English as a Second Language in China
I recently took a look at English as a Second Language in China. Like so many things in China, the numbers relating to the size of the ESL market are somewhat staggering.
To begin with, the generally accepted estimate of the total number of people studying English in China is 300 million, which is just 10 million less than the total population of the United States.
This includes private as well as public schools which teach English. Looking specifically at the large and fast-growing sector of private schools providing ESL instruction, tutoring, or test preparation services (e.g. SAT, TOEFL, GRE, GMAT etc.), this market is about US$4.5 billion in size this year, and expanding much faster than China’s rate of GDP growth.
There are something like 50,000 private English schools in China, most of which are small and either local or regional. Three national-level players dominate the highly competitive private ESL instruction and test-preparation field, NYSE-listed Chinese company New Oriental, privately owned Swedish company EF Education First, and Pearson PLC’s Wall Street Institute. This is the premium end of the ESL market, where consumers pay high tuitions for a classroom-centered product with highly-trained native English teachers and professional quality curricular materials.
If it looks like an easy business to succeed in, think again. Three fairly high-profile ESL schools in China went bankrupt in 2009, leaving lots of Chinese students without the lessons they had paid in advance for. Part of the problem is that market entry barriers in this sector are fairly low, which attracts all sorts of players, including some who lack staying power due to insufficient capital or for other reasons.
There are only 5,000 native speakers of English teaching English in Chinese classrooms, yielding a fairly daunting student-teacher ratio of 60,000 to 1. This is obviously a hypothetical number, because the vast majority of English learners in China simply do not have access to teachers who are native speakers.
Visit any Chinese bookstore, and you will see a large concentration of consumers in the sections offering ESL self-study books, programs, and gadgets. There are more than a dozen magazines specializing in English learning content for Chinese consumers, aimed at various different age groups.
In the online and mobile space, there is a dazzling array of self-study and ESL improvement products on offer, mostly at very low prices or free of charge, from domestic Chinese as well as international sources such as the BBC, Voice of America, Australian Broadcast Network, etc.
What’s driving this extraordinary love affair with English study in China?
Romance, passion and curiosity probably loomed large in the consumers’ motivation towards ESL study 20-30 years ago, but today’s consumers are mainly driven by very pragmatic goals: passing tests, gaining admission to better schools (at home and abroad), and getting better jobs.
This is not surprising when you think about it, because whether in education or the job market, there are vastly more opportunities in China than there were 20 years ago, but also a hyper-competitive rush by more and more qualified people to seize those opportunities.
Some of the trends this has given rise to include more affluent parents sending their children overseas for undergraduate, and even secondary studies; whereas until recently the vast majority of overseas students from China were at the graduate level.
In the job market, serious disconnects have emerged in recent years. At the entry level, far too many college graduates are chasing too few appropriate jobs. At the higher level, there is a serious shortage of qualified staff.
One thing is for sure, whether prospective employers are Chinese companies or international ones, they all want employees with good English and Chinese skills, and are willing to compensate such people accordingly. That’s why young white collar Chinese, or white collar wannabes, are able to justify paying high tuition rates for premium level private ESL instruction. To them, it’s a personal investment with almost sure-fire returns, much more so than buying equities or putting funds on deposit.
I think that’s a smart investment strategy.
Looking down the road, extrapolating from current enrollment trend lines and forecasting the future size of China’s population of advanced learners of English, it’s not difficult to foresee the day in the not so distant future when the size of this group will surpass the total population of Australia (current population: 21.5 million).