My son was telling me over the Christmas vacation about the growing number of mainland Chinese students attending the boarding school he goes to in the U.K. This stimulated me to look into the current state of the private education market in China, which superficially you might think would be non-existent, but in reality is large, robust and growing at almost every stage in the education system.
I am not talking about the market for international schools in China (pretty much a license to print money from a captive market of expat families). My experiences there can be the subject of another post – suffice to say there were highs and some very, very deep lows.
In the Chinese market:
■ In the segment of local kindergartens, private schools outnumber public ones by more than 2 to 1, with chains of hundreds of outlets building strong brands and economies of scale. The number of public kindergartens is shrinking even as the private market grows by double digits annually.
■ Primary schools are state dominated. Only 6% of students attended private primary schools in 2012, although this share is growing from a small base.
■ Private schools play a larger role at the secondary level, rising from less than 3% a decade ago to almost 10% today. This holds across junior, senior and vocational secondary schools and includes about 12,000 schools.
■ Private tertiary education is provided by around 700 institutions and is growing a bit over 10% annually from its current turnover of US$20 billion.
Beyond these, there are many, many private providers of training and certification, vocational training, and test preparation – maybe $30 billion a year and also growing rapidly. And these official sizings almost certainly understate reality significantly as the informal parts of the market, where cash is paid to unlicensed individual providers, is missed.
While the numbers are large and from a societal lens, quite important, it has proven hard for companies to scale. There are success cases of large and profitable players emerging in vocational learning (such as languages) and now in kindergarten, in other areas, fragmentation is the norm. Even as the share of children being educated privately continues to grow and will likely exceed the US within a few years (currently about 10% of pre-K-grade 12 students in the US are privately educated), I believe that the provider industry will remain fragmented.