Online education industry in China is growing rapidly. The number of companies entering the market with new innovative ideas is increasing day by day. 

What is the future of online education in China?

Many things have changed in China since the economic boom. No one expected online education to reach the heights it has reached now, because usually in China people tend to prefer the traditional education system. After the economic boom, a lot of industries got modernized, the education industry is one of them. So we can say that the vertical change in online education in China came after 2008. 

Almost every industry in the near future will be supported by artificial intelligence. AI is playing a huge role when it comes to online education. Companies like Liulishuo are playing the role of a villain for traditional education companies like EF (Education First) and institutes by providing high-quality education, personalized education, and most importantly low costs.

Chinese parents have very high expectations from their children when it comes to studies, they are willing to pay the price for a higher quality of education. K12 education quickly became the most active online education in China with over 200 million users every month. Nowadays, the most active mobile app for online education is Zuoyebang, which helps secondary school students with their homework. But a new trend in online education is now booming: STEM (Science, Technology, Engineering, and Math). Parents should give their children this online formation to make them learn about coding and robotics since a young age, though it costs RMB 200 (USD 30) per session.  

The future of online education looks promising than ever and will grow even larger in the coming years. This market will have countless opportunities, be it university graduates, businessmen, children or just people trying to improve their skills. Especially in fields like science technology and learning English, as these are the skills that the students will be required when they enter the job market.  

Is Luilishuo the leading online Artificial Intelligence education company?

Luilishuo is an artificial intelligence-driven educational technology company founded in September 2012 by Dr. WANG Wei (王翌), Dr. HU Zheren (胡哲人), and Dr. LIN Hui (林晖). It offers a personalized and adaptive language learning experience to 50 million learners in 379 cities in China and over 175 countries around the world Crunchbase reports. Its self-developed artificial intelligence English teacher, based on deep learning technology, can provide personalized and adaptive learning courses for each user.

In my opinion, online education or artificial intelligence should focus more on helping the teachers rather than replacing them for now. AI, for now, is only suitable for one on one classes. AI should focus more on working the basics and take care of the lower order tasks. But Artificial intelligence is supposed to be intelligent and doing lower order tasks will seems to ignore the importance of AI altogether.

Liulishuo has been doing well financially but for them to be on top in the online language learning industry they should focus more giving a helping hand using the AI rather than completely replacing the human factor from the online education industry. Artificial intelligence isn’t advanced enough right now to have emotions or feeling and in the education industry, emotions or feelings of a teacher do have a positive effect on the student.

How is Luilishuo doing financially?

United States Securities and Exchange Commission reports that Luilishuo’s net income for the fourth quarter of 2018 was RMB 224.5 million, and a net loss of RMB 163.4 million. The net income and net loss for the whole year of 2018 were RMB 637.2 million and RMB 488.1 million respectively. 

According to the same record in 2018 the complete cash income was RMB 986.6 million up by 215.2 % from the previous year’s RMB 313 million. The gross profit margin in 2018 was 72.6% which was up by 7.4% of 2017’s 65.2%. The annual loss to income ratio narrowed from 146.63% in 2017 to 76.59% in 2018.

Liulishuo said that as of December 31, 2018, the ever-increasing number of registered users exceeded 110 million, and the total number of paid users in 2018 was around 2.5 million. In 2016, Liulishuo said that the self-developed AI English teacher was online, marking the beginning of commercialization. In the past two years, the rapid growth in the number of registered users and paying users have proven the effectiveness of Liulishuo in attracting new users and turning them into paying users through free services. According to them the registered number of users and the paid users number increased by 80.5% and 201.1% respectively.

According to its prospectus, this Shanghai-based firm incurred a net loss of around $26 million due mostly to marketing and R&D expenditures. The firm claimed it’d keep losing money as a result of continued input into these two areas.

The company further added that in 2018, the annual R&D cost was RMB 155.2 million, which was an increase of 191.1% over 2017’s RMB 53.2 million.

Wang Wei said: "We are committed to improving proprietary AI technology, providing innovative and differentiated products, creating a personalized user experience that continuously enhances user engagement and improves learning effectiveness and efficiency."

In addition, he said that the expected income for the first quarter of 2019 will be in between RMB 240 million to RMB 260 million.

The Use of Artificial Intelligence 

Luilishuo, the company itself claims that it has the world’s biggest database of Chinese who can speak English. Based on the database Luilishuoo has created a Chinese-speaking-English recognition engine which provides users with ratings and feedback. The courses were launched in 2016 and boast around 50 million registered users reported CNBC. 

At the 2018 “China Stanford education forum expo” in Stanford University, when the founder of Liulishuo was asked by the host from Owl Ventures, whether he had gone through any difficulties or doubts on his way to entrepreneurship, Yi gave an honest answer. "Yes, there used to be a hard time," he said. "When I at first had the idea of bringing AI to language learning, AI was still an unfamiliar concept to the public. It was not easy to convince the capital of the prospects of AI. Read more on this here.

AI teaching can triple learning efficiency, CEO and Founder Wang Wei, former Google product manager, told CNBC on the sidelines of the Morgan Stanley Tech, Media & Telecom conference in Beijing. He further added that Luilishuo plans to add more languages and build “the most intelligent and efficient AI language teacher”.

Though future with AI is unforeseen, As James Barrat, author of Our Final Invention: Artificial Intelligence and the End of the Human Era, says “we as humans are so successful not because we are the strongest in the world or the fastest, but because we are the smartest. So when there is something smarter than us on the planet, it will rule over us on the planet”.

Will AI devices such as Google translation headphones and other advanced AI translation apps/devices affect the online language learning industry?

They will to an extent, but on a very minor scale. These devices are mostly for senior travelers in other countries but I don’t think they will be able to replace the whole online education industry. The ministry of education will not remove the English language class from the curriculum and these devices will not help students pass exams.