Education: Education again among category growth leaders
Cultural and competitive concerns drive value increase
Education rose 57 percent in value, a growth rate exceeded only by the entertainment among the 24 categories analyzed in the BrandZ™ China Top 100. The sharp year-on-year increase follows value increases of 68 and 46 percent in the prior two years, making education the category that has consistently increased substantially in value.
The sustained value growth of the category reflects the importance of education in China as a cultural ideal, a government priority, and a parental preoccupation to prepare children with the knowledge needed to compete successfully and enjoy a better life than earlier generations.
The consumer desire for quality education is part of the broader move to upgrade, which reaches even to China’s lower tier cities. In addition, the rising birth rate, following the elimination of the one-child policy, has particularly affected preschool enrollment.
Education brands typically prepare students for China’s primary and high school entrance exams and for the rigorous college entrance exam, the gaokao. Recent government reforms are easing the pressure of the gaokao by expanding entrance criteria and increasing flexibility for considering career options. Brands also tutor students for exams required to study abroad.
Of the three Education brands ranked in the BrandZ™ China Top 100, Xueersi almost doubled in value, New Oriental expanded modestly, perhaps reflecting the competitive environment for language education, with and another brand, VIPKiD, entering the BrandZ™ China Top 100 for the first time.
Newcomer VIPKiD operates an online platform for English language immersion. It is present in over 35 countries, including China, where it matches over 500,000 school children with around 60,000 teachers in North America. Financing in 2018 raised $500 million from investors including Tencent. The funds will be spent in part to expand VIPKiD to 100 countries over three years.
Both Xueersi and New Oriental, have increased their online presence over the past few years, having established their brands as networks of physical locations. Xueersi, has an enrollment of around 5 million students. Along with its online presence, Xueersi has around 650 physical learning centers in over 40 cities throughout China. With a student enrollment of over 1.7 million students, New Oriental operates around 1,200 physical locations in China.
The education category is in the sweet spot of the Chinese Dream, aligned with both the government’s objectives and the aspirations of individuals, especially of parents for their children. This opportunity is likely to attract more competition, perhaps shaped by the evolving attitudes toward education in China, the desire to complement rote learning with critical thinking.