Education Market Around COVID-19
Is there opportunity?
As Chinese schools get ready to start the academic year after the required lockdown, we ask ourselves the extent of the changes brought about by COVID-19 to the domestic educational landscape.
These some insights we have gathered so far:
The online class has become an essential model due to its scalability, and the number of online learners is higher than ever before. It remains to be seen, however, who will benefit from this surge in users.
Although schools are ready to start the academic year, it is unlikely that the economy will recover before Q3 or even Q4.
Online learning companies will have to deal with the shortcomings of the industry (large, unbalanced teams; exorbitant customer acquisition costs; poor accountability of learning outcomes, etc.) in a rather negative economic environment.
The MoE is expected to make changes to the academic year. This may well have a significant financial impact for many incumbents, who will be forced to refund course fees to parents.
Investors will most likely concentrate on the secondary market. Many early-stage companies will experience cash flow tensions in the forthcoming months. The ground may be ripe for mergers and acquisitions.
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