Online education sector could be among biggest beneficiaries of Covid-19, may be worth US$61 billion in China this year
- Tectonic shift in education, as online tutoring and education become more common, Hurun Report says as it releases list of sector billionaires
- Online education one of several thriving niche sectors in China: Mergermarket
Online education and educational technology companies could be among the biggest beneficiaries of the Covid-19 pandemic as schools across the world shut, forcing children to learn from home. In China, the sector was expected to grow 12.3 per cent to 435.8 billion yuan (US$61.5 billion) this year.
Hurun Report, which on Thursday released its first ever global list of billionaires who made their fortunes in the education business, said the education sector was going through a tectonic shift, as online tutoring and education became more common.
Rupert Hoogewerf, Hurun Report’s founder, said mainstream education institutes were being forced to offer online courses, and that valuations of traditional education institutions had recorded a severe drop, compared to the quick rise of education technology-focused companies.
In China, by one estimation, online education might actually be a lifeline for traditional institutions in these challenging times. “Amid the coronavirus impact, we would expect the China education sector to see the least impact compared to other sectors, as we see most students’ tuition [fees] are paid in advance and we are unlikely to see any refund, given that a majority of schools can still perform their teaching via online education,” said Jenny Tsai, senior equity analyst for financial services firm Morningstar. In fact, education stocks might even be good value for money right now. “We would suggest investors to look for re-entry points, as the sector pulls back due to the overall market index weakness caused by the coronavirus uncertainty or panic.”
Mergermarket identified online education as one of several thriving niche sectors in China, in a report released on Thursday, saying that 2020 was expected to be the “golden age” for China’s online education sector. The market was expected to grow 12.3 per cent to 435.8 billion yuan this year, according to iiMedia Research.
“The digitalisation of education is inevitable. The sudden epidemic accelerates the process by shifting all Chinese K12 users learning online,” said Amber Zhang, director at TH Capital, a Beijing-headquartered investment bank. She said that as schools remained closed for longer periods of time, students and teachers would grow accustomed to online learning.
