Golden Age Of The Chinese Education Market â€Myassignmenthelp.Com

Question: Discuss About The Golden Age Of The Chinese Education Market? Answer: Introducation Education is probably the best thing that can ever happen in people's lives. Countries all over the world have developed an education system that would compete with other nations in the industry. China, the most populated country in the world, is probably the one with the greatest education system. The country has developed regarding technology. Being the most populated country with adequate labour, it necessitates the idea to look at the education system in details and understand its marketing to the rest of the world. Countries across the world have been at the forefront in marketing their education. The significant economic growth in China makes it more suitable for the introduction of a more flexible education system. According to Benji (2017), the education market of China is vast, and the Government has plans to expand it even further in the near future as most families in China prepare their children for the global competitive economy that is dynamic in nature. The education m arket in China was reported to be US$ 240 billion in 2015, and it is predicted to double to US$450 in 2020 (Benji 2017). Chinese families give education a priority to assist their children to cope with the modern China. This presents an opportunity for private investors who would wish to introduce a learning institution that recognizes diversity. As at now, it is reported that the Chinas education industry is leading globally (China Education Industry Report 2016). The cases of investment are reported to have risen from 190 in 2014 to 270 in 2015 (China Education Industry Report 2016). The demand for foreign education services is high since competitive customers value the proficiency and quality of expatriates (Lu 2014). The demand for foreign education services presents an opportunity for us to introduce a service aimed at providing consultation services in China. Currently based in India, there is a plan to expand services in China in order to exploit the opportunities currently p resent. This report is aimed at analyzing the education industry in China with a view of to come up with effective entry strategies to the China market. A learning institution that teaches English and recognizes diversity can be a lucrative business. Methodology The methodology used in developing the report is a mixed-methods approach. The research utilized both quantitative and qualitative approaches. Under qualitative approach, industry reports from certified websites such as IBISWorld were used to determine the current trend in the industry. Direct interviews with renowned companies staff and some students and people had prior experience with the education system in China were also utilized. The data collected was then analyzed and combined into a report to guide in making investment decisions. Industry Analysis Education consulting in China can be classified as one of the products in the management consulting industry. According to IBISWorld report (2017), the industry was established just two decades ago; hence, it is still on a small scale as compared to other countries globally. According to IBISWorld Report (2017), the industry has experienced a revenue increase for the last five years at a rate of 11.1% annually to $25.3 billion. The industry revenue is projected to increase annually at a rate of 7.1% for the next five years to reach $35.6 billion in 2022 (IBISWorld Report 2017). The robust growth of the national economy of several businesses is expected to raise the demand for professional consulting services. Industry Outlook Education consulting services, according to IBISWorld Report (2017), contributes to 7% of the overall revenue in the management consulting industry. The primary services offered in this segment are overseas consulting and agency services. The potential customers are graduate schools and students seeking to further their studies who need assistance in their applications. The consulting firms charge a fee to assist students in their applications to overseas universities. They assist students in finding the best undergraduate and graduate programs which best fit them and guide them through the entire application process. The application can involve passing an English test which most of the Chinese students find it hard. These challenges have led to a fast-growing client base in China. According to Luk (2013), China is leading in sending students to study abroad. The number has been growing annually at a rate of 20% (Luk 2013). The Institute of International Education report (2016) confi rmed that China and India are the leading countries in exporting students to the U.S., accounting for 84% of the overall growth between 2015 and 2016. Demand for Educational Consulting Services The main drivers of the education consulting services in China are the increasing level of globalization and the standards of living. The revenue in the education consulting services in China is expected to grow in the future due to the increasing number of students applying to study abroad (Export.gov 2017). The major drivers of this segment are China's increasing globalization level and living standards. As more students apply for foreign schools, the share of revenue contributed by education consulting is expected to increase in future years (Export.gov 2017). According to 11E Report (2010), most Chinese students value the quality of U.S degrees. Several students are attracted to the U.S. by the liberal arts culture which gives students opportunities to study in different subjects (Export.gov 2017). The desire for Chinese students to enroll in the U.S. learning institutions is increasing day by day and, according to the Institute of International Education (2016), the demand is in spired by the increase in disposable incomes and the prestige that comes from attending top-rated U.S higher learning institutions. The increasing demand for overseas education by Chinese students confirms that educational consulting services are, indeed, a lucrative venture. As reported by Fischer (2011), 53% of respondents in a survey done by Zinch China showed that they could afford up to $40,000 per year on tuition. The survey also showed the willingness of Chinese students to spend money to secure admission in the U.S. learning institutions (Fischer 2011). Opportunities The education consulting service sector is currently facing a number of challenges in China. According to Zhang (2017), a wide gap exists between spending power and the education quality; thus, providing an opportunity for foreign investors to acquire a market share. Cavanagh (2013) observed that several China families have resorted to supplementing the Chinese curriculum in order to prepare their children for studies abroad. Although the business is booming in China, the industry is currently facing a challenge of credibility. Most families in China express doubts of who to be trusted in the sector (Luk 2013). As reported by Carmicha (2012), there is an instance where a Hong Kong family spent $2 million to an educational firm to offer tutorials and funnel donations in order to secure a place in Harvard University, but the student did not succeed. The family decided to sue the firm when their child did not get admitted. In some cases, consulting firms write admission essays for stude nts with no input from the students themselves, while others have been reported to charge students recruiting fees, a practice that is prohibited in the U.S. (Luk 2013). There exist education agencies in China which lack strong academic background. The industry has, therefore, lost reputation and most of the customers do not trust some of the existing firms. This further presents an operations for a professional company with personnel who are well-educated. Concerning government support, the China policies on education have demonstrated strong determination to offer support to the development of the education sector. The education market in China is expected to increase to RMB 3 trillion by 2020 (Luk 2013). English tutoring has also been encouraged in order to send more Chinese professionals to overseas job opportunities and education. There are currently very few education consulting firms in China which does not meet the market demand. The well-known domestic education consulting firms are Hiall, New Oriental, and Bebeyond (IBISWorld Report 2017). Market Analysis Understanding of the market for the product being offered is essential for any business venture. This helps in determining the most appropriate target segment. According to Atsmon and Magni (2012), the economic profiles of the Chinese consumers are the most crucial determinant of the market. China is seen as a potential market that will spur the growth of many companies. There are significant consumer trends that will define the market in the future. Demographic Segmentation There are rapid changes in the China market due to rising income, desire for better education, and greater mobility. Other factors that define the market are the economic imbalances among the Chinese regions. The consumer landscape is mainly shaped by the economic profiles. According to Atsmon and Magni (2012) in the McKenzie quarterly report 2012, Chinese are becoming richer at a fast rate as evidenced by the increase in household disposable income. According to the report, the disposable income for urban consumers is expected to double up by 2020, from $4,000 to $8,000 (Atsmon Magni 2012). Currently, a large proportion of the population comprises of the value consumers whose annual disposable income ranges from $6,000 to $16,000 (Atsmon Magni 2012). The other proportion is comprised of the Mainstream consumers whose disposable income is higher than their counterparts and is estimated to be $16,000 to $34,000. Few people in the Chinese population fall under the mainstream consumer s. Another small group form the "Affluent" Consumers and their household incomes are above $34,000. This segment makes up only 2% of the overall urban population (Atsmon Magni 2012). The summary of the demographic segments is shown in the figure below. Figure 1: Source: https://www.mckinsey.com/global-themes/asia-pacific/meet-the-chinese-consumer-of-2020 Based on the analysis, it is imperative to note that consumers with higher disposable income are likely to be interested and ready to study abroad. The affluent segment comprises of people with high income, although they form a small percentage of the market. The value segment forms the biggest percentage of the market. However, they prefer cheaper services. However, the consumers are expected trend is expected to change. It is projected that with the rise in wealth of consumers, the value category will join the mainstream segment by 2020 (Atsmon Magni 2012). The mainstream segment will form 51% of the overall urban population. Geographic Segmentation Geography is another important criterion to analyze the market. There are cities believed to be wealthy while others are poor. According to Atsmon Magni (2012), about eighty-five percent of the mainstream segment lives in a hundred wealthiest cities in China. In another category of wealthy cities, ten percent of the clients are Mainstream in 300 wealthiest China cities (Atsmon Magni 2012). The families living in these cities will be able to afford a broad range of services. Such cities are likely to attract more companies. The wealthiest cities in China are Shanghai and Shenzhen. The figure below shows a detailed analysis of the cities in China. Figure 2: Source: https://www.mckinsey.com/global-themes/asia-pacific/meet-the-chinese-consumer-of-2020 Target Segment The business will target the Mainstream and affluent segments. The value segment makes up the largest percentage of the entire market in China, but they will not be willing to spend money on overseas education. This group is likely to be conservative and would only be willing to study in China. They are not likely to be interested in prestige. The mainstream and the affluent segments are people who value quality and have great propensity to spend. This becomes essential to target them because they are the ones who are likely to be willing to travel abroad. These groups comprise of families who can afford luxurious goods and associate themselves with the West. Competitor Analysis The education consulting market in China has attracted several investors due to the rising demand for overseas education among the Chinese students. According to IBISWorld Report (2017), the major domestic consulting firms in China are New Oriental, Hiall, and Bebeyond. New Oriental Education Technology New Oriental Education and Technology is one of the leading companies in the education consulting sectors. According to Yang (2015), New Oriental is the largest comprehensive educational consulting service provider in China. As described in Ft.com (2017), the company provides private educational services in China. The companys services are divided into seven segments. The segments include Primary and Secondary education, language training and test preparation, online education, pre-school education, content development and distribution, study tours and overseas education consulting services (Ft.com 2017). The company trains English and other foreign languages. It offers courses for test preparations for securing U.S. learning institutions admissions, admissions to the China schools and Commonwealth countries (Ft.com 2017). It also offers online education. The company applies the strategy of diversification. Its products are well diversified to capture a big market share. New Oriental also employs highly talented professionals in their field. The company has gained positive reputation and is currently the leading company in the sector. As reported by Ft.com market (2017), the companys revenue in 2016 was US$ 1.8 billion with a net income of US $ 274.46 million. Figure 3: Source: https://markets.ft.com/data/equities/tearsheet/financials?s=EDU:NYQ Hiall Group Ltd The second largest company after New Oriental is HiAll Group Ltd. The company offers a wide range of services and has a broad range of clientele. Its main business segment is employer branding consultancy services (Bloomberg 2017). The company provides analysis of big data, media operations, and mobile internet platforms, and integrated marketing communication services in the Peoples Republic of China for foreign and local companies to recruit and provide training to fresh graduates and job seekers (Bloomberg 2017). The company also offers educational consulting services for people seeking to study overseas. Its offices are located in the wealthy cities of China such as Shanghai, Chengdu, and Shenzhen (Bloomberg 2017). Bebeyond Training Centre Bebeyond is the other competitor in the market. The company is relatively small and has not expanded its services in the market. The company offers training services to students who want to join overseas institutions and local institutions. Bebeyond Training Centre usually conducts graduate workshops to educate fresh graduates seeking overseas education. It is aimed at helping students secure admissions overseas and provides personal development training services (Bebeyond 2017). The company does not offer many threats to incoming investors. Key Success Factors The key success factors in this particular sector as identified by IBISWorld (2017) include having a high profile in the market. When a company has a high profile, it is likely to attract more clients. Another key factor is access to a highly skilled labor. It is essential to recruit highly competent employees because the sector is highly skill-intensive. The other factor is having well-developed internal processes. The employees should have the ability to ensure that there are necessary cost and time-management systems for easy monitoring of the processes. The last key success factor is the ability to quickly adapt to new technologies. Since technology is ever-changing, it is essential for companies to ensure up-to-date usage of technology. SWOT Analysis Positive Negative Internal Factors Strength The firm is highly diversified, offering a wide range of educational consulting services The company has highly trained professionals with experience in the field The company has established good relationship with clients in India It offers affordable services Weaknesses The company is not known to many in the Indian market. The company has not dealt with any foreign clients before This might include high cost of establishing an office in China There are currently no employees who can speak Chinese, hence, creating a possibility of language barrier in China External Factors Opportunities Increased disposable income in China will increase demand for overseas education Growing middle classes will create a wider market in China Increased interest in overseas education will increase demand for overseas education consulting services Government support will also boost the sector Threats There is pressure from large consulting firms such New Oriental. The growing use of agencies who offer the same services at lower prices poses a threat A possibility of increased government regulations is likely to emerge due to cases of fraud reported in the industry The Companys Entry Strategy The economic growth in Chinas Tier 2 cities makes them attractive to foreign investors (Hedley 2017). The cost of setting up a company in these cities is low. There is also an increased spending power of consumers due to the changing economic trends among the consumers. The increasing spending power increases the demand for foreign services (Hedley 2017). The Tier 2 cities in China are Tianjin, Wuhan, Chongqing, Nanjing, Chengdu, Qingdao, Suzhou, and Hangzhou (Hedley 2017). The company will include both Tier 2 and 3 cities in order to gain a first-mover advantage. Government regulation is another factor to consider since it impacts significantly on the costs of market entry. There has been a rising concern about the education consulting services firms in China which has caused the government to put stringent measures. Considering the language barrier that may arise because of few Chinese being able to speak English, a joint venture business model will be advantageous and is likely to be a low-risk strategy. One of the advantages of a joint venture is that the company will be able to use an existing sales network and customer base (Hedley 2017). Another advantage is that the company will be able to access the existing partners' resources. The setup cost and operations costs are also likely to be low. The hiring of employees will be much easier, and it will also have the advantage of representing the local community. It is, therefore, imperative for the company to look for a reputable company and negotiate wisely on the terms. Future Plans The company seeks to achieve a larger market share in the country. Starting with educational consulting services, it will also form other segments such as English training, education curriculum development, foreign language training, the establishment of vocational training, pre-school training and will partner with overseas learning institution to offer overseas curriculum in the Country. This is aimed at attracting large clientele base and increase revenue. Conclusion China is a potential market for educational consulting firms. It is imperative to note that the China education market is expected to grow rapidly in the coming as evidenced by the various industry reports discussed. There is currently, a challenge of English language in China which makes education consulting firms more viable. Although there are a number of firms currently operating in China, the market demand is still not met. List of References Atsmon, Y., and Magni, M. 2012. Mckinsey Quarterly: Management the Chinese consumer of 2020. [Online]. Available at: https://www.mckinsey.com/global-themes/asia-pacific/meet-the-chinese-consumer-of-2020 Bebeyond. 2017. Bebeyond [Online]. Available at: https://www.bebeyond.com/ Benji. 2017. The Chinese education market is projected to double to $450 billion by 2020 [Online]. Available at: https://www.marketingtochina.com/chinese-education-market-projected-double-450-billion-2020/ Bloomberg. 2017. Company Overview of HiAll Group Ltd.[Online]. Available at: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=345484327 Carmichael, M., 2012. Quest for Harvard entry ends in $2m tangle [Online]. Available at: https://www.bostonglobe.com/metro/2012/10/09/chinese-family-lawsuit-former-harvard-professor-promised-admissions-help-took-million/7tfbug9YlmW5LR4EqumIFN/story.html Cavanagh, S., 2013. U.S. Companies Finding Success in China's Education Market [Online]. Available at: https://www.edweek.org/ew/articles/2013/12/11/14china_ep.h33.html China Education Industry Report: 2016 Edition - Research and Markets. Business Wire [Online]. Available at: https://www.businesswire.com/news/home/20160217006485/en/China-Education-Industry-Report-2016-Edition-- Export.gov. 2017. China - Education and Training [Online]. Available at: https://www.export.gov/article?id=China-Education-and-Training Fischer, K., 2011. Many Chinese Students Could Pay U.S. College Costs but Lack the Language Skills, Survey Finds. Chronicle. [Online]. Available at: https://www.chronicle.com/article/Many-Chinese-Students-Could/129855 Ft.com. 2017. New Oriental Education Technology Group Inc [Online] Available at: https://markets.ft.com/data/equities/tearsheet/profile?s=EDU:NYQ Hedley, M., 2017. Entering Chinese Business-to-Business Markets: The Challenges Opportunities [Online] Available at: https://www.b2binternational.com/publications/china-market-entry/ IEE. 2016. IIE Releases Open Doors 2016 Data [Online]. Retrieved from https://www.iie.org/Why-IIE/Announcements/2016-11-14-Open-Doors-Data Lu, C., 2014. Report on the Diversification of Chinas Education Industry 2014 [Online]. Available at: https://www2.deloitte.com/content/dam/Deloitte/cn/Documents/technology-media-telecommunications/deloitte-cn-tmt-deloitte2014educationindustryreport-en-220514.pdf Luk, J., 2013. Educational Consulting Faces Credibility Challenges in China [Online]. Available at: https://www.chinabusinessreview.com/educational-consulting-faces-credibility-challenges-in-china/ Yang, L., 2015. Marketing Analysis for New Oriental Education Technology Group Inc. [Online] Available at: https://www.theseus.fi/handle/10024/94166 Zhang, J., 2017. The Golden Age of the Chinese Education Market [Online]. Available at: https://astreem.com/golden-age-chinese-education-market/