Salt Lake City

The track record for education companies wanting to make a splash in the Chinese market has been spotty, at best.

“Most Western companies fail in the Chinese market,” said Bill Boyu Ning, a partner in Blue Elephant Capital. He was speaking on a panel offering advice to companies trying to turn that tide, a session called “Riding the China Wave: Understanding Trends and Opportunities in the Market” at the 2017 ASU/GSV Summit here.

John Ying Wu, chief strategy officer and general manager of the investment business group for TAL Education Group, agreed. “I [have seen] successful western companies in China in different industries, but rarely in education,” he said.

But Wu sees signs of hope. “The entire public education [system in China] is growing at a very rapid rate–one by birth rate, and the other by upgrading” the system, he said.

With the growth of access to technology for students in China, now the question is: what kinds of content will be delivered by it? Leaders in the Chinese education system are open to products brought forward by foreign companies, he said.

“At this juncture, we believe the government is more and more open to procure from the private sector,” Wu said.

On a series of recent visits to the United States, Ning said he has seen a surge of interest in the Chinese education market.

His advice was to “get directly into the center of Chinese circles,” Ning said. That might mean working with a company like TAL Education Group, which is a leading education services provider in China. The company is also an active investor in China’s largest parenting website, Babytree, and internationally in companies like Minerva Schools and Knewton.

Wu’s advice for companies and investors looking to China: “Before you enter the market, understand who your core customers are—public schools, training schools, or end consumers, the parents,” he said. Then, understand that the user scenarios for Chinese students, teacher, and parents might be different than it is in another country.

Lessons From the ‘Big Publishers’ Approach

Another panelist, Yi Wang, co-founder and CEO of Liulishuo, observed that the tables have turned in how companies are trying to enter the market.

“It used to be that we’d go to the major publishers of English learning content, and they’d say, ‘Who are you?,” said the former Google product manager.

But that was before the LiuLiShuo app, which incorporates artificial intelligence, grew to serve more than 42 million registered Chinese users learning English. The company has also raised three rounds of funding from major investors.

Now, many publishers are approaching him to find out how they might partner for success.

“They’ll say, ‘We have this good content, this good curriculum. You guys seem to know what you’re doing,” said Wang, then offer the content and a team of editors to do modifications, and ask Wang’s company to build the technology and launch it in China.

Their next offer is a first. The publishers say they will give Wang’s company the flexibility “to adjust the pricing on the fly,” which is appealing to fit with different revenue-sharing models, he said.

“Maybe you have someone open doors, and you go in by yourself,” said Wang, “or maybe we handle the product and you handle sales and marketing.”

More Avenues to Pursue

Wang said U.S.-based education companies looking to work in China can take a page from how Uber entered the market, using localized operations, customer service and product iteration as lessons are learned about that local market.

Companies exploring to the Chinese market should also look for local partners, he and the other panelists said.

Wu said he would focus on finding a company that has operational insights and canbring insights about what will make a product stand out give it an advantage over competitors in China.

“Anyone coming from a different market, you have to be cognizant of the fact that the Googles and the Amazons—they’re smart, but they didn’t get the success [in China] that they were hoping for,” Wang said.

The panel was moderated by EdWeek Market Brief Senior Editor Sean Cavanagh, who recently wrote about China’s education market.

---

See also:

• Cracking Open Opportunities in China’s Education Market
• Trying to Make It in K-12 Markets Abroad? Protect Your Intellectual Property
• 10 Mistakes to Avoid When Going Global
• Strategic Partnerships in Other Countries Are Keys to Global Growth
• Reseller Relationships Vital to Growing Your Business in Other Countries