Huge funds go into online education in China as competition heats up

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On the arrival of Chinese New Year, online education platform 17zuoye announced that it has raised a series D round worth US$100 million, bringing the company’s total valuation to US$600 million. This latest injection of big money into Chinese online learning is indicative of the tremendous growth in this field in China.

The trend took off in 2013 when 91Waijiao, a learning platform that connects Chinese of all ages with foreign English teachers, received $4 million in funding from the Chinese internet company Netease and online education company Alo7 received millions in funding from American chipmaker Qualcomm. Since then the online education market in China has simply exploded.

2014 kicked off with a bang when online education platform and English-learning institution TutorGroup received a huge financial injection of $100 million from, amongst others, e-commerce giant Alibaba. Alibaba also offers online courses on the educational arm of its e-commerce marketplace Taobao.

The Chinese search giant Baidu also has a stake in the online education sector in China. The company has invested millions of dollars in Wanxue, online education company that specializes in prep courses for post-graduate entrance exams and civil service exams.

Another big Chinese internet company active in the online education market is Tencent, China’s second largest internet company. The company has its own online courses platform that is built on top of its QQ IM system that lets users do live courses right in its chatting service. In addition, Tencent is investing big in online education. In July 2014 TechNode reported that Tencent had established a joined venture with New Oriental Education & Technology group, a huge player in private education in China.

Around the same time last year a learning site based on a completely new concept was launched in China. KuZueXi is a non-profit that gets students to make its educational videos. The site is aimed at younger people who want short, snappy learning snippets of about five minutes long.

Getting back to 17zuoye. The online platform, which was founded in 2007 provides services to teachers, students and parents and focusses on English and Math classes. Tech in Asia reports that the online platform has seen explosive growth with a student base that has grown to 7 million from just 1 million two years ago – in July alone, the site added more than 130,000 students to its services.

Looks like the competition in online education in China is intensifying. It’s a huge market though. There should be enough scope for more than two or three big players.