K-12 education and training industry in China is mainly composed of three market segments: after-class tutoring,quality education, and English training. According to Oliver Wyman data, from 2017 to 2019, the average annual growth rate of the K-12 education and training industry market in China was close to 30%. In 2019, the market scale of China’s K-12 education and training industry has exceeded RMB800 billion, of which the after-class tutoring segment accounted for about 60%, and the market scale was about RMB470 billion; the scale of quality education and English training segments was about RMB250 billion and RMB80 billion respectively.
Affected by the pandemic in 2020, a large number of schools and classes in the industry will be closed. It is estimated that the overall market will suffer a huge loss in 2020, shrinking by 50% to about RMB400 billion.
In such a harsh environment, an education and training institution has strung up. According to the latest third-quarter performance forecast of Meten EdtechX Education Group Ltd. (NASDAQ: METX) (“Meten EdtechX” or the “Company”), the business of its Junior ELT/ K12 segment is booming in the post-pandemic period. Meten EdtechX found that customers have started to re-enroll in offline learning centers and online junior English training. Due to the pandemic, the income available to adult customers has declined. Therefore, the number of people enrolling in junior training is much larger than that of adults. In the third quarter of 2020, the gross billings from junior ELT are up 89% compared to the previous quarter (Q2 2020).
In the pandemic, most K12 institutions have gone through a stage of high cost and low efficiency. Meten EdtechX can easily cross this stage by using existing enrollment channels and classroom space. Meten EdtechX makes full use of the teaching venues of many offline centers across the country and the existing marketing scale advantages to quickly start multidisciplinary enrollment at low cost and complete the start of K12 tutoring. It is worth noting that, the company started the research and development of the competitive product for middle school students-“Bigao” as early as March 2019. For this product, Meten EdtechX completed 46 textbooks with a total of over 10,000 pages, and held nearly 100 teachers onboard and service training.