EdTech in China: Goldmine, Minefield, or Both?

In examining all sides of the equation, some words of wisdom from an experienced founder.

GUEST COLUMN | by Rohan Pasari

credit-google-mapsFaced with a massive opportunity, most people become one of two things: excited or skeptical. With a booming education sector, the chance to go abroad for studies is one such opportunity. Studying overseas has transformed from an elite luxury into the latest necessity for well-to-do Chinese families, and local and foreign businesses have been quick to capitalize on China’s major export—students. Businesses are offering everything from online tutoring to admissions consulting, summer school programs and more. Is this just another bear trap for a foolishly bullish market, or is there gold at the end of the rainbow? Here’s our two cents on the matter.

The potential is real

There are times when an influx of capital and competition are signals of an over-hyped market or impending bubble, but we strongly believe education is not one of them. Education in China is a red ocean in some sectors (e.g. online test prep and overseas study consultancy) but much less crowded in others (e.g. newer forms of education technology, big data plays, marketplaces and even learning management systems).

Good old hard work, solid intuition, and flexibility are required to make a vision come to life.

There exists a corner of a learner’s life that has yet to be dominated by a core group of players. Data-driven technologies are in their very early stages, so there is profit yet to be realized. On one side of the macro equation, with incomes rising and a language barrier propping up Chinese families’ desire and willingness to spend for global education, market demand will remain strong at least for the next generation or so.

On the other side, consistent activity from investors and education conglomerates like TAL Education Group, means that new businesses have multiple options for both initial support and an eventual exit. This means that it’s viable for startups to enter the edtech space, provided they offer an innovation solution to reach previously untapped consumer segments. That said, execution is still key to scaling, and the biggest enabler for this in China is localization.

Don’t transplant solutions here; build in China, for China

A product that has succeeded elsewhere will not necessarily work for Chinese consumers. Just look at eBay! Despite very comparable features and technical capabilities, Alibaba took the market via ground game: a clear understanding of the local consumer, and swift execution to make the necessary business changes. Cultural differences, language preferences, and even simple norms can easily become the reason for a company’s downfall; don’t let it be yours.

We’ve learnt our lessons the hard way — piggybacking our product off of our original tech setup in Singapore, and only to discover that Chinese customers couldn’t use our platform without Chinese servers and full translation capabilities. The solution is to have a local partner or team to understand your end user and other stakeholders, conduct business in Chinese, and build networks around friendships (not just business transactions) or else risk being shut out.

Lastly, decide how you’ll deal with the red ocean

It’s surprisingly easy to rock up in Beijing with an Ivy League degree, tell people you’re an education consultant, and win clients with a few insider introductions or a better price point. The business model is well known, readily replicable, and income dependable—a good formula for boutique enterprise. But scale looks very different.

If you want to be a major player in the space, you need to either bypass or work with all the other fish in the sea. When my company first entered China, we had it in mind to expand our admissions consultancy, only to discover that there are literally hundreds of other players, many of whom operate with a very similar value proposition; that’s when we decided to change our B2C strategy into a B2B Software as a service (SaaS) offering for China’s existing admissions consultants and school guidance counselors.

The bet is starting to pay off.

Instead of competing with the market’s trusted players, we are engaging them, learning from them, and improving their work through tech-enabled insights and efficiencies! It so happens that this is not only our business model in China, but globally as well.

So you need to ask yourselves—if you currently look like a “me too” business, are you happy with doing that same thing at a smaller scale, finding whatever niche is left untouched by the competition? Or are you willing to pivot and gun for a different position?

We’ll end with a caveat that there is no recipe for success. Good old hard work, solid intuition, and flexibility are required to make a vision come to life. But as each of you embarks on your own adventures in China’s edtech landscape, we think these three things are important to consider. Keep hustling, and connect with us if you think we can work together to build great things for China’s student market!

Rohan Pasari is CEO and founder of Cialfo, a Singapore-based online college admissions SaaS platform available on web and mobile for independent college counselors, private organizations and high schools to streamline their overseas college application process. Rohan founded the company in 2012 driven by a passionate belief in learning to learn, not for grades, and to democratize education for all people. Active in the Asian edtech community, he speaks at various conferences including Echelon, EdTech Summit, and EdTech Asia. Write to: hello@cialfo.co

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