Smart Learning Institute

Online learning platforms create new global market leaders, red-hot stocks for investors

For "naughty" 9-year-old primary school student Luca Bendini in Rome, home as a classroom was his life's first surreal experience. He and his Italian classmates have Chinese educational technology firms such as NetDragon Websoft Holdings Ltd to thank for the online courses.

E-platforms such as NetDragon's Edmodo facilitate communication, collaboration, and coaching, and are helping millions of students across the pandemic-stricken world to continue their education in spite of national lockdowns.

Asked if he likes e-learning, an elated Bendini said: "I'm so excited to interact again with my teachers and classmates after weeks. It's almost like being back at school. Online classes are more interesting than the real thing－we can even send emojis and experience virtual reality."

Bendini's mom Maria Fedullo is equally effusive in her appreciation of Edmodo. Stuck at home for weeks due to the pandemic, Fedullo had to deal with the hyperactive Bendini. Edmodo rescued her.

"Dio mio－that's Italian for 'oh my god!'－without these online platforms, I think we parents of school-going kids would have felt compelled to find a vaccine ourselves," said Fedullo.

Some 56 countries and regions have closed schools temporarily due to the pandemic. UNESCO estimated that some 850 million young students across the world would find their academic schedules disrupted due to the impact of COVID-19.

UNESCO's estimate also delineated the extent of business opportunity for educational technology companies in China and elsewhere. The global body recently recommended dozens of online education apps or platforms. Several Chinese platforms such as Edmodo, Alibaba's remote conference platform DingTalk and ByteDance's Feishu not only figured in the list but outshone others.

Xiong Li, CEO of NetDragon Websoft, which also publishes gaming content, said he never expected the company's technologies and products to come to the rescue of students worldwide during a pandemic.

"But it should not surprise anyone that we are able to help many countries to build virtual classrooms quickly, given our years of experience in educational technologies that innovate artificial intelligence and virtual reality," Xiong said.

In Egypt, Edmodo was recently designated as the official online learning platform for the K12 students, or those in the educational system spanning kindergarten to the 12th grade.

The Fuzhou, Fujian province-headquartered NetDragon will roll out its online learning platform to over 22 million students and over 1 million teachers in Egypt.

Tarek Shawki, Egypt's minister of education and technical education, said: "The unprecedented times that we have found ourselves in mean that all governments around the world need to find innovative solutions to ensure the continued education of all learners.

"We find ourselves well positioned to be able to support distance learning and the rapid implementation of Edmodo as the platform, to ensure that teachers, students and parents can collaborate and learn during this period."

Nick Nie, partner of Chinese venture capital firm CCV, said the pandemic has boosted the awareness and market prospects of the educational technology sector worldwide. It is a good time for Chinese edu-tech firms to expand abroad.

"As an increasing number of students worldwide now study at home, distance learning will quickly cover and penetrate many corners of the world during the special period," Nie said.

However, he noted that opportunities always come with challenges. "The first challenge for Chinese edu-tech companies is to develop content that is suitable for the culture of foreign countries.

A student participates in an online flag raising ceremony of the Jilin Street Primary School in Wuhan, Hubei province, through Alibaba's remote conference platform DingTalk on Feb 10. NIU JING/FOR CHINA DAILY

"It remains to be seen whether they can quickly localize in the country they operate in. The different laws and regulations may also present some potential bottlenecks."

That view is shared by Zhang Lijun, an education veteran and partner at Sinovation Ventures, a venture capital company founded by prominent investor Kai-Fu Lee. Zhang further said such business opportunities vary according to different specialties of companies.

"For companies that provide livestreaming, online teaching and educational tools, it'll be a good opportunity to go global. It'll also do a world of good to edu-tech firms that use English or other foreign languages as a medium of instruction," Zhang said.

Even in China, which suffered a great deal during the initial phase of the pandemic, edu-tech firms saw a surge in demand for study-at-home products. Over 80 educational technology companies have offered online courses across the country that boasts nearly 280 million students spanning kindergarten to universities.

Xueersi Online School, TAL Education Group's subsidiary specializing in educational technologies, started to offer free online courses to students nationwide. Its online courses cover all the main subjects and are scheduled in a manner similar to schools' terms or semesters.

Xueersi Peiyou, TAL's subsidiary that focuses on offline education, is also scrambling to switch its offline courses to the online channel with minimum disruption.

The advent of online education has boosted the fortunes of some of the Chinese edu-tech companies listed on domestic and overseas bourses. In China's A-share market in March, prices of 20 edu-tech stocks rose by the daily 10-percent limit.

Even on the New York Stock Exchange, TAL Education Group saw its shares rise from around $48 at the beginning of February to a peak of $59.76 in March; but, they receded to $50.82 on Thursday after TAL proactively disclosed a flaw in sales reporting last week.

The parent company said a routine internal audit found an employee had fabricated sales of "Light Class" services, which account for about 3 percent to 4 percent of the firm's revenue.

Market experts were quick to ring-fence the long-term potential of the sector from teething troubles like questionable financial reporting, which they said can be sorted out through proactive full disclosures, going forward.

Besides equity investors, electronic device makers cheered the rise of online education. Sales of gadgets like iPads, laptops, printers, smart speakers and projectors boomed as some parents fear excessive exposure to traditional PC and smartphone screens may harm their children's vision.

According to Zhuanzhuan, an online platform dealing in pre-owned goods, the transaction volume in the tablets and computer products category increased 84.7 percent monthon-month from Feb 1 to Feb 13, with third-, fourth－and lower-tier cities accounting for 45.7 percent of the total sales. Tablet products such as the iPad Air and the Huawei M6 were among the top sellers.

"The epidemic has helped the online education sector save on advertising expenditure to the tune of 240 billion yuan ($34 billion) in China. It took each firm around 1,000 yuan per student to bring about the switch from offline to online," said Chen Xiangdong, founder of online education firm Genshuixue.

Chinese edu-tech firms' rising popularity has inspired their foreign counterparts to beef up their presence in China, now considered home to the world's most mature educational technology sector. Shorelight Education, a US firm that helps find and manage the first-year international students for US universities, has launched a new online educational program in China.

Shorelight's technology allows students from all over the world to earn a degree from top universities in the US without leaving their home country. "When we designed this product, we never thought that we would encounter a pandemic globally. The original intention was to enable students around the world to access quality education from the US," said Tom Dretler, co-founder and CEO of Shorelight.

"As students and educators learned there was a solution that would allow them to return to school quickly, even restore normalcy in the future, more interactive courses or teaching models that mix online with offline will be adopted by them."

 

Despite the pandemic, Dretler remains optimistic about future prospects in China as the educational content consumption habits of a large number of local parents and students have migrated to the online channel. "China is an important market for Shorelight. Chinese families are deeply connected with the internet and their habits are more integrated with blended learning experience."