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China's Online Education Market: Lower-Tier Cities Offer Growth Prospects

May 03, 2020 7:15 AM ETEDU, TAL4 Comments
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  • China’s online education market has been growing over the past decade. The biggest segment of the market is for online K-12 and STEAM education.
  • Adoption has been largely driven by students in top tier cities where incomes are considerably higher and where internet infrastructure is extensive compared to lower tier cities.
  • 70% of China's school-age population is located in lower tier cities. Students in these areas are relatively under-served in terms of educational resources compared to their urban peers.
  • As rural incomes rise and internet connectivity improves, the online education sector could benefit.

70% of China’s school-age population is located in lower tier cities. However, students in these areas are relatively under-served in terms of educational resources, and there is a big disparity in academic performance between urban students and their peers in less developed urban centers and rural areas. As per capita incomes rise and rural internet connectivity infrastructure improves, China’s online education sector is poised to benefit.

China’s online learning market has been growing steadily over the past decade, reaching a market value of RMB 272.7 billion in 2019, from RMB 575 million in 2011, representing a CAGR of more than 15%.

Source: Deloitte

Rising disposable incomes, the perceived importance of a good education, growing competition for good schools and jobs, and a growing number of Chinese students studying abroad (Chinese students studying overseas increased by nearly 9% in 2018) are triggering demand for vocational training, corporate training, language training, and private education.

While online learning may not be suitable for everyone, there are still plenty of individuals who embrace online learning's convenience of being able to study from anywhere. Research firm Frost & Sullivan sees China’s online education market more than tripling to RMB 696 billion in 2023 from RMB 203 billion in 2019.

According to estimates from Deloitte, online education will account for about 10.41% of China’s overall education market, up from 9.32% in 2018. The biggest segment in China’s online learning market is online K-12 and STEAM education which will account for about 44% of China’s online education market, up from 37.1% in 2018.

Source: Deloitte

According to statistics from China’s Ministry of Education, there are nearly 200 million students in China’s K-12 age group. Of this, an estimated 22% will participate in online tutoring this year, up from 17% in 2019, according to research firm Blue Lotus Research Group.

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Comments (4)

I'm curious to know: have you looked into the new NTES educational spin-off, DAO? I'd love to see a comparison of EDU vs DAO. Meantime thanks for this excellent article.
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@Pegeen thank you for your kind words. I have not studied it in detail to give an educated response. Thank you and well noted your suggestion, if I could come up with a worthy and informative article, will certainly have it published. All the best.
James Hanshaw profile picture
Very interesting. I will study this more closely when I have time. Many countries in the west have failing education systems and would do well to copy China. James
TAL is a scam. I hope the stock goes to zero this year it is a well deserved fate.
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