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The 'Vocational Training 4.0' Era Arrives in China
COVID-19 and China
Image credit: Shubham Sharan/Unsplash

Launched in 2016 and developed by Xian Ruisheng (西安睿晟教育科技), Danglaoshi (当老师) is a platform providing online and offline vocational training programs to teachers. The company started its business with teacher certification programs, providing vocational education to help candidates to prepare for the National Teacher Certificate Examination (NTCE).

The vision of the teacher training institute is to build a one-stop platform that meets the customers’ needs in exams, employment and personal development.

At present, it has expanded its business categories to provide a bulk of related training programs and courses throughout the career path of teachers, encompassing certification exam preparations, interview training, pre-service training and post-employment education.

The programs are provided in a variety of forms, including self-learning app ‘Danglaoshi,’ online practice, small-group courses and offline tutorials.

Favorable policy in China’s teacher training market makes a favor to Danglaoshi’s business

The continuously soaring number of registered candidates for the (NTCE) in the past years shed a light on the area of opportunity being explored by Danglaoshi.

According to Essence Securities (安信证券), the figure was only 2.6 million in 2016, while it turns out that this has reached 9.0 million in 2019, representing a staggering Compound Annual Growth Rate (CAGR) of 51.2%.

Potential reasons for the sharp increase in the number of registered candidates – and thus, projected rising demand – may lie in two aspects:

1. Two rules filed by policymakers in 2018 regulated the qualification of teachers in various training institutions.

One specifies that “teachers occupied in training institutes should have corresponding qualification certificates,” the other put forward that “Online training agencies should follow the same specifications as their offline counterparts, and teachers must publish their qualification certificate’s number.”

2. The passing rate of NTCE has fallen from 50%-60% in 2015 to 30% in 2019, according to Essence Securities, which enhances the necessity of relevant training.

Inspired by the feel-good factor in the market, Danglaoshi adopts a ‘High Volume Low Margin’ strategy to quickly acquire users, then convert them into regular customers. The platform provides low priced offers for certain online projects, like writing exam preparation courses for NTCE priced at CNY 198; the interview training program costs CNY 498.

Up to now, the total number of historical purchases of the above two ‘special offer’ courses has exceeded 100,000. Meanwhile, the Danglaoshi app has attracted millions of registered users.

With the user pool it accumulates, the teacher training startup targets on improving retention rates, and promoting the more profitable projects, such as official staffing recommendation exams and pre-service training.

Besides, Danglaoshi also launches recruitment services for training institutions, bringing them the appropriate candidates, and then trying to provide further services targeting career development for the hired people.

Song Ci (宋词) – CEO of Danglaoshi – noted during an interview with 36Kr that, due to different regions tending to vary in their speed in responding to the policies, he projects that the dividends brought by favorable regulations will continue to be released over the next three to five years.

The CLV-Focused Vocational Education 4.0 in China

Vocational education in China has gone through several stages, and is now stepping into a 4.0 version which emphasizes user experiences and results.

In the very beginning, the phenomenon of ‘rural flight’ in China gave rise to skyrocketing demand for vocational training, which enables the market to take shape domestically.

Since then, booming Internet traffic in China has spurred a shift from offline to online education.  Meanwhile, the continuous expansion in university enrollment triggered employment pressure and training needs among college students. These brought the market to a 2.0 stage.

Afterward, the wildfire spread of Internet access across China spawned a bunch of online education platforms that treated Internet traffic management as their core competency.

This was followed by a slowdown in China’s Internet traffic growth, which caused the margins involved to diminish. Similar to most of the other online service providers in the country, the vocational training players gradually shifted their minds from acquiring users to customer maintenance, i.e., increasing Customer Lifetime Value (CLV).

In doing so, business under vocational training 4.0 enhances service and brand image building, seeking to provide comprehensive services based on users’ needs in different stages throughout their careers.

According to Mr. Song and the 58 Industry Fund, this 4.0 era has already arrived.

Its advantages are obvious. The post-service vocational training period tends to be much longer compared to the pre-service ones – typically between one to two years. Besides, the majority of people are in the most intensive and fastest-paced stage within the first five years after employment.

This gives rise to the demand for professional skills development and career re-planning services. Therefore, extending the service cycle to the same user group, helping to dig their needs in the post-service period, could possibly elevate CLV, improve retention rates and form a well-established brand image.

Narrowing down to teacher vocational training scenarios, 58 Industry Fund projected that if the service cycle could be extended to also cover five years post-employment – on top of the one to two years pre-service period – the average CLV would be nearly CNY 20,000. For more skills- and experience-driven occupations like product managers, the number could be accelerated to CNY 25,000.

Compared with the practice under the 3.0 model that only focused on earning quick money through promoting ‘selling like hot cakes’ programs which barely secure retentions, the 4.0 model – with emphasis on CLV – clearly helps players to gain a higher market recognition.

Editor: Luke Sheehan

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