Hit by pandemic, China’s after school education market embraces doing business online

China’s K-12 after-school education market is expected to see rapid growth after the Covid-19 pandemic subsides, reaching 1.4 trillion yuan (US$200 billion) by 2025, driven by new technology and the continued merger of offline-online educational activities, according to a new report.

With the deployment of 5G, AI and other technologies, the business-to-business (B2B) segment of the total market, comprising products and services for China’s nearly one million K-12 after-school training institutions, is projected to surpass 100 billion yuan by 2025, said a report issued on Tuesday by Oliver Wyman in collaboration with China’s National Institute of Education Sciences and the Tomorrow Advancing Life Group (TAL Group).

“The industry has been negatively impacted due to the Covid-19 outbreak, but the demand from parents and the fundamentals of the market remain unchanged. We expect the market to exceed 1 trillion yuan in a few years,” said Oliver Wyman partner Claudia Wang.

“Additionally, nearly 70 per cent of offline enrolled students moved online during the Covid-19 outbreak, spurring a wider awareness of distance learning,” Wang said.

China's K-12 after-school training sector primarily includes tutoring, enrichment education, and English-language training companies. The overall market was worth about 800 billion yuan in 2019.

During the pandemic, more than 70 per cent of these businesses said they experienced severe cash flow shortages due to a sharp drop in student enrolment, while more than 60 per cent of business executives in the sector said they expect the negative impacts of the outbreak to continue to the end of the year, according to the study.