What are the most popular educational platforms in China? Is there supplementary education in China? What is the “paid knowledge economy”? Especially before the start of the new academic year, ScienceMe project manager Vera Maslova (VM) asked Olga Bolkunova (OB), founder of China Insiders, about the Chinese blogging industry, government regulation of the online education market, podcasts and life streamers, and whether it is so easy to enter the Chinese market of online education services.
VM: How much do the Chinese spend on education?
OB: It depends directly on which province they live in. The most affluent strata of the population are in coastal areas, and it is logical that they buy more educational services there. In the list of Chinese cities, the leading position in terms of economic development is occupied by Beijing, Shanghai, and just the regions that are located in the coastal zone. Historically, they have been trading more, interacting with the outside world. Business is most developed there, and people are much richer. Education follows the same path as commerce. Interestingly, we are now seeing the market expanding inland, taking over cities with lower overall economic levels, and how many companies are changing to deal with lagging regions.
VM: How much do the Chinese spend on education?
OB: It depends directly on which province they live in. The most affluent strata of the population are in coastal areas, and it is logical that they buy more educational services there. In the list of Chinese cities, the leading position in terms of economic development is occupied by Beijing, Shanghai, and just the regions that are located in the coastal zone. Historically, they have been trading more, interacting with the outside world. Business is most developed there, and people are much richer. Education follows the same path as commerce. Interestingly, we are now seeing the market expanding inland, taking over cities with lower overall economic levels, and how many companies are changing to deal with lagging regions.
VM: Are these changes affecting the education platforms that are already in place?
OB: Education platforms are changing, but other products are also being created. Previously, everything was built around offline processes: students went to tutors, but now there are schools of additional education, where artificial intelligence is used to select an individual program, and the knowledge itself is supported by a tutor. And that is why quality content for schools is now being developed for developing regions. A relatively new for China teaching format is also used, where teachers work in pairs. For example, a highly qualified teacher from Beijing teaches a general education course online, which is broadcast in rural schools, and the teacher on the spot acts as a mentor, helps with homework and exercises. The point is that there is a shortage of good teachers in backward regions. After all, traditional classes in general education schools are very large, there are usually about 40-50 people.
VM: Who pays for these classes: the school or parents?
OB: All additional education is paid by parents, but they do it not to give their child a good education, but to prepare him for the state exam Gaokao (analogous to our USE). It is on the basis of the results of this exam that one can enter university, i.e. it is essentially a ticket to a better life for the whole family, so they start preparing for the Gaokao from elementary school.
OB: Education platforms are changing, but other products are also being created. Previously, everything was built around offline processes: students went to tutors, but now there are schools of additional education, where artificial intelligence is used to select an individual program, and the knowledge itself is supported by a tutor. And that is why quality content for schools is now being developed for developing regions. A relatively new for China teaching format is also used, where teachers work in pairs. For example, a highly qualified teacher from Beijing teaches a general education course online, which is broadcast in rural schools, and the teacher on the spot acts as a mentor, helps with homework and exercises. The point is that there is a shortage of good teachers in backward regions. After all, traditional classes in general education schools are very large, there are usually about 40-50 people.
VM: Who pays for these classes: the school or parents?
OB: All additional education is paid by parents, but they do it not to give their child a good education, but to prepare him for the state exam Gaokao (analogous to our USE). It is on the basis of the results of this exam that one can enter university, i.e. it is essentially a ticket to a better life for the whole family, so they start preparing for the Gaokao from elementary school.
VM: What are the specifics of investing in education?
OB: It became interesting to invest in the Chinese market about five years ago. At that time, companies realized that they could diversify new products and take into account the wishes of customers, because they had access to the user base. This was seen as an opportunity for monetization. Other businesses in China today operate the same way. They are quickly shifting to operate in free niches where there are obvious opportunities to maximize their audience. A few months ago, the Chinese government began regulating the education industry, particularly school supplementary education and language courses. Shares of education holding companies TAL and New Oriental went down, which excited the Western media.
VM: How dangerous is such regulation?
OB: First of all, you have to understand how the Chinese government operates. It first gives a green light to the development of an industry and full freedom to market players, and then it starts to structure their development, add laws and restore order, which is exactly what is happening now with education. Secondly, the companies that have suffered the most are the services of teaching English by native speakers, but a native speaker is not the same as a native speaker. There were cases when parents were misled that the teacher was from England, but in fact he was from Russia and had no specialized education. Thirdly, private companies have been banned from commercializing school curriculum courses. They explain it by the fact that the load on children is too great. Perhaps they want to support and redirect money to public schools, so I assume that it is only a matter of time before educational holdings start partnering with schools and providing services through them. Fourth, regulation of the industry within China will push Chinese companies to enter foreign markets, then you and I will have to compete for markets. We are likely to see more purchases by Chinese companies of foreign edtech companies under the brand of which they will promote their services.
VM: How is content monetization in the supplementary education segment?
OB: Education is about creating content and selling content. Let's say small schools in the West already have their own promotion channels (Twitter, Facebook), but they are constrained by the limit on content creation. For example, they can only write 10 courses per month. However, it is in China that schools can still buy content, resell it and thus utilize their audience for additional revenue. A whole market of content is being formed that schools are willing to buy so that they don't have to spend money on developing their own course.
VM: And clients are comfortable being tied to one resource? Why does this happen? Is it related to the specifics of thinking?
OB: It became interesting to invest in the Chinese market about five years ago. At that time, companies realized that they could diversify new products and take into account the wishes of customers, because they had access to the user base. This was seen as an opportunity for monetization. Other businesses in China today operate the same way. They are quickly shifting to operate in free niches where there are obvious opportunities to maximize their audience. A few months ago, the Chinese government began regulating the education industry, particularly school supplementary education and language courses. Shares of education holding companies TAL and New Oriental went down, which excited the Western media.
VM: How dangerous is such regulation?
OB: First of all, you have to understand how the Chinese government operates. It first gives a green light to the development of an industry and full freedom to market players, and then it starts to structure their development, add laws and restore order, which is exactly what is happening now with education. Secondly, the companies that have suffered the most are the services of teaching English by native speakers, but a native speaker is not the same as a native speaker. There were cases when parents were misled that the teacher was from England, but in fact he was from Russia and had no specialized education. Thirdly, private companies have been banned from commercializing school curriculum courses. They explain it by the fact that the load on children is too great. Perhaps they want to support and redirect money to public schools, so I assume that it is only a matter of time before educational holdings start partnering with schools and providing services through them. Fourth, regulation of the industry within China will push Chinese companies to enter foreign markets, then you and I will have to compete for markets. We are likely to see more purchases by Chinese companies of foreign edtech companies under the brand of which they will promote their services.
VM: How is content monetization in the supplementary education segment?
OB: Education is about creating content and selling content. Let's say small schools in the West already have their own promotion channels (Twitter, Facebook), but they are constrained by the limit on content creation. For example, they can only write 10 courses per month. However, it is in China that schools can still buy content, resell it and thus utilize their audience for additional revenue. A whole market of content is being formed that schools are willing to buy so that they don't have to spend money on developing their own course.
VM: And clients are comfortable being tied to one resource? Why does this happen? Is it related to the specifics of thinking?
OB: Probably. There is an emerging loyalty to the platform on which they are already working or learning. A very illustrative example in this case is the use of “opinion leaders”. In China, they are really followed and trusted, but at the same time, there is a whole team behind these people that decides, for example, what content to advertise and what not. Schools also understand their audience perfectly well and know what to offer them, but they are not ready to create their own content. Especially when there is already something they can resell. Marketplaces work to sell content.
VM: Do you think they're moving toward separating teachers from students? That is, towards the introduction of machines to a greater extent?
OB: Yes, since China, to reiterate, does not have many high-level teachers, artificial intelligence is becoming the cheapest alternative. There are companies working in this direction that are actively recruiting students, and there are also cloud companies. Systems for building individual learning trajectories, special constructors in mini-applications are appearing - and this is only in the field of education. This system works in the same way as a store within a regular application, for example, the messenger WeChat has a function to pay for and create a mini-app with online courses. This store sells either video or audio content.
VM: And what percentage of companies are developing large platforms today?
VM: Do you think they're moving toward separating teachers from students? That is, towards the introduction of machines to a greater extent?
OB: Yes, since China, to reiterate, does not have many high-level teachers, artificial intelligence is becoming the cheapest alternative. There are companies working in this direction that are actively recruiting students, and there are also cloud companies. Systems for building individual learning trajectories, special constructors in mini-applications are appearing - and this is only in the field of education. This system works in the same way as a store within a regular application, for example, the messenger WeChat has a function to pay for and create a mini-app with online courses. This store sells either video or audio content.
VM: And what percentage of companies are developing large platforms today?
OB: I think it is different in different spheres, but any microbusiness first uses the resources of large platforms or creates a mini-application. The minimum threshold in terms of money for its creation does not exceed 300,000 roubles, if everything is done independently in a Chinese application builder. Adult education is seen as either professional or a hobby. There is a separate term “paid knowledge economy”（知识付费), which is distinguished from education. This market is counted separately, but it's essentially supplementary education for adults (lectures, podcasts, no degrees and often no official certificates). But I will not venture to call it infobusiness, because in Russia it causes rejection. However, I believe that it is all in all - knowledge. Legislation provides clear rules for selling knowledge as “education”. It is quite strict here, because this content is shaping the new generation. However, there is no mention of adult education in there. All adult further education courses simply belong to the e-commerce sector. Perhaps after structuring children's supplementary education will reach adults as well. For now, this is a very fast-growing segment in which, in my opinion, there are opportunities for foreign companies.
VM: Is additional education popular in China if it is not work-related?
OB: Very much so, and interest is growing. There are several factors that have determined this growth. Chinese people have started paying to gain knowledge. It all started with the Summer Olympics in 2008, when they wanted to show the country at its best and started fighting pirated content, now it's much harder to find. I've seen ads for reselling access to courses, they have a very funny name - Second Hand Knowledge. Plus in China, convenient payment systems are integrated everywhere, and it's already easier to pay for a second than to look for access. In general, a culture of buying content has emerged and many tools have been invented to make it happen. Subscription has not caught on, although it exists. There are, for example, subscription services for flower delivery. Subscriptions typically include an annual fee. As for information content, consumers choose channels that interest them, and then they are willing to pay for quality content. Because quality content is valuable, the people who create it are also valuable.
VM: How does the podcast business work in China? Is it author-centric as well?
OB: My favorite platform in China is called Ximalaya - it's basically a podcast platform. Its specialty is that it helps you collect feedback. So there's always contact with the audience. The ecosystem is built not around the content, but around the author.
OB: Very much so, and interest is growing. There are several factors that have determined this growth. Chinese people have started paying to gain knowledge. It all started with the Summer Olympics in 2008, when they wanted to show the country at its best and started fighting pirated content, now it's much harder to find. I've seen ads for reselling access to courses, they have a very funny name - Second Hand Knowledge. Plus in China, convenient payment systems are integrated everywhere, and it's already easier to pay for a second than to look for access. In general, a culture of buying content has emerged and many tools have been invented to make it happen. Subscription has not caught on, although it exists. There are, for example, subscription services for flower delivery. Subscriptions typically include an annual fee. As for information content, consumers choose channels that interest them, and then they are willing to pay for quality content. Because quality content is valuable, the people who create it are also valuable.
VM: How does the podcast business work in China? Is it author-centric as well?
OB: My favorite platform in China is called Ximalaya - it's basically a podcast platform. Its specialty is that it helps you collect feedback. So there's always contact with the audience. The ecosystem is built not around the content, but around the author.
There are tools for the author: creating and editing information, news tools. They have their own team that helps with marketing, with building communication with subscribers. This is a kind of microbusiness management tool. In general, the peculiarity of all platforms is that a business can be inside a business. Podcasters who have become millionaires can attract investment. They don't have a product, they have a channel with podcasts and it can become a business. This is basically the domain of people who have become bloggers. You can sell your course directly or, if it's interesting content, through intermediary companies, such as Western ones. Ximalaya has its own internal team, and if you become a popular blogger, this team will help you or produce activities.
VM: Talking about the stuffing, how does it function? Do they have a personal account or an app?
OB: In China, the two most popular models are o2o (online to offline, offline to online) and o2m (online merges offline). The two-teacher format is omo - merging online and offline. Most often it is an app. There are different formats. In some you chat, in some there are prepared notes. The most unusual is if the chat has audio messages. Basically, it's like Whatsapp, a course group is recruited and a seminar is held, that is, the instructor records an audio message. But it's common to buy live recordings. The first sales are an online interactive with the teacher, and then the finished recording is sold for half price.
VM: It turns out that you can buy a recording at any time, and then you're off to a flying start?
OB: Yes, but you don't have an accompaniment in that case, it's some short lectures for two hours.
VM: You were telling me that there are barriers, not everyone is allowed into the market...
OB: At one time they started to impose restrictions on the platforms of live-streaming with foreigners (English teachers, mostly native speakers who could speak Chinese), they promoted their courses very well.
VM: What about now?
OB: A lot of bloggers are starting to get into MCNs. These are agencies that produce any kind of life streamers and bloggers. There are even separate blogger schools out there (for anyone interested, I recommend watching People's Republic of Desire). People are more active in watching video content and better at buying it. It turns out to be a “store on the couch”, only in a separate app. This trend is in e-commerce, now it's moving into education. MCN have the right to conclude a contract with the site itself, due to this contract, bloggers who are part of the MCN portfolio are ranked higher, there are separate advertising packages for them. Therefore, bloggers who have reached a certain “ceiling” of subscribers, but who want to grow further, it is easier to connect to MCN. Judging by the design of foreign bloggers' streams, one gets the feeling that they are not copying each other's product. Rather, some one team works with them, perhaps there is already MCN, which deals only with foreign bloggers, for example English teachers, and does it under a template.
VM: Is there a separate segment specializing in online art education?
OB: It's not just art - it's a journey to get some kind of arts education. These companies can also identify Chinese students to art universities, there are companies that send students to study in foreign universities. These are agencies that form their own programs and take students out themselves. (For example, you look for an expert on French painting in Paris and plan a seven-day program with him.) There are those who do study abroad consulting. It's actually a huge market, because Chinese students really want to study abroad. And Western universities pay these agencies a commission for each student brought in. The commission is taken for the fact that the universities do not spend on marketing. Another sphere is educational tourism, the Chinese go to see different universities where they can enroll. When they come to the United States, for example, they are met by Chinese realtors who help them buy real estate in the same country.
VM: Talking about the stuffing, how does it function? Do they have a personal account or an app?
OB: In China, the two most popular models are o2o (online to offline, offline to online) and o2m (online merges offline). The two-teacher format is omo - merging online and offline. Most often it is an app. There are different formats. In some you chat, in some there are prepared notes. The most unusual is if the chat has audio messages. Basically, it's like Whatsapp, a course group is recruited and a seminar is held, that is, the instructor records an audio message. But it's common to buy live recordings. The first sales are an online interactive with the teacher, and then the finished recording is sold for half price.
VM: It turns out that you can buy a recording at any time, and then you're off to a flying start?
OB: Yes, but you don't have an accompaniment in that case, it's some short lectures for two hours.
VM: You were telling me that there are barriers, not everyone is allowed into the market...
OB: At one time they started to impose restrictions on the platforms of live-streaming with foreigners (English teachers, mostly native speakers who could speak Chinese), they promoted their courses very well.
VM: What about now?
OB: A lot of bloggers are starting to get into MCNs. These are agencies that produce any kind of life streamers and bloggers. There are even separate blogger schools out there (for anyone interested, I recommend watching People's Republic of Desire). People are more active in watching video content and better at buying it. It turns out to be a “store on the couch”, only in a separate app. This trend is in e-commerce, now it's moving into education. MCN have the right to conclude a contract with the site itself, due to this contract, bloggers who are part of the MCN portfolio are ranked higher, there are separate advertising packages for them. Therefore, bloggers who have reached a certain “ceiling” of subscribers, but who want to grow further, it is easier to connect to MCN. Judging by the design of foreign bloggers' streams, one gets the feeling that they are not copying each other's product. Rather, some one team works with them, perhaps there is already MCN, which deals only with foreign bloggers, for example English teachers, and does it under a template.
VM: Is there a separate segment specializing in online art education?
OB: It's not just art - it's a journey to get some kind of arts education. These companies can also identify Chinese students to art universities, there are companies that send students to study in foreign universities. These are agencies that form their own programs and take students out themselves. (For example, you look for an expert on French painting in Paris and plan a seven-day program with him.) There are those who do study abroad consulting. It's actually a huge market, because Chinese students really want to study abroad. And Western universities pay these agencies a commission for each student brought in. The commission is taken for the fact that the universities do not spend on marketing. Another sphere is educational tourism, the Chinese go to see different universities where they can enroll. When they come to the United States, for example, they are met by Chinese realtors who help them buy real estate in the same country.
VM: So Chinese young people are more focused on studying abroad?
OB: No, but it is prestigious. Chinese parents make a decision very early on whether their child will study at a Chinese or American university, because children have to take a special exam like our USE. Based on the results of this exam, the child can enter a university in China. If the parents decide that the child will study in China, then from the age of six they begin to prepare the child for this exam. If the parents decide that the child will study in America, the child will most likely take the SAT. Then they send him to a foreign school. The teachers there teach according to the American system, and the children are thus prepared for admission. The students who come to Russia are most often from those who failed the exam in China and cannot study in Chinese universities, or they no longer have the money or time to prepare for the American exam.
OB: No, but it is prestigious. Chinese parents make a decision very early on whether their child will study at a Chinese or American university, because children have to take a special exam like our USE. Based on the results of this exam, the child can enter a university in China. If the parents decide that the child will study in China, then from the age of six they begin to prepare the child for this exam. If the parents decide that the child will study in America, the child will most likely take the SAT. Then they send him to a foreign school. The teachers there teach according to the American system, and the children are thus prepared for admission. The students who come to Russia are most often from those who failed the exam in China and cannot study in Chinese universities, or they no longer have the money or time to prepare for the American exam.