Article / 12 June 2015 at 4:56 GMT

Latest Chinese P2P apps are all talk

China Watcher / Shanghai
China

  • English proficiency is a key differentiator in China
  • However, the quality of English education in public schools is poor
  • A number of P2P English apps have been launched to address this

By Neil Flynn

Proficiency in the English language is an essential skill for China’s huge labour force, with adults willing to pay a lot of money for classes, and parents desperate for their child to have an advantage over their classmates. 

For those wealthy enough, many parents send their children to overseas universities for undergraduate and graduate studies, and for the lucky few, to middle school and high school. The problem is that for the vast majority, the exorbitant international student fees are too expensive, so parents have to find a more cost-effective way of helping their child to learn English.

The problem in China is that the quality of English education in public schools is poor. Students almost exclusively learn grammar in order to read and write, but spend very little time on practising speaking and listening. During my university days in the UK, I had Chinese classmates who would score very high marks in exams, but would struggle to have a basic conversation in English. 

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All adds up ... many expats teach English to Chinese students but
it can work out to be very expensive. Photo: iStock

In major cities such as Shanghai, the growing expat community has exploited this opportunity. Alongside their normal jobs, many expats teach English to Chinese students. A standard one-on-one English class in a casual setting such as a Starbucks would cost a Chinese student RMB 200 an hour. Likewise, if a Chinese student wants to learn a different European language, such as French or Spanish, the cost is even higher, due to the smaller number of native speakers in China. 

While the cost is very high, many Chinese students are willing to pay for these informal classes. Not only do they get speaking and listening practice with a native or fluent speaker, but they also learn about Western culture.

TutorGroup launches expert On-demand service


TutorGroup is an Alibaba-backed language learning firm that runs several services, including VIPABC, which has been heavily marketed for several years in China with former NBA player Yao Ming. The company has diversified away from the standard classroom learning environment by hosting yoga and cooking classes in English. It has also recently launched a peer-to-peer (P2P) service called Expert On Demand, which allows users to connect with teachers from a relevant background. 

For example, if students are lawyers and want to improve their professional English vocabulary, they can find a user with a background in law that is willing to teach a class. As the user base grows, a user can not only learn English, but become a teacher by offering professional English classes to users, at a price of between RMB 90 to RMB 110 RMB.

The concept is certainly sound, and for professionals wanting to improve their job-related vocabulary, the price is cheap. However, the problem for TutorGroup is finding teachers that are willing to give lessons. I find it difficult to believe that a well-paid lawyer would be willing to give English lessons in their free time for a fee that is likely to be very small relative to their salary. 

The adult English market has also declined notably over the past five years as the quality of adult English has improved. New Oriental Education has seen its revenues from Adult English classes fall substantially, and this is a common theme throughout the industry.

51Job takes on the big players

Typically, most technology-based industries in China are dominated by the BAT trio of Baidu, Alibaba and Tencent, who have an oligopolistic control over China’s smartphone adoption boom due to their financial strength. 

I have previously discussed how Tencent has partnered with leading education firm New Oriental Education to launch an English-learning app called uDA that helps students prepare for the university entrance exams. However, the problem with the app is that it helps students to pass exams based on the current standard of English teaching in China, rather than improve the quality of teaching.

Tencent's and New Oriental Education's English learning app uDA
Tencent's uDA App
 





















Source: Tencent

51Job is a job listings website in China that has grown in popularity over the past few years, despite Western firms such as eFinancialCareers and LinkedIn entering the market. The firm has recently launched a new P2P English language-learning app that has been heavily advertised over the past few weeks, called 51Talk.

Classes range from RMB 8 to RMB 15 for a 25-minute class, which is substantially cheaper than the RMB 200 for a one-on-one class with Western expats in China. Classes can be conducted over Skype or through Tencent’s popular messaging service QQ, which means that the classes are purely focused on speaking and listening. 

Users can select a teacher based on the time that they want to take a class (left), and can listen to the teacher’s introduction and book a class on the teacher’s profile page (right). 

51Talk's Teacher Search


























Source: 51Talk

The reason for the low price is that 51Talk uses teachers from the Philippines, who themselves are mostly university students or call centre workers. Each teacher has their own profile page, with a recorded message to introduce themselves and their teaching style. This helps students hear the quality of the teacher’s English, and helps them choose which teacher to use. In terms of the quality of the English, it is certainly good enough for the majority of Chinese students.  

The quality of English in China has improved over the past few years, as people have greater access to foreign TV shows and films. In addition, the growing number of Chinese students that attend university overseas will only help to improve the average level of English in China. 

However, this means that in order to differentiate themselves from their peers, students will need to work even harder to improve their English level. Apps such as 51Talk will be vital for this, and given the low price, it is certainly a cost-effective way of learning the language.

– Edited by Gayle Bryant

Neil Flynn is a portfolio manager at Alcuin Asset Management. Follow Neil or post your comment below to engage with Saxo Bank's social trading platform.
4y
moat888 moat888
Did you go to Alibaba's analyst day in Shanghai last week? Any thoughts?
4y
coolgilr43 coolgilr43
This article really has true points especially in the english proficiency of most Chinese. I take chinese lessons on skype at http://preply.com/en/chinese-by-skype and it's really obvious how they speak differently.
4y
Neil_Flynn Neil_Flynn
To be honest, i rarely have time to go to analyst days
4y
moat888 moat888
The reason I asked was because it looks like management guided down their top line growth rate as wells as warned heavy spending will continue in 2015, meaning pressure on margins, so the stock sold off heavy last week.

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