As the British Council launches a webinar on 16 October to introduce a new report on digital education in China, Jeremy Chan, regional head of research and consultancy, explains what the Chinese digital education landscape looks like, and the opportunities and risks for foreign investors.
China's huge education market
By almost any measure, China is the world’s largest education market, with more than 400 million students – nearly 30 million of whom are currently enrolled in higher education institutions. To put the sheer size of this education challenge in context, there are as many students in China as there are people in the US, UK and Australia combined.
Not surprisingly, China has struggled for years to provide enough education to keep up with surging demand. More recently, however, the education landscape has begun to change in China. Household incomes have continued to rise, and the young person population has begun to shrink. China is now turning its focus away from increasing quantity to improving quality in its education, and paying particular attention to digital education. This presents an array of potential opportunities for the UK.
Chinese spending on education is rising fast
In 2012, China met its long-stated goal of spending four percent of GDP on education. In 2013, total education expenditure grew by nearly 10 percent again. Spending on digital education in particular, both public and private, has expanded even more rapidly.
The size of the potential digital education market in China was estimated to be £7.4 billion in 2012, which represented a 22 percent increase from the year before.
China's digital divide
Digital education is seen as a solution to many of China’s current educational needs. It has the potential to increase access to education, while lowering costs and promoting a more high-tech economy. At the same time, the rise of digital education could exacerbate the existing digital divide between China’s cities – where some 80 percent of students use the internet at home – and rural areas, where only two percent of students have internet access in their homes.
The first step for China in addressing this digital divide will require increasing connectivity, particularly in rural and inland areas. Government funding for distance learning has reportedly extended to over 80 percent of rural schools in central and western China in recent years, but China will require far greater Internet penetration into rural households, as well as faster connection speeds and teacher training to help educators get up to speed. These incremental improvements in Internet access and human capital will ease the spread of digital education to classrooms and beyond, but what form the market will ultimately take is still unclear.
What does digital education look like in China?
Digital education in China encompasses a broad range of facilities and products, both foreign and domestic. It includes online education platforms, e-campuses and e-libraries, and the software to power them. For the time being, many of these products remain underprovided and largely limited to the tertiary education sector in China. But large investments are being made to increase access and tailor programmes for schools and younger students. China has announced ambitious plans to create a universal digital learning environment, promising to provide broadband connectivity to all K-12 classrooms by 2020. To take advantage of this surge in Internet connectivity, all provinces have been asked to start digital education trials by 2015.
Digital education technologies are not noticeably different in China than they are in other countries. However, it is unclear whether these technologies can succeed in China’s current education system, particularly in classrooms that traditionally limit two-way interaction in favour of exam preparation and rote memorisation. To get the biggest potential market, digital education providers may have to switch the focus of their technologies from student to teacher needs.
What are the opportunities and risks for foreign investors?
Digital education combines two of the more highly regulated sectors in China – information communication technology (ICT) and education. So far, however, government policy has been generally encouraging towards foreign investment, particularly in less regulated areas of the country’s education system. In large part, these favourable policies result from a desire for foreign technology. The greatest risk for outside providers of digital education is a change in government regulations, once Chinese firms have developed competitive indigenous technologies.
For most outside investors, the most promising opportunities remain at the margins of China’s tightly regulated public education system, namely in rising demand for home schooling, after-school tutoring, vocational training and preschool education. There are also considerable opportunities for foreign investors in the publishing and provision of e-books, digital note-taking and other cloud-based services, as well as education software development for electronic hardware.
As is often the case in China, a certain amount of uncertainty surrounds the future of digital education, but most current trends suggest great potential. A large student population, rapidly rising incomes and increasing educational attainment levels – not to mention an increasingly information- and technology-based economy – have all increased demand in China for education technologies that can fill existing gaps in the traditional education sector. Government policy is also generally positive toward foreign investment in digital education, although competition for this market will be increasingly fierce as both domestic and outside firms jockey for position.
There is no denying the considerable risks and uncertainties surrounding China’s digital education market. But there is also no denying the potential opportunities. For interested UK firms and investors, the moment and the market for digital education both appear to be auspicious.
The full report is available for purchase. Please contact Cathy.He@britishcouncil.org.cn for more information. Watch the webinar [Editor's note, 25 November 2016: webinar link inactive] to find out more about the report on digital education in China on Wednesday, 16 October 2013.
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