Chinese Ed Tech Companies Take Off: A Perfect Storm Of Opportunity And Growth
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Chinese Ed Tech Companies: Discussing Opportunity & Growth

In our previous article from this series (Kantor & Paul, 2019), we made the case that China’s Ed Tech sector is the market across the globe to watch for innovations in learning technologies. This is due to a confluence of factors including significant government and venture capital investment, low barriers to obtaining pilot data, lack of constricting regulation, and finally the social force of a generation of parents who invest heavily in their children’s education partly as a method for providing themselves with a secure retirement. Together these factors have resulted in the rapid outgrowth of startups and other organizations that innovate with new technologies to accelerate student learning, particularly in the areas of English language learning, standardized test preparation, and STEM subjects. In Q1 of 2019 alone, 131 Chinese Ed Tech ventures raised more than $1.86 billion which significantly dwarfs the meager $1.45 billion invested in US Ed Tech startups during all of 2018.

In this article, we provide a deep dive into five leading Chinese Ed Tech organizations and the cutting-edge innovations in Virtual Reality, Artificial Intelligence, Big Data analytics, adaptive learning, language synthesis, and virtual classrooms they are developing. Each of these organizations was visited by us as part of the Global Education Technology Summit in Beijing held this past November during which the promise of this sector’s progress was on display, and the opportunity to dig more deeply and dialogue with company reps was extremely worthwhile. For comparative purposes, we also discuss the focus of leading U.S. Ed Tech companies and why they appear to be less attractive to investors.

Zhongguancun Mooc Times Building

The Zhongguancun MOOC Times Building is a visibly striking example of the Chinese government’s investment in educational technology. The building serves as an incubation hub for multiple government-funded companies boasting sleek development studios, the fastest Internet connections, and high-quality demonstration rooms. Throughout the complex, a variety of interesting solutions are being designed, produced and tested by companies enjoying the freedom of experimentation the rent-free environment affords. One group was able to spend their time building out hundreds of three-dimensional learning objects. These items can be free rotated in space and will constitute a growing library of learning objects that can be incorporated into multiple Virtual and Augmented Reality environments and enhance learning experiences in diverse fields like electrical engineering, anatomy, chemistry, and physics. The support of the Chinese government can be fickle and withdrawn at any minute, but the Zhong Mooc Times Building demonstrates strong government support for Ed Tech start-ups and innovation and plays a critical role incubating the industry in China.

TAL

TAL Education Group (NYSE: TAL) is a leading international education and technology enterprise based in China with a mission is to provide every person the opportunity to obtain quality education through advancements in science and technology. TAL carries out R&D on personalized learning and identifies ways to leverage Artificial Intelligence to increase the quality of distance education. As one of the largest education companies by market cap and a recognized Ed Tech leader, TAL has deployed an ecosystem strategy in which they acquire other specialized Ed Tech companies in order to deliver a platform with a wide range of forward-looking capabilities. Their internal R&D is focused on using AI to improve the quality of virtual classroom instruction and hones in on six key areas: image recognition, adaptive learning, video Augmented Reality, emotion identification, gesture and voice recognition. In normal virtual classrooms, instructors have little understanding of the emotional state of their students at a distance. TAL experiments with giving each teacher an “emotional score” measuring the engagement of students in distant classrooms to improve instructor performance. The AI-driven facial recognition software can determine if students are engaged, bored, happy or frustrated. Additionally, Tal’s adaptive learning platform uses Big Data analysis to gauge student levels of proficiency and then to prescribe or direct the most useful learning activities. This adaptive technology can enable truly personalized learning, a key strategic initiative of the Chinese Government.

Netease/You Dao

Youdao and its parent company, Netease, are big players in the Chinese technology market that have recently begun expanding into the education sphere. Their existing suite of tools includes search engines, dictionary applications, email, cloud-based storage, and data management solutions. Their email service and game development output is number 1 in the country; their cloud music platform is the largest of its kind; their NetEase News has over 450 million installs; Youdao Dictionary & Translate are respectively the number one e-dictionary & educational apps in China. With over 18,000 employees and growth Revenues of 8.36 billion (41.6% YoY growth), their expansion into the Ed Tech market is not to be taken lightly.

Youdao’s division of Netease is developing mobile learning applications which leverage Big Data and while focusing on innovative approaches to content development and user experience. They are developing a significant catalog of online courseware. Their new courses are highly innovative, self-paced eLearning courses under the YouDao brand. Since 2017 they have sold more than 20 million courses, demonstrated 500% annual growth and currently have more than 5 million paid users. Two newly released products are especially noteworthy. The Translation Egg is an easy-to-carry device that supports 69 different languages leveraging a proprietary Optical Character Recognition (OCR) Software. This OCR can be used in a new “intelligent board-writing tablet,” when computers are not available, enabling a student with a stylus to record and transmit their responses to questions in real time. This enables teachers to access tests and quizzes uploaded to a central server. Teachers receive an online version of what was written and can correct the assessment online.

iFLYTEK

iFLYTEK specializes in the research and development of intelligent speech and language technologies and information services. Using speech synthesis and speech recognition, they aim to advance human-machine speech to the level of human-human conversations. The company is using new AI algorithms to create robots and smart applications that integrate their highly-rated, intelligent speech and language technologies into systems that can provide customer service and coaching in multiple languages.

Empower Education Online (EOO)

Founded in 2014, with the intention of developing the world’s leading online classroom platform, EEO is currently being used by over 2,000 institutions and schools as their virtual classroom tool of choice. Their “Classin” platform has a unique set of capabilities which incorporate gaming, embedded cloud storage, simultaneously collaborative blackboards, instant messaging, full media integration, and other plug-in teaching tools all leveraging advanced technologies which reduce latency. Their classrooms can service a capacity of up to 600 students in one class. With a large existing user base of students and institutions to test new products, further innovation from EOO is highly feasible.

US Ed Tech

By comparison, the Ed Tech app with the most 2018 downloads in the US is a solution called “Remind” which enables parents, teachers, and students to communicate and share files safely and securely. While practical it certainly does not sound like groundbreaking as the Chinese firms covered above. During our research, we found it difficult to locate more than a few US Ed Tech startups focused on deep learning and using AI to support prescriptive or adaptive learning.

A likely reason for this disparity lies in the different attitudes and practicalities surrounding data gathering and use. In China, virtually all people utilize the same platforms. For messaging and communication, for example, there is only WeChat which has a very cooperative relationship with the Chinese government and recently scored a 0 out of 100 on an amnesty intentional report ranking encryption of user data to protect human rights. This means that the focus of many US companies, to create safe and secure platforms for sharing and integrating learning data, is essentially already solved in China for government-backed ventures. Providing them with the data they need to “train” and develop their solutions and freeing them up to focus on more innovative Ed Tech challenges such as: measuring achievement, administering student placement, tracking progress over-time and utilizing technology to expand access to quality learning resources.

Conclusion

This review of innovative organizations working to apply new technological capabilities to the world of learning emphasizes the importance of China’s Ed Tech sector. A critical business sector worth noting whose advancement will impact the way in which education will be conducted around the world in the future. It is truly the “perfect storm” of change and innovation being driven by sociological and economic factors and the support of the government, business interests, and parental concern. US companies and other educational entities would be well advised to take a closer look at Chinese Ed Tech sector to predict future trends that will eventually impact the global marketplace not just from a childhood education perspective but also, as we anticipate, for corporate learning as well.

Bibliography:

  • Brothers, P, Principal at HolonIQ; Conference Presentation at GET Summit, Beijing China; (11/2018)
  • JMDedu, Research Report on Current State of After School Education in China (2/2019)
  • Kantor, RJ; (11/2018) Field notes, Video and Audio data collected at GET Summit, Beijing
  • Kantor & Paul (6/2019) China’s Promising Ed Tech Market: Understanding Its Growth & Innovative Orientation; eLearning Industry
  • TEK Consulting, Conference Presentation at GET Summit; Beijing, China (11/2018)
  • Wan, Tony (12/2018); Year in Review: Our Top Edtech Business Stories of 2018; Edsurge
  • Wan, Tony (8/2018); More Popular Than Gmail, Facebook and Instagram: The Education AP That Hit #1 On The IOS Chart; Edsurge
  • Schaffhauser, Dian (1/2016) Report: Education Tech Spending on the Rise; THE Journal
  • Zhang, Siyi (5/27/2019) Chinese Edtech Sees $1.86B in Q1 2019, Bucking Plummeting Venture Trend, EdSurge
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