Online English education sector records 168% growth but challenges remain

Online English-language courses for children saw an explosive growth in 2018, according to a report released by data-monitoring firm Trustdata on Tuesday.

The report on China's online English education market for children shows that the market had more than 15 million users last year, up 168.3 percent year-on-year. It's expected that the market size would surpass 50 billion yuan ($7.3 billion) in 2019.

The market pattern of one-on-one teaching has been gradually formed and the top brands have secured the lion's share of the market, as per the report.

Market size doubles in one year

The market size of online English-language education for children was 21.3 billion yuan in 2018, an increase of 104 percent year-on-year, with one-on-one teaching taking up more than half of the market size. The online users double from 5.7 million in 2017 to 15.3 million in 2018.

Insiders say as Chinese parents increase their spending on education, online education gets more recognition and China's internationalization progresses, online course users will keep growing, The Beijing News reports.

The report echoes their opinion. Data from the report shows that the penetration rate of online education rose from 0.8 percent in 2015 to 9.1 percent in 2018, up 11 folds within four years. It's projected that the penetration rate will reach 12 percent in 2019.

New users go for top brand

Data from the report shows the market share of VIPKID is 68.4 percent, followed by 51Talk (11.6 percent), DaDa English (7.8 percent) and vipJr (5.7 percent).

More new users choose VIPKID among all online English education brands. Since September 2018, 70 percent of all new users were snapped up by VIPKID.

There is also significant difference between VIPKID and other brands on user activity. Since early 2018, the monthly active users of VIPKID have risen while other brands didn't see much growth.

People in first- and second-tier cities take up 65 percent of all paid users, becoming a major force in online English course market for children. The number of users in third- and fourth-tier cities is growing.

Quality of foreign teachers a challenge

The quality of foreign teachers is a key factor when parents choose English learning platform. The foreign teachers of China's online English education brands mainly come from North America, Europe and Southeast Asia. All of VIPKID's 70,000-plus foreign teachers are from North America; while 69% of 51Talk's foreign teachers are from Southeast Asia.

As different brands fight for foreign teachers, the recruitment, high salary and staff mobility will become a challenge, industry analysts say.