The growing demand for talents has created a market scale, and the huge population welfare and willingness to pay accelerate the development of the industry
How big is the education and training consumer market?
Regarding the consumption behavior and consumption outlook of young people aged 18 to 35, a survey found that the top three spending rankings in 2020 are education and training, housing, and health care. Educational training, which has been lingering outside the five places, has become a big hit.
Industry insiders pointed out that in recent years, residents’ willingness to spend on education and training has been on the rise. Especially in the context of rapid economic development and industrial restructuring, the demand for talents in China has become more and more obvious, and the scale of education investment has also continued to expand. Population welfare and willingness to pay have created a trillion-yuan market scale for the education industry.
Good prospects, big "cake"
"Education is currently the biggest expenditure of our family. Children who are in the fifth grade of elementary school apply for training courses such as English, Mathematical Olympiad, and calligraphy, which cost about 50,000 yuan per year; and I also participated in accounting training. Less money." said Liu Min, a citizen of Urumqi.
The survey found that young people aged 26 to 35 pay more attention to their own software construction and have a strong need for education and training.
"I am more optimistic about the education and training market. With the change of concepts, people will invest more and more in education and training." Bao Jianbin, who has been engaged in education and training for a long time, told reporters.
It is understood that the three largest sectors of the education and training industry, pre-school education, pre-school education to high school education (K12) and adult education, of which the K12 education market is the largest. Based on the forecasts of multiple research institutions, the current penetration rate of K12 extracurricular tutoring should be around 22%, so the market size of this field is about 400 billion yuan. New Oriental's fiscal year 2019 financial report showed that net income reached US$3.096 billion, and K12 was the main growth force.
"Now many parents have the consciousness of'don't let their children lose on the starting line', which shows that the surrounding children have participated in the training class, so my children can't fall behind, and they must keep up with the training trend." Bao Jianbin said.
"When I first started learning flute, a class only cost 120 yuan. Later, with the improvement of exam grades, the tuition continued to increase, and now it costs more than 200 yuan per class. But you can't give up. Giving up means abandoning all previous efforts and can only continue to learn. "The current situation of Zhou Bing's education and training for children is also a problem faced by many parents. Once they attend the training class, they will continue to learn.
Industry chaos
"Cash flow is the biggest advantage of training institutions. As long as one person is recruited, all tuition fees for a semester are received." Bao Jianbin said that currently training institutions adopt a pre-paid model. "Most K12 educational institutions still use ' Charge first, then go to class. Parents pay in advance, even for several years at a time, so as to ensure cash flow."
However, it is precisely because of this prepaid model that has caused a lot of chaos in the industry. "Once the money is misappropriated, or the capital chain is broken due to other reasons, there will be a runaway." Bao Jianbin said, "The entry is too low, renting a venue, the institution and the faculty recruit students and share it together. This is the main mode currently adopted. The highest income of teachers can account for 70% of tuition fees. If students cannot be recruited, it will be difficult to continue business.” In this year’s renovation, the Ministry of Education issued a “regulations that charge no more than three months” for the prepayment model.
It is understood that labor costs and marketing costs account for the bulk of the costs of education and training institutions. The one-time investment in opening an education and training institution is small, and losses can be stopped in time if there is a loss. For teachers who have excellent teaching skills, they often have their own source of students, and they can start classes when they find a venue.
At present, the profit rate of education and training institutions can reach 15% to 20%. However, with the intensified competition in the industry environment, the larger the chain of institutions, the wider the spread, and the more difficult it is to make profits due to manpower. "Small but beautiful" has become the most important profit model advocated by small and medium-sized training institutions.
Not long ago, a survey conducted by the Shanghai Municipal Consumer Protection Commission and a number of institutions in Shanghai, Beijing, and Shenzhen showed that due to the lack of disclosure of corresponding information by training institutions, 65.8% of households said that they encountered Over the "very unsatisfactory" problem.
At present, with the control of the epidemic and the gradual recovery of production and life, the number of education and training consumer consultation and complaints has increased significantly, and problems such as overlord clauses, false promises, and delayed refunds have been prominent, and consumers have responded strongly.
Online online integration development
Affected by the epidemic, training institutions have completely suspended classes after the Spring Festival. In response to the “no suspension of classes” policy proposed by the Ministry of Education, traditional offline training institutions were forced to quickly transfer classes to online platforms. "New Oriental" and "Good Future", two giants in the traditional education industry, have launched free courses across the Internet to continue to increase their market share. Internet giants have also entered the game one after another, relying on their strong financial and technological advantages to launch a battle for user entrance.
Industry insiders pointed out that although online education has obvious shortcomings such as weak communication with customers and difficulty in monitoring the effectiveness of teaching, its development trend is irreversible, especially the sudden epidemic, which has accelerated the integration of online and offline. The curriculum system and teaching services are of course important, but how to adapt to and even innovate the changes in the educational scene brought about by new technologies is a problem faced by every teaching and training institution. In order to meet the constantly escalating high requirements of consumers, the education and training industry is bound to achieve leapfrog development at a faster rate.
“During the epidemic, on the one hand, the teachers were unable to attend classes, and on the other hand, the teacher’s salary had to be guaranteed. One training point lost hundreds of thousands of yuan. However, with the release of offline training, it gradually improved.” Bao Jianbin said frankly, “Facts It proves that training institutions do not seek to be big, but to be refined, and to be unique in one aspect can make money."
In the first half of the year, many people stayed home to fight the epidemic for a long time, and many people spent money to buy online courses in idle time. But it is worth noting that thanks to the boom of online education and education and training apps, education and training consumption is undergoing a cycle of major expansion.