THIS MATERIAL IS A MARKETING COMMUNICATION.
Transformation of China’s Education System
Ongoing Digitalization of K-12 Education Systems
China is one of the largest K-12 education systems in the world with 225 million K-12 students (National Bureau of Statistics (NBS), as of 2019). The nation’s education system has been in the process of rapid digital transformation in recent years with strong support from the government. More specifically, the Chinese government aims for teaching and learning apps to cover all teachers and students, and digital campus to cover all schools by 2022. It also requires local governments to spend at least 8% of their education fiscal budgets on education informatization (Ministry of Education of the People's Republic of China: Education Informatization 2.0 (2018-2022), April 2018).
Source: iResearch, Nov. 2019
Increasing Penetration of Education Software
We believe educational software and digital educational resources will be a key investment focus in the Education Informatization 2.0 stage. Only 57%/64% of China's Grade 1-12 schools used smart in-school classroom solutions in 2019/20, according to Frost & Sullivan (Dec. 2020). By 2025E, 154k out of approximately 200k, or 78% of Grade 1-12 schools in China will use smart in-school classroom solutions (as estimated by Goldman Sachs, Dec. 2020).
Beyond in-school classroom solutions, software and cloud-based technologies like real-time communication technology-supported livestreaming has also been transforming the after-school tutoring industry. During Covid-19, students and teachers started to adopt these immersive online channels and technologies extensively.
Despite the government’s support, we note several hurdles that might prevent education software to scale up quickly like other SaaS (Software-as-a-Service) products:
- China’s education industry remains very fragmented with more than 400k education institutions, among which more than 99% are long-tailed with annual revenues below Rmb100mn. (Mirae, 2020)
- Each province has different curriculum and examination systems, which diverse needs by both teachers and students for course preparation, evaluation, study support, etc.
- Education IT procurement for elementary/high schools is highly localized and centralized, as decisions are made by local education bureaus. Therefore, it requires massive amount of sales resources/channel partner network in order to penetrate into a large number of end-customers.
Major Verticals of Education Software
For smart in-school solution software, products could range from class preparation and delivery, homework assignment and evaluation, and student performance tracking and analysis for teachers, to online quiz library, homework submission and personal strength/weakness analysis for students, and day-to-day learning progress supervision for parents. In fact, mobile apps that focus on providing smart in-school classroom solutions have become the 2nd largest app category in the most popular apps for Grade 1-12 students in China. (Analysys, Oct.2020)
Other popular software includes question search/question banks that aggregate nationwide exam questions by subjects and provide a one-stop solution for students across different provinces, English speaking and reading assessment and many others.
We believe the continuous penetration of education software cannot happen without the support of technology development in major areas of Artificial Intelligence such as speech/voice recognition, computer visioning, machine learning, etc.
For example, speech recognition, an authentication technology that decodes human voice and processes into a written format, has already been used by many education software/hardware companies in multiple scenarios. It can help assess and harness students’ oral English skills by letting students listen to text read aloud by a computerized voice and follow what is being read on the screen, and make teachers’ in-class teaching into transcript content.
Optical Character Recognition, the use of technology to distinguish printed or handwritten text characters, is also the major underlying technology behind many question research apps.
Staying Ahead with Mirae Asset’s Latest Insights
Disclaimer & Information for Investors
No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.
The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.
Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.
Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.
The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.
A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary/.
The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.
Hong Kong: It is intended is for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Singapore: It is not intended for general public distribution. The investment is designed for Institutional investors and/or Accredited Investors as defined under the Securities and Futures Act of Singapore. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Monetary Authority of Singapore. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction.
Australia: The information contained in this document is provided by Mirae Asset Global Investments (HK) Limited (“MAGIHK”), which is exempted from the requirement to hold an Australian financial services license under the Corporations Act 2001 (Cth) (Corporations Act) pursuant to ASIC Class Order 03/1103 (Class Order) in respect of the financial services it provides to wholesale clients (as defined in the Corporations Act) in Australia. MAGIHK is regulated by the Securities and Futures Commission of Hong Kong under Hong Kong laws, which differ from Australian laws. Pursuant to the Class Order, this document and any information regarding MAGIHK and its products is strictly provided to and intended for Australian wholesale clients only. The contents of this document is prepared by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Australian Investments & Securities Commission.
Swiss investors: This document is intended for Professional Investors only. This is an advertising document. The Swiss Representative is 1741 Fund Solutions AG, Burggraben 16, CH-9000 St. Gallen. The Swiss Paying Agent is Tellco AG, Bahnhofstrasse 4, CH-6431 Schwyz. The Prospectus and the Supplements of the Funds, the KIIDs, the Memorandum and Articles of Association as well as the annual and interim reports of the Company are available free of charge from the Swiss Representative.
UK investors: This document is intended for Professional Investors only. The Company is a Luxembourg registered UCITS, recognised in the UK under section 264 of the Financial Services and Markets Act 2000. Compensation from the UK Financial Services Compensation Scheme will not be available in respect of the Fund. The taxation position affecting UK investors is outlined in the Prospectus. This document has been approved for issue in the United Kingdom by Mirae Asset Global Investments (UK) Ltd, a company incorporated in England & Wales with registered number 06044802, and having its registered office at 4th Floor, 4-6 Royal Exchange Buildings, London EC3V 3NL, United Kingdom. Mirae Asset Global Investments (UK) Ltd. is authorised and regulated by the Financial Conduct Authority with firm reference number 467535.
Copyright 2023. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.