E-learning market scale expected to exceed $104 billion by 2025, says UBS

Online education is gaining momentum in China with the market scale expected to exceed 714 billion yuan ($104 billion) by 2025, a recent report from UBS Securities said.

According to the UBS report, the Chinese online education market will grow markedly from the 29 billion yuan reported last year.

Government support, technological progress, and a cultural emphasis on education have all contributed to a burgeoning online education market in China, said Liu Jiehao, an analyst at consultancy iiMedia.

This combination of factors has given the country's online education a boost, and analysts point out that Chinese parents are a key driver.

Edwin Chen, an analyst from UBS, said: "Chinese parents have high expectations for their children, wanting their kids to get into Tsinghua or Peking University. This is creating huge demand."

In China, education is always high on the agenda for parents and their children. The majority of Chinese parents expect their kids to continue learning after the end of the school day.

"One important reason that we choose to take extra classes online is that our child can get one-on-one tutoring without wasting time in traffic, especially in Beijing," said Wang Liping, a mother of a 15-year-old boy from Beijing.

However, Chinese parents currently pay for fewer extra classes than their neighbors in Asia, leaving huge room for growth.

The UBS report pointed out that about 37 percent of Chinese parents paid for tuition compared with 70 percent in places such as Japan and South Korea.

The wider acceptance of online after-school tutoring has led to vigorous competition among education companies in China.

VIPKid, a Chinese online education company, recently raised $500 million in its latest round of financing, the world's largest-ever fundraising in the online education sector.

The fresh fundraising pushed the company's valuation over 20 billion yuan, making it the biggest online education company globally.

The Beijing-based company, founded in 2013, provides children with one-on-one online English courses, and links teachers from North America with Chinese kids aged 4 to 12.

The latest data from the company showed it has enrolled more than 60,000 foreign teachers in its network, enabling it to work with 500,000 paid users.

"The financing accelerated the accumulative effect of the country's online education segment," said Lyu Senlin, founder and chief researcher at Learneasy Times Online Education Research Institute, an industry research consultancy.

He said that industry leaders are competing for bigger market share and pushing small firms out in this segment.

In recent years, TAL Education Group and New Oriental Education & Technology Group, China's top two education players, are transforming from offline to online and putting great emphasis on online education.

TAL unveiled its latest technology products and online solutions in July, aiming to step up technology efforts to back up its online businesses.

"The company is striving to advance education through technology, hoping to build a large-scale, low-cost and high-quality online education experience," said Zhang Bangxin, founder and CEO of TAL.

The platform's latest fiscal report showed the transformation to be a success.

Revenue of Xueersi Online School, the online subsidiary of TAL, soared by 158 percent year-on-year in the fourth quarter of the 2018 fiscal year.

However, the industry still faces challenges, according to Zheng Wencheng, an education expert and founder of Hyphen Education, a Shanghai-based online education platform.

"Teachers working online often fail to realize that students may be bored and not concentrating on lessons," he said.

To tackle the problem, an array of companies are scrambling to leverage high-tech solutions to make online teaching more personalized and appealing.

Hyphen, for example, has developed an artificial intelligence-enabled product to improve students' learning and teaching experience online.

The technology can help recognize and analyze students' responsiveness as well as their ability to grasp lessons, which could help teachers adjust their teaching methods quickly.

"If we compare online education to driving a car, then we hope technology can act like an intelligent assistant to help drivers (teachers) to better control the speed and the direction," he said.