Course in 'cannibalism' a steep learning curve

'Cannibalism'

As more small institutions enter the market and struggle to survive, competition is becoming increasingly fierce.

Yu Minhong, founder and CEO of New Oriental Education and Technology Group - one of China's most successful fully accredited educational institutes - referred to the competition as "cannibalism" at the 2013 Summit of the Private Educational Industry.

Training institute staff members deliver ads for post-school courses to students in Fuyang, Anhui province. Hei Bai / for China Daily

"This typically Chinese mode of thinking has resulted in the bloody collapse of many training institutes," he said.

Yu used the growing trend for expensive "customized" training courses to illustrate his point. The profitability of this sort of course, where fees are much higher than those for traditional teaching, has seen the number of providers mushroom as newcomers jump on the bandwagon en masse.

The result is that few establishments are able to make a profit and many are forced to close. Sometimes the owners abscond without reimbursing the students.

"The competition is becoming increasingly fierce because there is almost no difference in the products being offered by the various players. The biggest difference is the teachers," said Margaret Yang, a former partner of a training institute in Nanjing, who has worked in the industry for seven years.

She said a lot of training institutes are trying to fight their way out of this "homogeneous" competition, but it's difficult. "The teachers are the most important factor. It usually takes us two years to cultivate an excellent teacher, mostly English graduates from China's top universities."

"Unlike the manufacturing industry, where production can be expanded simply by using more facilities and equipment and employing workers who can improve their skills quickly, the expansion of a training institute requires good talent and careful management," she said.