viewed in China?
• 44:11 Royal dreams can be motivators for etiquette learning
• 46:44 What book has inspired Guillaume Rué de Bernadac in his entrepreneurial journey?
• 47:57 What does Guillaume Rué de Bernadac read to stay up to date about China?
• 49:04 What can be learned from using WeChat?
• 50:07 What book about China would Guillaume Rué de Bernadac recommend?
• 51:38 If he has extra time what other business would Guillaume Rué de Bernadac pursue?
• 53:27 What success and failure have Guillaume Rué de Bernadac witnessed in China?

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This article China Paradigm 105: Teaching Royal etiquette to affluent Chinese is the first one to appear on Daxue Consulting - Market Research China.

Chinese economy is bouncing back

China’s GDP contracted by 6.8% in the first three months of 2020. It is the biggest drop in nearly three decades, as the country’s factory output ground to a halt. National Bureau of Statistics of China showed that industrial output was down 8.4% from the year before.

[Data Source: Tradingeconomics.com, ‘China’s GDP growth forecast’]

In the beginning of April, State Council claimed 99% of manufacturing firms had begun working again. Besides, 84% of small and medium businesses had reopened. The economy’s performance in the second quarter will be crucial for the government to get the economy back on track. A quick rebound can happen because of the “countercyclical policies”, or pro-growth measures taken by Beijing. Chinese experts expect economic indicators to significantly improve in the second quarter, with growth returning to potential by the end of 2020 or early 2021.

Recession-proof markets in China during the epidemic

Some markets have proven that they are recession-proof during the epidemic in China. For example, people need health services even more so than usual in these hard times. In a crisis period people also visit discount stores to buy goods in bulk and at discounted rates to save money. Since people had to use nearby supermarkets during the epidemic in China, convenience stores saw good growth dynamics.

Such goods as food, hygiene products, household and baby products were always essential and did not experienced recession. The Chinese began to be more attentive to their own health, so the sale of facemasks and sanitizers also increased. Given the current situation, most companies are making their workforce remote. They are using Chinese video conferencing solutions such as  WeChat work and DingTalk. Additionally, in a recession period, people fear losing jobs, and they get insurance to be safe.

A unique characteristic about consumption following COVID-19 in China, is that digital and online tools and services came out as a recession-proof market in China. Due to being indoors, consumers spent much more time on entertainment like gaming, short videos, and streaming movies.

Higher demand for healthcare services in China

The growing healthcare sector is in many aspects a byproduct of China’s recent economic rise. Now several hundred million people have higher living standards and can afford healthcare services. This increases the demand for healthcare services. Although the medical industry is growing fast in China, the demand for further healthcare services is growing even faster.

Industry experts estimated the Chinese healthcare market will grow to 90 billion yuan by 2020. The Prospective Industry Research Institute predicts that the sales revenue of China’s pharmaceutical industry will exceed 3 trillion yuan. The industry scale will exceed 5.3 trillion yuan in 2025.

[Data Source: Sohu, ‘China’s healthcare industry market revenue’]

Healthcare is a recession-proof market in China. After the coronavirus outbreak in China has led to an increase in the demand for medical equipment. From January to March 2020, there were 87,265 new businesses with medical devices. Besides, the performance of some medical device companies increased in January, and the medical device industry sector is trending well.

[Data Source: iimedia research, ‘Share price trend of pharmaceutical device industry’]

Most experts agree that the coronavirus outbreak will lead to profound changes in China’s healthcare sector. These changes could include massive investment in disease prevention infrastructure and a re-visiting of pharmaceutical companies’ pipeline strategies. Other improvements could focus on greater emphasis on the role of community healthcare centers.

The outbreak will also most likely lead to digital technology playing a greater role in China’s healthcare. Healthcare industry will turn to digital technologies and solutions to engage markets using AI-based diagnostics and tools.

[Data Source: qianzhan, ‘China’s VR medicine market size forecast’]

Retail industry: convenience and discount stores

Convenience stores win during the epidemic

In 2019, the number of convenience stores in China is about 135,000, an increase of 10.3% from the previous year. The number of stores will be close to 150,000 in 2020. With the improvement of digitalization and supply chain, convenience stores will give consumers a more convenient and safe shopping experience.

[Data Source: chyxx, ‘Number of convenience stores in China’]

Convenience stores proved to be a recession-proof market in China. They had more advantages during the epidemic. People have reduced their outings and the scope of activities. Community convenience stores are a typical less-personal retail format. They have gradually become a centralized point of sale and their commercial value also started to stand out. Many convenience stores even started stocking fresh fruits and vegetables to better cater to Chinese demand during COVID-19.

Walmart and Costco – discount stores in China stay on track

Executives of Walmart in China claimed that sales at the company’s 430 stores had not faltered, even during the quarantine. Customers turned to the retailer to buy food and necessities. Walmart also invested in a grocery delivery venture in China that has continued to make home deliveries during the outbreak.

Report published by Costco showed that Costco’s sales accelerating in February 2020, increasing 11.7% year over year. Customers started shopping at the discount stores when the outbreak hit. Demand was so strong that Costco placed a limit on how much customers could purchase of certain items. This helped to increase second-quarter sales and it will influence third-quarter results. For the three months ended February, Costco reported worldwide revenue growth to $39.7 billion.

[Data Source: Costco Wholesale Corporation, ‘Costco revenue worldwide for the quarter ending February’]

Food products: healthy food and convenience food face huge demand in China

In the basic life needs food undoubtedly occupies the first place. That is why it is a recession-proof market in China. During the isolation period in China, people could not eat out, so they bought the ingredients for cooking at home. Downloads of the recipe apps more than doubled in February to 2.2 million at China’s app store. In February 2020, cooking and food-related content attracted more than 580 million views on Chinese video-streaming platform Bilibili.

In order to avoid contact with people, consumers choose to use food delivery in China and have the habit of hoarding food products. Healthy food and vegetables saw the growth in sales.

[Data Source: JD Data, ‘YOY growth rate of food sales during Spring Festival 2020’]

Convenience foods and quick-frozen foods have become the first choice for customers. According to ECdataway, sales of quick-frozen foods have skyrocketed from January to February. Instant noodle sales increased by 57% year-on-year, dumplings sales increased by 78%, instant hot pot increased by 144%, and meat products increased by 264%. 

[Data Source: ECdataway, ‘YOY growth rate of convenience food sales January-February 2020’]

Survey by the “Food Safety” magazine showed 5% of food companies faced  the risk of immediate bankruptcy. 8% of companies can persist for 1 month. 3% of companies can persist for 9-12 months. Roughly 41% of companies can persist for one year. 

Baby products as essential market

As babies are a part of a natural life circle, baby products are a necessity for people. The business of baby products rarely crumbles and proved to be a recession-proof market in China. As a just-needed product, diapers had greater demand than other supplies during the epidemic. The data shows that the most stocked items for pregnant women and mothers in January-February 2020 were diapers. The proportion of pregnant women who chose to hoard diapers was 29%. The proportion of mothers who chose to hoard diapers was 64%.During the epidemic, the most used channels to buy baby products in China were large supermarkets.

Sales of cleaning household products are growing

Chinese government’s recommendation to clean touched surfaces and objects frequently increased the demand for household cleaning products. According to statistics, sales of household cleaning products on Tmall surged 210% compared with the same period last year.

Alibaba released a report which stated that the sales of household cleaning products on Alibaba website increased by 316%. Moreover, consumer demand urged the promotion and application of multifunctional washing products. As household products had big demand during the pandemic, it is a recession-proof market in China.

Hygiene industry – hand sanitizer and facemasks

High demand for hand sanitizers in China

Affected by the coronavirus epidemic, the demand for hand sanitizers surged. After the outbreak, the sales of hand sanitizers increased sharply by 231%. Hand sanitizer sales on Taobao has soared to 31 million, about 11 times more from the previous year. From January 20 to February 13, 2020, JD Supermarket provided around 6 million bottles of hand sanitizer for consumers nationwide.

[Data Source: qianzhan, ‘Demand for sanitizers January-February 2020’]

Affected by the coronavirus outbreak, the growth rate of sanitizer output value will increase. The initial estimated growth rate can reach 13.7%. The annual disinfectant output value will exceed 11.5 billion yuan.

With the need for epidemic prevention and control, the demand for 75% medical alcohol has greatly increased. In 2020 it will exceed 80,000 tons.  China Chamber of Commerce estimates that the annual output of hand disinfectant will exceed 50,000 tons in 2020.

Facemasks industry is growing

Masks have become the most important goods during the coronavirus outbreak in China in 2020. In recent years, the output value of China’s face mask industry has maintained a stable trend, and the growth rate of output value has remained above 10%.  Affected by the coronavirus outbreak in 2020, the growth rate of medical masks will increase significantly, reaching 28%. The market scale of the Chinese mask industry in 2020 will have a substantial increase and reach 71 billion yuan

    [Data Source: iimedia research, ‘China’s face mask market size’]

Industry insiders pointed out that in the future, professional masks will continue to occupy the market, and the market share of low-end full-gauze masks will continue to decrease.

Distance learning and remote work tools as recession-proof markets in China

Distance learning attracts more users in China

After the government announcing to postpone the starting day of school, online learning APPs achieved dramatic growth. Statistics show that the scale of China’s online education market exceeded 300 billion yuan in 2019. It will reach nearly 500 billion yuan in 2022. The epidemic brought to online education an outstanding traffic performance. During the epidemic, the daily active users of Xueersi (学而思) online education platform exceeded 10 million.

According to the data of the “Statistical Report on the Development of China’s Internet” China’s E-education users reached 232 million in 2019. It increased on 31 million from the end of 2018, accounting for 27% of the total Internet users.  As many schools still have an online teaching, China’s online education users can reach 305 million in 2020.

[Data Source: chyxx, ‘Chinese online education market size’]

Remote work tools are getting more popular during the epidemic

During the coronavirus outbreak, the demand for online office software has risen sharply. According to the government reports, nearly 70% of the employees believe that the company needs to provide tools for employees to work online.

In 2017, the scale of China’s remote office market was about 19 billion yuan, and it reached about 23 billion yuan in 2018. In 2020 it will grow to 47 billion because of the big demand.

[Data Source: Sohu, ‘China’s remote office market size’]

The popular remote office in this epidemic were DingTalk and WeChat Work. Later Zoom, Xiaoyu Yilian and ByteDance’s Feishu subsequently joined the competition. According to statistics, there are currently about 4,500 cloud office companies in China. At present, DingTalk and Enterprise WeChat already have a certain lead in terms of user size.

After the outbreak, the probability of using these remote office tools will only increase. This epidemic has caused more people to start to understand and understand remote office software. 

Insurance market in China can resist recession risks

The outbreak will increase China’s insurance awareness and may help the long-term development of China’s insurance industry. As the world’s second largest life insurance market, China’s growth potential remains strong. During the epidemic, the willingness of enterprises to avoid man-made and natural disasters increased.

The impact of the epidemic on the insurance company’s claims is under control. Bank of China and Insurance Regulatory Commission have strict supervision on the solvency adequacy of insurance companies. Currently, the insurance industry has enough solvency to better resist risks and is one of the recession-proof markets in China. 

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