Shift away from private core K-12 programs opens door to whole new learning industry

From the outside, the dozens of classrooms at a Chinese vocational education company in Beijing's Haidian district may not look like the Hogwarts School of Witchcraft and Wizardry from the Harry Potter movies.

But inside, the packed rooms of young people are studying a type of wizardry, even if it is the more down-to-earth kind involved in information technology. The vocational education students are upbeat about learning the intricacies of Java programming, user interface design and other lessons key to the magic of their field.

With China having released a series of guidelines recently to promote the high-quality development of modern vocational education, that market is expected to see further boost.

China aims to build a modern vocational education system by 2025, and by 2035, the country's vocational education is expected to be ranked among the best in the world, according to guidelines jointly released by the general offices of the Communist Party of China Central Committee and the State Council, China's Cabinet.

Listed companies and leading enterprises in related sectors are being encouraged to develop vocational education. Vocational schools are also encouraged to work with private businesses to develop infrastructure and training centers together, it said.

"Unlike previous policies, the new guideline mentioned for the first time participation of listed companies, which means that listed companies, even if they are not leading ones, can be involved in developing vocational education," said Xiong Bingqi, director of Beijing-based 21st Century Education Research Institute.

"It also demonstrates the country's determination to nurture more talent, especially high-tech talent in emerging fields, to drive related key industries, which will carry a significance for the construction of a new vocational education market as well as economic development," said Lyu Senlin, founder of Guiding Light Think Tank.

Under the new guideline, industries including advanced manufacturing, new energy, new materials, modern agriculture, modern information technology, biotechnology and artificial intelligence will be top priorities.

Lyu said that it is a favorable policy for education companies as most of them are exploring new ways to survive and thrive again in the aftermath of a guideline for the sector in late July to undertake reform of its business model. The guideline urged all institutions offering tutoring based on school curricula to be registered as nonprofit organizations, which industry insiders said will force businesses that naturally pursue profits toward noncurricular education business endeavors.

Right after the new guideline on vocational education was released on Oct 13, the stocks of a number of listed education companies in the A-share market, including Xueda Education, soared by their daily limit.

A report by market consultancy iResearch said China's vocational education market is expected to hit 390 billion yuan ($61 billion) next year. It is estimated that there will be a shortage of about 1 million professionals in the domestic IT market per year on average.

In fact, a group of companies in the field has announced their transformation from K-12, or kindergarten to 12th grade, education to vocational education, after the country's reform of the K-12 sector in July.

Zuoyebang, a leading online education firm, launched Bufan Class, which means "extraordinary class", to tutor adults in English, finance and accounting. TAL Education Group also announced its new brand Qingzhou and said it will explore the vocational education market.