What U.S. Companies Should Know About Asia's Edtech Market

Market Trends

What U.S. Companies Should Know About Asia's Edtech Market

By Bing Wang     Sep 17, 2018

What U.S. Companies Should Know About Asia's Edtech Market

Last summer, when I was working for ThinkCERCA, which helps students develop critical thinking skills through reading and writing, the edtech startup was facing a big decision: should it try and break into the lucrative Chinese market?

On the one hand, China’s private education market is projected to grow 9 percent per year until 2020, reaching a value of $330 billion—an enticing market for many American entrepreneurs. On the other, the uncertainty of the market, and the fact that it looks very different from the U.S. education space, can pose serious challenges to any organization.

After a summer of market research and competitor analysis, the company eventually signed off on a collaboration with a Chinese partner, TAL Education. A year later, this project has grown steadily with over 300 Chinese students enrolled in the joint program. ThinkCERCA is definitely not the first U.S. company that has eyed Asia as the next big market. But their story is not a blueprint that will make sense for every company.

Back home, I’m a Chicago teacher, but I spend my summers consulting with edtech companies in Asia. Today, as I am drafting this article in the middle of the hustle-and-bustle of Tokyo’s Roppongi crossing—after working on another digital learning project in Japan over the summer—I realized many companies still don’t understand the realities of the Asian market. Between the drastic variations in business culture, social norms and day-to-day education affairs, there are a lot of differences companies should know about (along with a few similarities). Here’s a handy guide for anyone in edtech looking to cross the Pacific.

Boom Times for English-Teaching and Test-Prep

Parents in China and Japan are used to investing their own in money in education outside of school. Almost everyone I met during my time in Tokyo has been enrolled in a juku, or private cram school, at some point in their academic life, and the same goes for Shanghai, where I grew up.

Teacher friends in China tell me it’s now common practice for teachers to connect with parents through group chats on WeChat (a ubiquitous messaging app), so they can keep up with what their kids are learning at school and help supervise at home. Parents in China are deeply involved in their children’s learning and development. As a result, a bigger part of the accountability for a child’s academic performance is shifted to the family, which makes them more committed to providing supervision and resources.

This is good news for educational products with a B2C—or business-to-consumer (or, in this case, parent)—model. The education markets in China and Japan have birthed many prosperous companies. In China, there is New Oriental, VIPKid and TAL Education. In Japan, there is Kumon and Z-Kai. As EdSurge and others have reported, these companies greatly concentrate in B2C English and tutoring services (and sometimes a combination of both).

If your product or services can easily pivot to English-teaching or improving students’ readiness for standardized tests as ThinkCERCA did by redesigning its curriculum to focus on supporting English language learners, then Asia may provide a big potential market.

Why B2B Edtech Is a Harder Sell

While the Asian education market focuses heavily on test-prep and English tutoring, it can be hard to make sense of why business opportunities are not as lucrative for other subjects, such as STEM education, which is a fast-growing area in the U.S. In my experience, this phenomenon is partly caused by the limited business models that an edtech company can efficiently pursue in the two countries.

Last year when I visited home, I made a stop at my alma mater, Kongjiang High School, a top-ranking school in Shanghai. I was surprised to learn from my former literature teacher how little has changed in more than a decade—both the facilities and the way she teaches. When I asked if she uses any technology in class, I got a blank stare in return. After a while she said, “Oh, the projectors are still there.”

At least I can say my high school has Wi-Fi and does not restrain the use of mobile devices after class. A year ago, I took a group of exchange students from Chicago to Taizhou No.1 High School, a top school in a small, affluent city in Zhejiang province, south of Shanghai. There we encountered even harsher restrictions on technology. The school’s Wi-Fi is exclusive to teachers, and any use of mobile devices is banned. You would think that the hype around the use of technology in classrooms in the West would have had some influence on these elite schools in China’s most economically-advanced areas. But the reality is that in most K-12 schools, the infrastructure for edtech adoption simply does not exist.

The situation is similar in Japan. Although the country is perceived as a pioneer in technology innovation, teachers’ mindsets around tech use and facilities in Japanese K-12 schools are no different than in China. I spoke with teachers from five different schools while I was in Japan and found that most schools seem to view the internet as a source of distraction instead of a source of essential information, and so restrict the use of technology in schools.

My friend Norbert, who used to teach English in a small town in the prefecture of Southern Nagano, said that his school made news three years ago when they found funding for installing projectors and purchasing 140 iPads for the school’s 775 students. The only school I interviewed that is equipped with high-speed internet and 1:1 tablets is an all-boys private boarding school located in the outskirts of Tokyo. When I asked my friend Jose who teaches there how he uses the tablets, he said he only uses them occasionally to share notes.

Deep down, it is the pervasive exam-focused system that stifles schools’ motivation for upgrading technology, as the purpose of schooling is twisted from preparing students to be ready for life to getting them ready for exams. Edtech projects that try to enhance students’ learning experience without directly targeting test-taking skills—such as gamified learning products and project-based learning platforms—do not appeal to schools whose biggest priority is test-performance. (And you can forget about products that focus on emotional skills or social justice.)

In the U.S., a good number of edtech products, such as Google Classroom and Edmodo, are designed exclusively for in-school use, and cannot survive without a B2B market. Parents alone won’t use them, and schools don’t have the infrastructure for them, making adoption a non-starter.

Sparks for Change in Japan

Flash back to a humid Saturday afternoon in August, when I was invited to serve as a judge for an English speech competition in Tokyo. After the competition, the parents of one of the contestants, a lovely girl named Asuka, approached me and we exchanged some thoughts on education. They were concerned that Japan’s test-driven approach would hinder their daughter’s development of creative and social skills. “I would love to send her to an international school here or even a school in America in the future,” Asuka’s mom told me.

And she is not alone. The craving for a more diverse educational experience in Japan can be felt in many places. Every day during my two months there, I would pass the Roppongi Hills, an integrated development area with apartments, offices and all sorts of businesses, where I would see parents line up to enroll their children in the summer workshops. These workshops taught everything from Scratch and game design to the culture of Gujo City and 3D printing deer horn necklaces. These innovative educational experiences attracted a big crowd of Japanese parents from this upscale neighborhood.

In response to these needs, some schools, such as the one that my friend taught in Minowa, are starting to change. Japan’s education policy has also been debating whether or not to adopt yutori kyōiku, roughly (and somewhat misleadingly) interpreted as a more relaxed education.

Gearing up for the Olympics in 2020, Prime Minister Shinzo Abe’s government has announced major changes for education, including adopting fully online and computer-based testing and requiring college admission to assess a full spectrum of applicants’ credentials, including extracurricular activities. In the U.S., policy changes, such as the implementation of Common Core and online-administered standardized tests helped speed up the shift to digital in schools. The impact of the new education policy remain unclear, but there is a chance that it could have the same effect in Japan.

And in China

In China, the growing need for change in education is fueled by the country’s emergent middle and upper class. These families, who benefited from China’s fast economic growth in the past few decades, now have the financial leeway to offer their children a new choice: a college degree from a foreign institution.

Suddenly, the outstanding standardized test performance of those renowned traditional Chinese schools has become irrelevant to these families. Paired with the anxiety to maintain their children’s social status in the consolidating social stratification process, they are eagerly looking for more personalized and humanistic ways of schooling. From 2010 to 2017, the number of international schools almost doubled in China to answer the growing need. Privileged families from China and Japan are becoming pillars of a greater variety of edtech companies’ sales in Asia. My friend, Eddy Zhong, founded his own summer camp, LeanGap, for high school entrepreneurs, which focuses on creativity and problem-solving. He now receives tons of applications from across Asia to attend his $6,000 summer program.

In that respect, privileged schools and parents in both China and Japan may be opening up a lucrative niche for the U.S. edtech companies. But institutional change takes time. Will these sparks ignite a shift to a new, tech-driven era in Asian education? It’s possible. Just don’t count out the power of the all-mighty test quite yet.

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