The private higher education industry in China has experienced rapid growth as it entered the phase of regulated development when the relevant government authorities made great endeavor in completing the regulative framework for private higher education. Private higher education institutions in China can be divided into three categories, namely, private universities (民办普通本科), independent colleges (独立学院) and junior colleges (民办普通专科). Private higher education institutions are distinct from public institutions of higher education mainly in that public institutions of higher education are generally operated by the PRC national or local governments and their major source of funding is PRC public expenditure on education.

Market Size and Trends of the Private Higher Education Industry in China

The total revenue of the private higher education industry increased steadily from CNY 57.0 billion in 2010 to CNY 92.6 billion in 2015, representing a CAGR of 10.2%. In the future, the total revenue of private higher education in China is expected to increase from CNY 92.6 billion in 2015 to CNY 156.3 billion in 2020, representing an expected CAGR of 11.0%. The following diagram illustrates the total revenue generated by the PRC private higher education industry from 2010 to 2015, and the forecast of revenue from 2016 to 2020.

Development Trends of the Education Industry in China

• Income growth is likely to drive premium education spending. As the PRC economy continues to grow steadily, annual disposable income of urban households is likely to grow as well. The rise of middle class families is likely to motivate the spending on premium education. For example, parents are inclined to send their children to schools with better access to premium education resources; and

Increasing number of higher education institutions focusing on applied arts and technologies. In order to better match market demand, the PRC government issued policies to support the development of profession-oriented undergraduate education in China, as well as the establishment of a classification and evaluation system for China’s regular universities by 2020. It is expected that there will be increasing number of institutions focusing on applied arts and technologies in China in the future.

Market Drivers of Private Higher Education in China

The development of private higher education in China is primarily driven by the following factors:

• Government support: The development of PRC private higher education is significantly driven by PRC government policies and initiatives. Certain major policies and initiatives include:

⦁The National Medium-to-Long Term Educational Reform and Development Plan (2010-2020): Promulgated in 2010, it advocated a strategic development plan in order to increase financial investment in education, support the development of private education and strengthen international communication and cooperation;

⦁Non-governmental Education Promotion Law of the PRC: It was promulgated in 2002 to promote the development of non-governmental education and protect the rights of private schools and students in China;

⦁Implementation Opinions of the Ministry of Education on Encouraging and Guiding Private Capital’s Entry into the Education Sector and Promoting the Sound Development of Private Education: It was issued in 2012 to encourage and support private funding to operate educational businesses in China, including higher education institutions; and

⦁Draft Amendment for Non-governmental Education Promotion Law: This draft amendment contains changes to the existing law. According to the draft amendment, private schools can choose to be registered as for-profit entities or non-profit entities. For-profit entities can determine the tuition fees to be charged without the need to seek approval from the relevant government authorities.

• Increasing wealth and demand for higher education: With the increase in income and improvement of physical living conditions in China, the general public is more aware of the importance of education. Private education has gained ground for development based on the gap between the rapidly increasing demand for higher education and the relatively limited public higher educational resources. With continued economic development, along with Chinese households’ increasing income and wealth, China’s higher education student enrollment rate is expected to continue to increase at a rapid pace. Nevertheless, the development of public educational resources is likely to remain stable. Thus, private education is expected to fill in the gap and witness strong development;

• Growing market demand for technical talents: With continued economic development, the market is demanding more technical talents in all areas. Especially with public higher education expanding their enrollment base, a significant lack of skilled and well-trained front-line workers has been identified; and

Development Trends of the Private Higher Education Industry in China

• Industry consolidation: China’s higher education market is expected to experience increasing consolidation as the leading players continue to develop with the primary strategy of pursuing growth through M&A. Such trend is also heightened by stringent legal requirements, large amount of required capital and long preparation period for the establishment of higher education institutions;

• Transformation from independent colleges to private universities: The transformation from independent colleges to private universities is likely to be a key development trend supported by private education operators’ increasing capability to integrate quality academic and capital resources, as well as their continuously improving education quality and recognition. This trend is also supported by Chinese people’s pursuit of higher education degree levels based on the overall social economic and technological development of China along with the people’s increasing personal wealth and spending on education;

• Encouragement of private capital: Currently, a majority of the education institutions in China are funded and operated by government authorities. The PRC government is likely to welcome more private capital in the educational system in order to improve efficiency, in which case large-scale private education service providers are likely to be favored; and

• Better match of talent cultivation objective and market demand: Universities focusing on applied arts and technologies are able to provide training with practical techniques to better cultivate technical talents, who are well sought after by employers in China. The PRC government is expected to further increase its support for the development of profession-oriented higher education and relevant institutes.

The post Overview of the Private Higher Education Industry in China first appeared on CRI Report.

• Income growth for middle class in China is expected to drive up education spending: According to Research, the per capita disposable income of Chinese urban households increased rapidly from CNY 24,565 in 2012 to CNY 31,195 in 2015, and is forecasted to increase to approximately CNY 44,290 in 2020. The rise of middleclass families in China is expected to drive the spending on premium education, as such families are relatively well educated and they consider that good education background could benefit their children in the long run.

• Encouragement for private investment in the education sector: Currently, the majority of the education institutions in China is funded and operated by government authorities and education resources are not necessarily able to be distributed equally. The central government tends to increasingly welcome private investment in the education industry to improve efficiency, hence likely to benefit private-owned education group with large scale.

• Demand for well-rounded education with premium quality: Many believe that existing education in China may have over emphasized on examination scores, while other aspects of students such as social skills, psychological and physical health may have often been neglected. There is an increasing preference from parents to seek for high quality academic programs from private schools that can offer a more comprehensive education program that aims to educate students with all-rounded ability.

Customize your market research on China’s Education Industry>>>

The post Driving Factors for Education Industry in China first appeared on CRI Report.

Market size and trends of the private fundamental education industry in China

Private education was first allowed in China by law in early 1980s to bridge the shortage of public resources. Private education has experienced rapid growth and become an important segment in the PRC education system. According to the Research, total revenue generated by the PRC private fundamental education industry increased from CNY 124.1 billion in 2012 to CNY 184.2 billion in2015, and is expected to increase to CNY 325.5 billion in 2020, representing a CAGR of approximately 14.1% and 12.1% respectively. This rapid growth was primarily driven by the parents’ and students’ rising preference for private schools, which resulted in the increased student enrolment in private schools, as well as increased tuition fees charged by private schools.

Comparison between private and public fundamental education in China

According to the Research, compared to public schools, private schools have the following advantages:

• Flexibility in enrolment plan: Private schools generally have more flexible enrolment plans and fewer limitations regarding students’ background, whereas public schools usually have specific requirements, such as students’ registered permanent residence.

• Curriculum diversification: Many public schools are reluctant to make adjustments and the diversification in public schools’ curriculums is limited due to the requirements of governmental departments. In contrast, private schools tend to have more diverse and broader curriculum offerings and a greater degree of flexibility in terms of the level of tuition they charge.

• Motivation for improvements: Private schools react more actively towards market needs and demand compared to public schools which are mainly driven by the government guidance. As a result, private schools are more motivated to continuously making improvements, which allows them to attract high quality students and charge higher tuition fees.

• Operation flexibility: Private schools in China generally have higher level of operation independence. With greater motivation to react to market dynamics and to improve, private schools also possess greater flexibility in operation that enables them to do so. They have their own employment system and stimulus measures, which broaden the source of teachers and encourage them to improve teaching quality.

• Tuition fee: Tuition and miscellaneous fees are generally higher in private schools than public schools. According to the Research, annual average tuition and miscellaneous fees in private high schools, middle schools and primary schools are estimated to be CNY 7,719, CNY 3,289 and CNY 2,567, respectively in 2015. In China, primary schools and middle schools are compulsory education, and public schools do not charge tuition fees for compulsory education, while only a limited amount of miscellaneous fees will be collected.

Drivers of private fundamental education in China

The development of private primary and secondary education in China is driven primarily by the following factors:

• Increase in income level and higher attention to children’s education of Chinese households: Children’s education is generally the priority for most parents. There is also an increasing number of Chinese parents who would like their children to receive differentiated and well-rounded education which are usually provided by premium private schools. With the increase in disposable income of urban households in China, tuition fees charged by premium private schools have become more affordable, which is expected to support the growth of the industry.

• Government support: Since the 1980s, the PRC government, both at the central and local level, has launched a series of policies to encourage the development of private education institutions. For example, PRC government expenditure on private education increased at a CAGR of 14.8% from 2012 to 2015. The PRC government also encourages private investment in the education sector. For example, the Decision on Amending the Law for Promoting Private Education of the PRC, which was put into effect on 1September 2017, provides additional supportive measures to private schools. Additionally, the 12th Five-Year Plan for National Economic and Social Development issued by the National People’s Congress in 2011 encouraged private capital to run education and ensured that private schools enjoy equal legal status as public ones. In some regions, local government has taken many favorable policies to attract well-branded private schools to establish local branch, such as free land or financial support for campus building.

• Increase in private investment: With the continuous development of the PRC education sector and support from the PRC government, the sector has attracted increasing attention from private investors and significant investments have been made by them in the form of private investment, initial public offering, etc. We expect that this trend will continue and become an important funding channel for the industry.

Customize your market research on China’s Education Industry

The post OVERVIEW OF THE PRIVATE FUNDAMENTAL EDUCATION INDUSTRY IN CHINA first appeared on CRI Report.