Ep. 47: Chinese K12 English EdTech: VIPKid and How Learning is Earning

In episode 47 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma dive into a topic they have been wanting to cover for a while now: Chinese educational technology (edtech). Specifically, they focus on VIPKid, a company that has an incredible number of competitors but is by far the largest in terms of scale for its cross-border model of English-language instruction. Notably, 8 of the 12 startup unicorns categorized as edtech by CBInsights are from China — and this does not include the number of publicly listed Chinese education companies in the U.S. Our co-hosts explain that edtech (alongside the recent TechBuzz topics of online brokerages, e-cigarettes, plastic surgery, and e-sports livestreaming) is yet another example of an industry that is thriving in China but is either not widely reported on or would not work well in other markets.Rui and Ying-Ying begin by exploring the landscape for English learning in China, in the context of edtech. They remind our listeners that while over 300,000 students from China study in the U.S. every year, this demographic is a drop in the bucket as compared with the 1.4 billion Chinese citizens who are alive today. The reality is that the country as a whole ranks low in terms of education attainment: The average Chinese person has only had 7.5 years of formal schooling. Of today’s Chinese millennials, almost 20 percent have college degrees, already a sharp increase from the less than 5 percent of Chinese people who are college educated and now in their fifties and sixties. These and other trends, combined with a highly regulated education sector in China, mean that the “TTE” — test prep, tutoring, and extracurricular activities — market for K12 in China is an enormous $18 billion opportunity.Listen to find out: Just how much are Chinese parents spending on extracurricular tutoring for their kids — and how does that compare with the spending of parents here in the U.S.? How much of that funding is going toward English-language tutoring, and what are the reasons behind the Chinese obsession with learning English? How does this all provide context for the legend of 36-year-old VIPKid founder Cindy Mi, a high school dropout who then made her way to an elite M.B.A. program? How did the company first gain traction, and what are its curriculum and business models like today? How did VIPKid come to raise over $800 million from the likes of Sequoia, Tencent, Sinovation, and Coatue, and how did it come to generate at least half a billion dollars of annual revenue with over 600,000 paying customers? What are some of Rui and Ying-Ying’s predictions about the macro factors that may impact VIPKid’s business in the coming years?As always, you can find these stories and more at pandaily.com. If you enjoy our content, please do let us know by leaving us an iTunes review, liking our Facebook page, and tweeting at us at @techbuzzchina! Thank you also to our listeners over at our partner, dealstreetasia.com.We are grateful for our awesome producers, Shaw Wan and Kaiser Kuo, and our interns, Wang Menglu and Mindy Xu. Thank you!Our co-hosts plan to take the week of July 4th off and to return in mid-July. Happy Independence Day to our U.S. listeners!