2 out of 3 households enroll kids in extra curricular education

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Parents willing to spend more money than ever

Growth in prosperity; the two-child policy; 30% of the population being under 24 years of agechanges in education regulationsChina marches toward building a service economy where education will remain the deciding factor amongst a highly competitive workforce. So where can you as an exporter set in?

Interesting market outlook

Although the Chinese education market is worth around an impressive EUR 260 million, the areas of education open to foreign investment, overall, are still limited. But the import of non-academic training-related since has been on the rise since ‘non-academic vocational skills training was removed from the Negative List in 2015. Apart from the heavily-controlled schooling segment, the remaining segments of the China’s education market are open to joint ventures and wholly-foreign owned enterprises. 

The Chinese seem to like it. The Chinese education sector is highly competitive, with 9.4 million students sitting each year for the university admission exam (gaokao) and C9 universities selecting as few as 50,000. Parents will spend to get an edge, generating hyper-competition from pre-primary school.

Currently, 370,000 children (growing around 12% p.a.) of which 66% are Chinese nationals are enrolled in international schools. Since a Chinese household spends upwards of EUR 6,500 p.a. on extracurricular education for their children, the market today is already substantial.

Segments and competition to consider in the education industry

Market entrants will primarily focus on:

  • English language training
  • Bilingual K-12 (kindergarten to 12th grade) 
  • Test prep, tutoring and enrichment
  • Higher and vocational education

And they will be matched by a considerable number of international companies already in the market, such as:

  • 17ZuoYe, VIPKID, Yuanfudao, and ZuoYeBang within primary and secondary online education (homework tutorials, vocational schools, and English education);
  • Koolearn,  GEDU, and Offcn Education within test-oriented education focusing on examinations such as CET-4, CET-6, TOEFL, IELTS and Civil Services Examinations; and
  • FenBi, HuaTu Education, and ChinaACCA within vocational education and skills training including technology, accounting, finance, and other professional skills.
Establishing education as a foreign entity

Foreign companies in the education market are required a legal entity status in China; a good credit rating score (not on the ‘black list’); and a legal representative being a citizen of China who exhibits good credit, no criminal record, and possesses civil capacities and political rights.

The initial stage involves registering for a business license from the Department of Industry and Commerce which involves an online registration process. You will need:

  • An application describing the founder, purposes, scale, level, form, conditions, interior management system, financing and management, etc.;
  • Founder’s name and domicile address; and
  • Sources of the assets, proof of the funds, which shall clearly include the property ownership.

Market entrants have three options to successfully establish a training centre in China: The Variable Interest Entities (VIE) structure, consulting Wholly Foreign Owned Enterprise (WFOE), and the training WFOE (the latest and preferred option). The training WFOE involves is the establishment of a directly-owned training centre as a WFOE or a domestic subsidiary of a WFOE. It is the more favourable option because option involves fewer agreements, fewer risks in money flow, saves time, and is under direct control of the foreign owner.


Significant up-take of foreign training services in China. Yet, the competition follows.

Narrow in your focus on English language training; bilingual K-12 training; test prep, tutoring and enrichment; or higher and vocational education.

Training WFOE would most likely be your preferred legal structure.

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