Always learning, Pearson expands its China footprint by complying with the policy reform

About 20 years ago, Pearson as the newcomer in China’s education market was seeing the same untapped opportunities as other overseas companies that the country started to embrace overseas capitals, boosting the demand for English learning contents. But at that time customers have less brand awareness, therefore, many overseas publishers regarded licensing as the easiest way to enter the Chinese market. New Concept English, the most influential off-campus English textbook series among China’s 80s and 90s generation, was co-published by Foreign Language Teaching and Research Press and Pearson China in this context.

“But the time we really started to plan the macro business map in China should be ten years ago.” Said Joe Lam, Pearson’s Managing Director of the Greater China and India Hub. Now, Pearson China has already set a product chain covering all the learning stages of an individual’s life from K12 to vocational learning while traditional publishing companies are still seeking the way to digitalization.

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Mobile learning was almost not available in China when Pearson decided to officially set foot in this market. Formal in-class learning with textbooks was still the main approach for students and there were limited access to multimedia teaching aids served as a way to support teaching, such as CD-ROM. “5 years ago was a time pivot,” students went out schools for extracurricular learning and m-learning has ushered in its burgeoning age, which was not only a huge change for the global education industry but also sparked the digital revolution of publishing companies.

“Digitalization is not our goal, but just a means,” and “service” is the key word that Joe emphasized during the whole interview: “Our long-term goal and the top priority is to provide customers with learning products spanning from K12 stage to lifelong learning with high-quality service.” Meeting diverse learning demands is the business core of the entire Pearson Group. Joe also believes that although there are many different brands of mobile English training apps, the contents are always quite similar and the difference just lies in the service. For instance, students can choose to learn from a foreign teacher, a Chinese teacher or AI teacher.

At the initial stage, Pearson China regarded M&A as one of the strategies in the market. “But it doesn’t mean you can cover all the services just by buying companies in different sectors.” Said Joe, so Pearson sought another path, by doing its utmost to deep dive into the market research and find out Chinese learners’ real demand.

Currently, Pearson Group has released White Paper worldwide, analyzing learning data to support education service offerings to students in different regions. “Global Research depicted a comprehensive market landscape but in China, we need to put more effort as we see the country’s ambition to become the world leader with regards to overall education quality” Said Joe.

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In the short term, Pearson China has moved forward its research in several aspects including policy analysis, students’ requirements and teachers’ experience.

When new policies are laid out, adapting the business strategy accordingly is also one of the secrets of Pearson China’s success. In a country rife with regulatory risk, Joe and his team know that the government’s maximum effort to deepening education reform will bring about lots of untapped potentials.

In the past two years, the Chinese government has tightened up the introduction of overseas textbooks in campus and after-school tutoring institutions, which has been a heavy blow for the related players in K12 sector. Although Pearson still runs the publishing business, the regulation has not had strong impacts owing to its core education concept: “we emphasize ‘efficacy’ to improve students’ all-rounded learning ability through Pearson’s products as opposed to the exam-orientated and rote-learning model adopted by the majority of K12 institutions.” The target of this oversight action is revolved around after-school tutoring market which is not Pearson’s primary business.

Conversely, Pearson China grasps the infinite opportunities of developing competency-based learning and vocational education advocated by the policy reform. Apart from diving into STEM education, “1+X as a new model has also shown us a new direction of business expansion.” China’s “Belt and Road Initiative” spurs a surge in demand for skilled professionals and top players in this field are already eyeing this market. Joe said that the assessment standards they developed are based on the Chinese market’s needs. “We are also planning to promote the standards to other countries involved in the Belt and Road Initiative in the future.”

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At present, Pearson China has a product matrix serving multiple educational tracks, which also credited Joe for his adjustment of Pearson China’s department structure in 2017. Prior to this, Pearson China mainly focused on English language teaching resources. But since then, in order to enrich the diverse experience of learning activities, Joe has recruited more talents being expert in AI and product developing based on the Chinese customers’ learning habit. He believed that the structure of the whole team can address the possible challenge in the short term and new adjustments will be made by 2022, according to the Chinese political reform within a 5-year period.

Challenged by the higher education market in North America, the revenue of the entire Pearson Group in these years has shown a decline but the branch of China is witnessing a healthy growth rate of 5% to 8%. Although running smoothly, Pearson China’s language training attempts during the past decade has been highly concerned.

As we mentioned above, in 2008, Pearson Group acquired Dell International English, marking this world’s leading education company’s official entry in China’s English training market. After that, Pearson has successively acquired Wall Street English and Global Education(for IELTS Training), accelerating its footsteps in building a product chain covering all learning stages. But these brands were sold again just after few years, and Joe has talked about this decision from two aspects.

One the one hand, this is a process that Pearson has to experience on finding out what works in this complicated market, “we realized the importance of the market conversion rate. From an investment perspective, it is reasonable to make such a decision on divesting businesses that impedes our footsteps.” Said Joe. On the other hand, the outcome indicates the shift in Chinese students’ English learning approaches and purposes. The demand for adult English training has dropped year by year because of the continuously increasing English proficiency of university graduates. Moreover, learners would prefer to sign up for skills training targeting specific industries. “In the future, we may not stop M&A but will for sure consider more about the company’s future value added to our business.” Said Joe.

At last, Joe reminded: “China’s capital market has already cooled down and investors in EdTech space are becoming more rational in the last couple years. Local providers may not have the most advanced technology but the country has been taking a lead in digital education and mobile-learning.”

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