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Chinese Educational

Market Opportunities

Ohana Foundation2004-2005 Snapshot

November 5, 2004 Carlos F. Camargo, Ph.D.

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Content

General Situation Opportunities Challenges Degree/non degree Visa Situation

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General Education System•Nine-year compulsory education system

•Upper secondary education is non-compulsory and lasts three years, with students generally graduating when they are 18 years old.

•National Entrance Exam - Students with high school graduation certificates who wish to enroll in higher education must first pass a strict enrollment exam.

•Kindergarten, primary school, junior and senior middle (secondary) school, and institutions of higher education.

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Chinese Education System

The Chinese education system is composed of• Kindergarten

• 3-6 age• not compulsory, can do JV

• Primary school• begins at 6, continues for six years• compulsory, can not do JV

•Junior and senior middle (secondary) school• begins at 12, continues for six years• junior is compulsory, senior is not

• Institutions of higher education.

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Higher Education

•Higher education is provided by universities and colleges, specialized colleges and vocational colleges.

•Colleges and universities offer four-year undergraduate programs, as well as graduate programs, which lead to Master’s and Doctoral degrees.

•Vocational colleges and some specialized colleges offer two or three-year diploma programs.

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Higher Education Figures

2000 figuresHigher Education 11 million in school 11% E.R.Master-School students 301,000

Plan by 2005Higher Education 16 million in school 15% E.R.Master-School students 600,000

Plan by 2010Higher Education 23 million in school 20% E.R.Master-School students 1,000,000

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Opportunities

ESL, English training programs Corporate and group trainingDistance education, IT and other technologies trainingMBA Programs EMBA ProgramsMPA ProgramsFinancial Program TrainingExchange of studentsExchange of teachersOlympic English

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Market Entry Challenges

• VISAs: If your business plan depends on visas, plan on failing• Finding a suitable local partner can be hard• Regulatory constraints

• Lack of transparency

• Unfamiliar government procedures and policies (Central versus provincial)

• The Chinese market must be viewed as a number of large markets with unique characteristics and opportunities, requirements vary by program and geographic area.

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Joint Degree Programs

China's educational institutions are not only seeking opportunities to cooperate in business management, but also in disciplines such as health care, engineering, accounting, language, and advanced technologies. Even China's State Council and various Chinese ministries are eager to cooperate with foreign institutions wishing to share curricula and deliver joint degree or certificate programs.

MOE issued a new list of 97 approved degree programs (Chinese universities with with foreign and Hong Kong universities) as by December 24, 2003.

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Approval Process for JV Degree Programs

•Find a reputable Chinese partner university

•Chinese university submits the following material to the Academic Degrees Committee of State Council (ADCSC) by the end of May or end of October every year.

•A request to establish a joint degree program;•A cooperation memorandum of understanding and draft agreement signed by both sides;•A feasibility report which should at least include:the necessity, feasibility and background of the program; academic introduction of the degree issued by its American partner university;information of its American partner.•Plan of joint program which should include:.work plan;administration and management;student resources, enrollment scale and method;teaching courses;teachers; .finance and budget.

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MBA & Business Education Market

•Beijing International MBA was the first U.S. MBA program approved by MOE to deliver U.S. degree in China (26 U.S. University consortiums)

• Main competitor is China-Europe International Business School

• For a degree program must have JV can’t do WOFE

•Approval procedures are the same as JV program

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Educational Software• Most common forms are EFL training and examination preparation software.

• A supplementary for regular education. May educational websites offer supplementary material to the middle school curriculum.

• Piracy is a very serious problem. Estimated piracy rate is as high as 96% , resulting in an annual loss of $14.7 billion.

• Encryption- if used to protect IPR content does not need to be registered. Will also allow company to seek criminal damages rather then civil if you end up in court.

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Non Degree Programs

Can be a WOFE in some training areas, i.e., financial training for Bank of China More of a gray area- no real regs Just need local MOE or relevant local ministry approval

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Long Distance Education

•China invested $12 million to develop its web based long distance education.

• 62 million Internet users

• Go West Project• near 1/4 of China’s 1.3 billion people live there• geographic restrictions and poor infrastructure • lack of qualified teaching staff and modern curriculum• Government is relaxing regulations in order to attract foreign capital

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Olympic Need

• Beijing won the bid for 2008 Olympics

• Need at least 100,000 volunteers to have English ability by 2008

• $ 500 million English & EFL training market

• 600,000 people attend English training courses every year

• Beijing Municipal Government has “Beijing Citizens Speak English” Campaign

• Beijing has 3.12 million English-speaking-population

•By 2008, Beijing will have 5 million English-speaking-population

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Special Needs Education• China has a total of 20 million children who need special education.

•China has 1,535 special schools in which 358,400 youngsters and adults who have physical or mental problems are enrolled.

•The schools have pre-school, fundamental, vocational and higher education programs.

• Training a physically disabled or mentally retarded teenager costs an average of 4,000 yuan (US$482) a year; while training a non-disabled teenager costs 1,200 yuan (US$145) annually.

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How to approach market

Do due diligence twice before entering market-- then do it again.Locate good & reputable partnerAttend educational & industry fairsHold presentations and seminarsLocal representative officeSandwich programs Visit as often as possible

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VISAS- HUGE PROBLEM• Get free, accurate information on applying for a student visa. Visit the U.S. Embassy web site (www.usembassy-china.org.cn).

•Law status guilty until proven innocent

•Student must be thoroughly prepared.

• Answer that questions asked. Don't give a prepared speech.

• Tell the truth.

• Ties to China

• FE Database

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Summary

China is a difficult marketVisas are huge issueLots of competitionNot everyone is making money- need long term outlookDO DUE DILLIGENCE