TAL Education Group
There have been several bullish articles written on TAL (NYSE:TAL) in recent months by other contributors here and here. They both provided a good overview of TAL's business, performance, and reasons to long the stock. This article takes a deeper look into today's K-12 education and tutoring industry in China.
Overview of Chinese Education Market
In ancient China, the governors then used a system called "Keju" to select talented individuals into the government. Keju is a test, it requires candidates to write about a selected topic; the candidates would then be valued based solely on how well-written the article is. Those who scored in the top-three would be known immediately around the country and be chosen for important positions in the government; in other words, the test brought people prestige and wealth simultaneously. Keju has been one of the most important inventions in Chinese history, since it provided a common ground for people with talents, regardless of their family backgrounds or any other external conditions; it remained the simplest way for people to rise in social status -- a farmer could become a governor in no time, as long as he/she is capable of thinking strategically and expressing ideas eloquently.
Today in China, the Keju system no longer exists. However, its influence over Chinese education remains. How the Chinese selected talents from ancient times became how they evaluate students today - by tests and mostly based on the scores of the tests. These tests provide a common ground for same-age teenagers to compete with each other, regardless of any other condition except their scores. Hence, the test system in Chinese education is similar to Keju, since it is the only way to rise in social status. As a result, Chinese parents who wanted to make better lives but failed to do so due to various reasons devoted all of their
