opinion

Looking to Grow in China? 3 Lessons for U.S. Edtech Companies

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As the world’s biggest Internet market, China is an alluring prospect for U.S. tech firms, including edtech players. China-based edtech companies raked in more than $1 billion in investment in 2015, or 37 percent of global funding for the year. Asia has the world’s highest regional growth rate for e-learning, and an e-learning market projected to be worth $12.1 billion by 2018. At Coursera, we’ve seen registered users in China climb by more than 500 percent between 2013 and 2016, crossing the one million mark in 2015. Still, companies looking to do business in China face a “tangle of issues.”

The hurdles? U.S. edtech companies can expect to confront special regulatory and infrastructure challenges in China, in addition to having to adapt content and design. And the landscape is increasingly crowded. When Coursera partnered with Guokr in 2013, we were featured with only a few other partners. Now, Guokr lists over 45 platforms. And new platforms mean more content. The Chinese Ministry of Education is encouraging the growth of local MOOCs, with a policy that sets targets of 1,000 from Chinese universities by 2017 and 3,000 by 2020.

So, based on the experiences of Coursera and other companies, what are some lessons for edtech startups looking to grow in China?

Find the right partners.

Business in China is notoriously relationship-driven. The right partnerships can help American edtech companies distribute, translate and localize their content; develop native content; and—importantly for companies looking to operate in China—offer political protection.

Some firms, including education organizations like Minerva Project, take on strategic investment from Chinese partners to support the their overall long-term development in China. At Coursera, our relationships have been more targeted. Our partnerships with NetEase and Guokr have increased Coursera’s distribution in China; Guokr and Yeeyan facilitate translation of Coursera content from English into Chinese; and our partnerships with 10 elite universities across Greater China and collaboration with Internet giant Tencent generate native Chinese language content. Similarly, Udacity’s recent partnership with Didi Chuxing on a $100,000 grand-prize machine learning competition aims to grow awareness for Udacity’s programs among Chinese learners while also connecting Udacity offerings to the Chinese “talent ecosystem.” American edtech companies thinking of expanding into China must start by building the right relationships.

Determine a clear competitive advantage. 

In China, anything that can be replicated will be—and it will be better, faster and built specifically for Chinese users. Companies like Coursera and Udacity are uniquely positioned because we are able to provide Chinese learners with high quality global content. Coursera also helps Chinese universities export their content to the rest of the world, building their international presence. And while many Chinese MOOC platforms focus on university students as their target learners, Coursera focuses on serving learners over a lifetime, potentially of value in helping address China’s skilled labor shortage. McKinsey & Co. estimates that failing to address a projected shortage of high-skilled workers could cost China $250 billion or 2.3 percent of gross domestic product by 2020. Before American edtech companies enter the China market, they should identify a strong competitive advantage.

Agree internally on goals, spending and risk.

It’s important for companies thinking about going international to get aligned on China as a priority. Expanding into China requires building a team with knowledge of the landscape and fluency in the culture and language; investing in improving technical infrastructure and localizing content, payments, and features; and building relationships with Chinese partners. Setting up localized payment, improving site speed, and localizing the experience can be expensive and compete with other internal growth priorities. While there will always be uncertainty for tech companies operating in China, edtech companies can mitigate some of the risk by having early and frequent internal conversations about what they want to accomplish, how much they’re willing to invest and when they expect to see results.

Mariel Reed (@marielreed) is a partnership manager at Coursera, where she focuses on building relationships that help Coursera grow in Asia. She is a World Economic Forum Global Shaper and leads the San Francisco chapter of EdTechWomen.

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