BDA-淡马锡中国教育市场洞察研究China's Education Industry-20151130

Confidential©BDA2015CapturingtheChineseConsumptionOpportunitythrough2020

PartV:Deep-DiveStudyofEducationIndustryinChina2TableofContentsSummaryDemandSideAnalysisSupplySideAnalysisEmergingOnlineModelsDemandSide:ParentsareallocatingmorespendingtoK12after-schooltutoring;teachingqualityremainsthekeyconcern,whichismeasuredbyprivateschools’reputation,examskillsinthetutoringandlanguagesectors,starteachers&jobreferencesinvocationaltraining3EnrollmentDynamicsSpending&DecisionMarketingDynamicsK12:Enrollmentsforpublicschoolshaveslightlydecreased;enrollmentsforprivateschoolhavewitnessedstablegrowthduetothecurrentsmallbase.LanguageTests:Participantsfordifferentlanguagetestshaveincreasedsubstantiallyasanincreasingnumberofsecondaryschoolstudentswanttostudyabroad.VocationalTraining:ThenumberofpeoplewhoenrollinITtrainingremainsstagnantduetolimitedvaluepropositionandaddressablesize,whilethenumberofpeopletakingtrainingcoursesforprofessionaltestshasincreasedsteadilyDecisionMaker:Evolvingfromparentstostudents,asstudentsgrowupandbecomethemaindecisionmaker.ParentsplaysthekeyroleindecisionmakingduringtheK12privatetutoringphase,butwhenenteringintophaseofvocationaltrainingandlanguagetrainingforoverseasstudy,studentsbecomemoreindependentandbecomethekeydecisionmaker.SpendingPattern:Totalspendingofkeysegmentswillbenefitfromconsumptionupgrades,i.e.K12afterschooltutoring,languagetestsandvocationaltrainingwillallbenefitfromconsumers’tradingmoreforthefiercecompetitioninChina’sexam-orientededucationsystem,andtradingupforabetterteachingeffect,indicatingstronggrowthpotential.KeyPurchaseCriteria(KPC):Teachingqualityisthemostimportantfactorwhenmakingchoices,whichismeasuredbyprivateschools’reputation,examskillsintutoringandlanguagetests,starteachers&jobreferencesinvocationaltraining.Effectiveness:Intermsofstudenttype,after-schooltutoringismoreeffectiveforyoungstudentsandstudentswithweakself-learningabilities;intermsofcoursedifficult,tutoringisnecessaryforadvancedlearnersortopstudentstobeilluminatdebyfromhigh-qualityteachers’essentialguidance.ConsumerDynamicsKeyFocus&PainPointsSource:BDAresearchandanalysisConsumers’keyconcernsforeducationareallaboutteachingqualitybecausetheyaremoreresults-drivenandcareaboutteachingeffectiveness.K12after-schooltutoring:parents,thekeydecisionmakers,desiremoresmallclasstrainings,worryabouttherebeingtoomanydistractionsandlackofinteractionfromonlineeducation,andcomplainaboutthecustomerservicequalityofinstitutions.Languagetests:studentsandparentsbothactaskeydecisionmakers,andtheirkeyfocusliesinscoreimprovement.Thus,theydesiremoreaccuratetestpredictionsandmorehigh-qualitytestskills.Someparentscomplainaboutthelackofcommunicationfromtheschoolandparents.Vocationaltraining:studentsplaysthedominantdecisionrole.Juniorlevellearnerscaremostaboutemploymentbutaredissatisfiedaboutjobsreferredfrominstitutions;intermsoftypeofteaching,sincemanycoursesareintheformofliveorrecordedonlinecourses,thelackofinteractionwithteachersanddistractingtechnicalproblemsbotherthemmost.SupplySide:Theeducationmarketisnaturallyfragmentedbutisexperiencingconsolidationdrivenbyinstitutionswithstrongstandardizationcapabilities;onlineeducationpenetrationratescontinuetoincrease,withtrafficattractionbeingthemajorfocusfornow4SupplierDynamicsKSF&PerformanceStructuralChangesStrategicMovesofInstitutionsConcentrationlevelandconsolidation:Theeducationmarketisnaturallyafragmentedmarket,withindividualserviceproviderstakingasignificantshareintheearlystage,sincelocal“starteachers”aretheessentialelementthatdrivesthemarketHowever,thestandardizationofthetutoringsystem,includingmechanismsforscreeningandtrainingteachersaswellasateaching-researchsystem,isgraduallydisruptingtheinfluenceof“starteachers”anddrivingtheconsolidationprocessVerticalintegration:Alongwiththetrendinstandardization,tutoringinstitutionsaregraduallytappingintotheirupstreammarketandintegratingbothteachingtalentsandsupplementarymaterialsDigitaldisruption:Onlineeducationispenetratingmostsubsectors,withnumerousoperatingmodelscoveringdifferentverticals,thoughitisstillrelativelyimmatureTraditionalofflineeducationinstitutions:InstitutionsarestrengtheningtheirlevelofstandardizationanddevelopingtheirnationalexpansionprudentlyInstitutionsaregraduallyshiftingtosmallerclassesforeconomicreasonsAlongwiththeemergenceofpureonlineeducationplayers,offlineinstitutionsarealsotappingintoonlinebusinesses,thoughatearlystageOnlineeducationinstitutions:Operatingmodelinnovationisontheway,withtrafficacquisitionbeingthecurrentfocusofmostonlineplayers;monetizationisgenerallyweaknow,butwithpotentialinthelongtermTraditionaleducationinstitutionsK-12after-schooltutoringDespitethelowconcentrationlevelatpresent,standardizationcapabilitieshavestartedtobecomethekeysuccessfactorXRScurrentlyenjoysadvantagesinstandardizationthankstoitsscientificteachertrainingprocessandcentralteachingresearchcenter,thoughitsnationwidemarketshareisstilllowOverseasEnglishtestpreparationThestandardizationoftheteachingsystemisrelativelyslowbecauseofminimaleffortbyleadingplayers,thusthosewhocanbetterretaintalenthaveanadvantageEDUisthestillthelargestplayer,yetitsedgehasgraduallydiminishedduetothelossoftopteachersVocationaltraining:Controllingqualifiedteacherresourcesiscrucialforinstitutions,thusthemarketisregionallyconcentratedtoafewleaderswhocancornertheteachersupply,butnationallyfragmentedduetorelativelyhighentrybarriersPrivateschool:Trackrecordisacorecompetitivenesstrait;themarketisfragmentedmainlyduetorestrictionsbroughtaboutbycautiouslicenseissuanceandalongpaybackperiodOnlineeducationplayersOntheteachingside,onlineplayersarecompetingintermsofteachingquality,butcurrentlymostofthemarenotsatisfactoryOnthelearningside,theonlineQ&AmodelisattractinghugetrafficthankstoitsstrongvaluepropositionoverpurecontentdatabasesSource:BDAresearchandanalysisInvestmentHighlights:Wedeemthatinvestmentopportunitieslieinlow-ageeducationsectorsthatemphasizethecultivationofinterestsandexamskills,amongwhichK12after-schooltutoringismostpromising,intermsofbothofflineandonlinesegments5InvestmentHighlightsRationaleK12-KindergartensMediumpotential,mainlyliesinleadingprivatepremiumkindergartenswithlong-establishedreputationK12-Middle/HighSchoolLanguageVocationalTrainingLeadingnationalchaininstitutionslikeXRSwhoexcelintheestablishmentofqualifiedteacherspoolsandexamskillsstandardizationLeadingregionalchainedplayersinaffluentprovinceslikeGuangdong,JiangsuandZhejiangmayalsohavepotentialOnline“learning”toolswhichemphasizecustomization&targetedinteraction(e.g.17zuoye)K12-PrimarySchoolInvestmentPotentialLargestSmallestLeadingnationalchaininstitutionswhoexcelintheestablishmentofqualifiedteacherspoolsandexamskillsstandardizationOnline“learning”toolswhichemphasizecustomizationandtargetedinteraction(e.g.Xuebajun)LimitedinvestmentpotentialduetothedecelerationofmarketsizegrowthandtherelativelyhighconsolidationlevelinthemostlucrativeoverseasstudypreparationsegmentLimitedinvestmentpotentialformajorsectorslikeITandaccounting,withtheformerlackingvaluepropositionandlatterladenwiththehighcostsofcross-subjectreplicationAsteachingeffectishardtoverify,parentsresorttothereputationofkindergartenstogaugeeducationalcapabilitiesandabilitytostimulateinterestInsufficientsupplyofpublicpremiumschoolsfurtherincreasesdemandforprivatepremiumschoolsAsparentsandstudentsareresults-driven,trainingforsuperiorexamskillshasbecometheirmostimportantvalueproposition.InstitutionswhohaveanexpertiseincollectingaqualifiedteacherpoolandareeffectiveatexamskillsstandardizationwillstandoutAffluentprovinceswhereparentshavestrongerspendingpowerwillalsoholdpotentialforregionalplayersThepremiseofthecurrentlyfragmentedmarketwillgraduallybecorrodedalongwiththetrendforthenationalunificationofentranceexamstouniversitiesandcollegesCustomizationandtargetedinteractionishowonlineeducationdifferentiatesfromofflineThenumberofstudentspreparingforoverseasstudyhaswitnesseddeceleratinggrowth,andmarketconsolidationhasreachedarelativelyhighlevelITtrainingislimitedbyitssmalluserbaseandmediocresupplierperformanceintermsofcreatingastrongvaluepropositionthatmeetsconsumers’jobhuntingdemandsIt’sdifficulttosellothervocationaltrainingcoursestostudentspursuingaccountingcertificates.TeachingsystemsvarygreatlyamongdifferentsubjectsSource:BDAresearchandanalysis6TableofContentsSummaryDemandSideAnalysisChinaEducationSystemSize&GrowthofEnrollmentsSize&GrowthofSpendingConsumerSegmentationSupplySideAnalysisEmergingOnlineModelsOverviewofEducationIndustryinChina:K12afterschooltutoringhasthelargestinvestmentvaluethankstoitslargesizeandrapidgrowth,followedbythemarketsforvocationalandlanguagetraining7PrivateSchoolLanguageTrainingK12VocationalTrainingDefinitionNumberofTotalEnrollmentsAverageSpendingperCapitaPenetrationTotalSpendingK12fundamentaleducationAfter-schooltutoringforpupilsinkindergartens,primaryandsecondaryschoolsOverseasEnglishtestpreparationProfessionaltestpreparationforCPA,CTA,etc.Forentry-leveljobslikeITskillstraining2014:35MN2010-2014CAGR:7%Growthpotential:medium2014:203MN2010-2014CAGR:~0%Growthpotential:limitedNA2013:2MNformajoraccountingtests,0.9MNforITGrowthpotential:5-15%forITandAccounting2015:RMB183BNEst.3-yearCAGR:~15%2015:RMB537BNEst.3-yearCAGR:19%2015:RMB6.4BNEst.3-yearCAGR:11%2015:ITatRMB10BN,withaccountingatRMB4BNEst.3-yearCAGR:21%forIT,17%foraccountingNANA2015:RMB8.5K2015:RMB8K2013:RMB13KforITtraining2015:30%NA2013:20-25%foraccounting,50%forITSource:MinistryofEducation,GoldmanSachs,CLSA,BDAresearchandanalysis12348TableofContentsSummaryDemandSideAnalysisChinaEducationSystemSize&GrowthofEnrollmentsSize&GrowthofSpendingConsumerSegmentationSupplySideAnalysisEmergingOnlineModels9Overseas

CollegePrivateSchoolEducationPath:AtypicalChinesechildwillreceive15yearsoffundamentaleducationstartingfromkindergartentohighschool,duringwhichthechildcanmakechoicesbetweenpublicandprivateschoolsbeforechoosingwhethertofurtherstudyindomesticoroverseascollegesorstartworking16121518AgeSource:BDAresearchandanalysisHighSchool(Grades10-12)

VocationalSchoolMiddleSchool(Grades7-9):Nineyearsofcompulsoryeducation

PrimarySchool(Grades1-6):NineyearsofcompulsoryeducationKindergartenDomestic

CollegePublic/Private:ChildrengotopublickindergartensintheirneighborhoodOrpayextratoattendprivatekindergartensPublic/Private:

SameaswithpublicprimaryschoolsSameaswithprivateprimaryschoolsPublic/Private:Similartopublickindergartens,theverybestschoolsaresopopularthatonlychildrenofparentswithaparticularconnectionareadmitted,iftheydonotliveintheneighborhoodParentspayextratoattendprivateschoolsPublic/Private:

EntranceexamscoresdeterminewhichhighschoolchildrenattendBetterschoolsrequirehigherscoresForprivatehighschools,theverybestschoolscanhaveaentryscorerequirementashighasthetoppublicschoolsTrainingtogetentry-leveljobTrainingforadvancedcareerdevelopmentTypicalK12EducationPathCollege/VocationalTraining:EntranceexamscoresdeterminewhetherstudentsgotoatoporordinarydomesticcollegeSomestudentschoosetostudyabroadStudentsalsocontinuetotakeeducationcoursesInterestCultivationExamOrientationEmploymentOrientationInterestGroupK12After-schoolTutoringK12After-schoolTutoringK12After-schoolTutoringLanguageTestVocationalTrainingLanguageTestLanguageTestforOverseasStudyVocationalTrainingPublicSchoolAlongtheeducationpath,thedemandforprivatesectoreducationisstimulatedinprivateschoolfundamentaleducation,K12after-schooltutoring,languagetestpreparationandvocationaltraining10FundamentalEducationPreschools(Kindergarten)ElementarySchoolsMiddleSchoolsHighSchoolsSource:BDAinterviewsandanalysisFormalEducationSysteminChinaPrivateSchoolK12PrivateTutoringSecondaryVocationalEducationHigherEducationAdultEducationPreschools(Kindergarten)ElementarySchoolsMiddleSchoolsHighSchoolsITAccountingMedicalOlympicMath&PrimaryEnglishAllSubjectsAllSubjects…IELTSGRE/GMAT…CET-4/6SATTOEFLEngineeringChef…Law…123411TableofContentsSummaryDemandSideAnalysisChinaEducationSystemSize&GrowthofEnrollmentsSize&GrowthofSpendingConsumerSegmentationSupplySideAnalysisEmergingOnlineModelsPublicSchool:TotalenrollmentsforK12allwitnessedslightdeclineinthepast5yearsexceptforpre-schoolandhighereducationsector12NumberofPublicSchoolEnrollmentsbyEducationLevel,2010-2014Unit:MNSource:MinistryofEducation,BDAresearchandanalysis41201324239244595392012244HighSchoolHigherEducationMiddleSchoolPrimarySchoolPre-school2014412444955110134201024334245310130246382548993720112473625CAGR+8%-1.7%-4.8%-0.3%+4.5%PublicSchool:Grossenrollmentratefordifferentsectorsremainintact,exceptthattheratioforhighereducation&pre-schoolhasbeengraduallyimprovingto38%and71%in2014respectively13NumberofPublicSchoolGrossenrollment1RatebyEducationLevel,2010-2014Source:MinistryofEducation,BDAresearchandanalysisNote:1.referstoallenrollmentsdividedbypopulationoftherightschoolagebyeacheducationlevelregardlessofactualageofenrollments,thustheratiomaybeover100%HigherEducationHighSchoolMiddleSchoolPrimarySchoolPre-school38%87%104%104%71%35%86%104%104%68%30%85%102%104%65%27%84%100%104%62%27%83%100%105%57%PrivateSchool:Enrollmentsforprivateschoolhaveenjoyedrapidgrowthinthepastfouryearswithpre-schoolsectorincreasingthefastest14Source:MinistryofEducation,BDAresearchandanalysis434524617201031525HigherEducationHighSchoolMiddleSchoolPrimarySchoolPre-school201441625721201339625620201237525619201114NumberofPrivateSchoolEnrollmentsbyEducationLevel,2010-2014Note:includesordinary,premium,bilingualandinternationalprivateschools.Unit:MNCAGR+11%+6%+2%+1%+5%After-schoolTutoring:ThepenetrationofstudentstakingK12after-schooltutoringhasexceeded30%,withpre-schoolbeingthehighestduethissegmenthavingthemostfreetimeavailable;themainsubjectsareOM&Englishinprimaryschool,andall-subjecttutoringinmiddleschool15Source:BDAresearchandanalysisPre-schoolMiddleSchoolHighSchoolPrimarySchoolPenetration45%40%32%30%25%17%35%30%22%202040%35%201527%2010MajorSubjectsMainlyart-relatedinterestgroupsSomechildrenalsoenrollinEnglishcoursesOlympicMath(OM)andPrimaryEnglishtutoringPrimaryMathandEnglishTutoringInterestgroupAll-subjecttutoring,mainlymath,EnglishandChineseforjuniorhighschoolAll-subjecttutoringForstudentsmajoringinscience:PhysicsandChemistryForstudentsmajoringinarts:Math,EnglishLanguageTraining:thepopulationofoverseasstudentsreached460Kin2014,butthegrowthratehassincesloweddown162014+14.9%2020CAGR:+7.3%20132012201120102009Unit:ThousandpeopleTotalNumberofStudentsforOverseasEducationSource:MOE,BDAresearchandanalysisTheslowingdownofgrowthofnumberofstudentsstudyingabroadismainlyduetodecreasingadmissionrateofoverseascollegesLanguageTraining:IELTSandTOEFLtakethelion’sshareofthetotalnumberofparticipantsforlanguagetests17Source:MinistryofEducation,BDAresearchandanalysisTOEFLSATGMATIELTSNumberofParticipantsofDifferentLanguageTests340300221166139550500310280260FY20102011201220142013504540205853584030Unit:ThousandPeopleNAVocationalTraining:ThenumberofpeoplewhoenrollinITtrainingremainstableduetolimitedaddressablemarket,whilethenumberofpeopletakingtrainingcoursesforprofessionaltestsincreasesteadily18Source:MinistryofEducation,BDAresearchandanalysis1,0001,345Accounting-JACAccounting-CPAITTrainingArchitecture-NCEMedical-CMLNumberofParticipantsofTests(2014)Unit:ThousandPeoplePenetrationofTrainingEnrollments(2014)PenetrationGrowthPotential25-30%20%25%15-20%50%10-15%

Lessthan5%sinceactualpenetrationasofpeopletakingtestshasbeenashighas50%Lessthan5%duetolimitedaddressablemarket5-10%duetolimitedaddressableconsumersOver40%duetocurrentlowpenetrationProfessionalTrainingProfessionalExamsOnlineEducation:Thenumberofusersutilizingonlineeducationhasreached78MNin2014;theonlinepenetrationwillcontinuethegrowthmomentuminnearfuture19Source:iResearch,BDAresearchandanalysis+16%+15%20172016201520142013201220112018China’sOnlineEducationUserBaseUnit:MNAs%ofTotalInternetPopulation10%10%11%12%14%14%15%16%Note:Theuserbaseofonlineeducationisdefinedasindividualuserwhoreceiveseducationbyinternetatleastonetimewithinayear,thetypesofeducationrefertoK12,Highereducationandadulteducation,Vocationaltraining,corporateE-learningandlanguagetraining.20TableofContentsSummaryDemandSideAnalysisChinaEducationSystemSize&GrowthofEnrollmentsSize&GrowthofSpendingConsumerSegmentationSupplySideAnalysisEmergingOnlineModels15%offiscalspendingwasspentoneducationin2014,thehighestamongallcategoriesGov.expendituresoneducationhasenjoyedtremendousgrowthinthepast5yearsandaccountsfor4%ofGDPPublicschooleducationisfinancedbygovernmentfiscalexpenditures,withanannualspendingofRMB2.6TNin2014,takingupover4%ofGDPand15%ofgovernmentfiscalspending21Source:NBS,CEIC,BDAresearchandanalysis5.5%Healthcare6.7%Transportation6.8%Urban/RuralCommunity8.5%PublicServices9.1%Agriculture&Water9.2%SocialSecurity10.5%Education15.1%Environment2.5%ScienceMilitary3.5%2014FiscalSpendingBreakdownGovernmentExpenditureonEducation,2009-2014CAGR:+16.7%20144.15%20134.30%20124.28%20113.93%20103.65%20093.59%Unit:RMBBNAs%ofGDPTheothersectorsarewellshapedbyprivateconsumption,amongwhichacrucialbudgetportionhasbeendevotedtoprivatetutoringandschooltuitions,representing14-19%ofhouseholdannualincome22Source:GoldmanSachs,BDAresearchandanalysisEducationasaPercentageofAnnualHouseholdIncome,Chinavs.OtherCountriesAccordingtoGoldmanSachs’research,themajorityofChinahouseholdsspend14-19%ofannualhouseholdincomeontheeducationoftheirchildren,with8-11%offamilyincomeallocatedtoschooltuitionand6-8%spentonafter-schooltutoringservices.USJapan

17%Korea2%10%17%ChinaChinahouseholdsallocateacrucialbudgetportiononeducation,representing17%ofannualhouseholdincome.Forcomparison,parentsinKorea,JapanandUSspend17%,10%and2%ofhouseholdincomeoneducation,respectively.SchoolTuitionsOthers7%PrivateTutoring9%Specifically,totalspendingforK12after-schooltutoringisexpectedtoenjoydecentgrowth23Pre-schoolMiddleSchoolHighSchoolPrimarySchoolTotalSpendingforAfter-schoolTutoring(RMBBN)EnrollmentsforAfter-schoolTutoring(MN)CAGR:+6%CAGR:+14%CAGR:+21%CAGR:+7%CAGR:+23%CAGR:+8%CAGR:+14%2018F20152015CAGR:+2%2018FSource:BDAresearchandanalysisTotalspendingforoverseaslanguagetestspreparationsectorincreasestably,andtotalspendingforvocationaltrainingisestimatedtogrowrapidly24ITTrainingAccountingLanguageTotalSpending(RMBBN)PenetratedEnrollments(MN)CAGR:+11%CAGR:+2%CAGR:+21%CAGR:+8%CAGR:+17%2018F2015CAGR:+13%2018F2015Source:BDAresearchandanalysisNote:MeasuredbytotalapplicantsforoverseasstudyNote:MeasuredbypeopleregisteringformajoraccountingtestsTotalspendinginonlineeducationwillbesurgingfromRMB100BNin2014toRMB208BNin201825+20%+21%20172016201520142013201220112018China’sOnlineEducationMarketSizeRMBBNNote:Theuserbaseofonlineeducationisdefinedasindividualuserwhoreceiveseducationbyinternetatleastonetimewithinayear,thetypesofeducationrefertoK12,Highereducationandadulteducation,vocationaltraining,corporateE-learningandlanguagetraining.Source:iResearch,BDAresearchandanalysis26TableofContentsSummaryDemandSideAnalysisChinaEducationSystemSize&GrowthofEnrollmentsSize&GrowthofSpendingConsumerSegmentationSupplySideAnalysisEmergingOnlineModelsChinesehouseholdscanbegroupedintofivesegments,namelymovers&shakers,urbanwhitecollars,urbanbluecollars,migrantworkersandruralworkers…27Source:GoldmanSachs,BDAresearchandanalysisUrbanBlueCollarMigrantworkerMoversandShakersRuralEmploymentUrbanWhiteCollarAsPercentageofTotalHouseholds0.3%Averageannualhouseholdincome21.8%10.4%24.7%42.9%USD605KoraboveUSD22-23KUSD14KUSD11KUSD6KKindergartenandPrimarySchoolPublicPrivatePremiumMiddleandHighSchool1OrdinaryPublicPremiumPrivateOverseas/LanguageCollegeDomesticOverseas/LanguageK12BestPublicüüüüüüüüüüüüüüüSecondbestalternativesüNote:1.Allstudentscangotobestpublichighschool(Keyhighschool)iftheypasstheexamandascholarshipcanbeoffered.üüAnnualIncomeSpentonPrivateTutoringUSD6KUSD1,350USD840USD660USD480ü…amongwhichurbanwhiteandbluecollarsandmigrantworkersareconsideredtobethekeydemanddriversfortheK12market,giventheirstrongwillingnesstoinvestineducation28Source:BDAresearchandanalysisMoversandShakersEducationPathüInvestmentValueLowduetoasmallconsumergroupbaseandatypicaleducationpathTargetPrivateEducationSegmentPrivatepremiumschoolsBilingualschoolK12PrivateTutoring:ParentsaremostwillingtopayahighpriceintheK12tutoringmarketforbetterschoolstopreparestudentsforChina’sexam-focusedandemployment-orientededucationsystemLanguageTraining:PrepareforoverseaseducationVocationalTraining:PrepareforemploymentHighduetoalargeconsumergroupbaseandahighwillingnesstopayforprivateeducationinordertosurviveandstandoutinChina’seducationsystemLowduetolowdisposableincomeandlowwillingnesstopayextramoneyforprivateeducation.Notarget;guidedbydestinyReceivebesteducationinhigh-endprivateschoolsinChinaoroverseaseliteprivateschoolsandhavetheworldpresentedbeforethemParentsintoptiercitieshavetopayanextrapriceforXueQuFanginordertosendtheirchildrentothebestpublicprimaryormiddleschoolsToenrollinbestorkeypublichighschoolsistheminimumrequirementifchildrenpasstheentranceexamsforkeyhighschoolsMoreinclinedtogotomid-endorhigh-endprivateschoolswithmorevalue-addedservices,iftheirfinancialsituationallowsGotoordinarypublicprimaryandmiddleschools;mayenrollinkeypublichighschoolsiftheypasstheexamsandascholarshipisprovidedCharacteristicsBornwithsilverspoonsWell-educatedmiddleclassMassstrivingforbetterlivingInpovertyUrbanBlueCollarsMigrantWorkersRuralEmployedUrbanWhiteCollarsForK12andlanguagetutoring,parentsmakedecisionsfortheirchildren,focusonexamresultsandcaremostaboutteachingquality;invocationaltraining,studentsmakeowndecisionsandaremorefocusedonjob-hunting29DecisionMakingDynamicsKeyImplicationsPre-schoolandPrimarySchoolMiddle/HighSchoolEducationVocationalTrainingCultivatinginterestPurposeSpendingPatternKPCEffectParentsactasthedominantdecisionmakerandareverywillingtoinvestinbetterresultsScoreimprovementsEmploymentandcareerdevelopmentParentsactasthedominantdecisionmakerandareverywillingtoinvestinbetterresultsStudentsactasthedominantdecisionmakerareareconservativewiththeirspendTeachingqualityandreputationofinstitutionarethemostimportantcriteriawhenchoosingteachersandinstitutionsTeachingquality,andisultimatelymeasuredbystudents’academicperformanceinexamsJobreferralforentry-levellearners,professionaltitleforadvancedlearnersTutoringisnecessaryandmosteffectiveforintelligencedevelopmentandinterestcultivationTutoringismosteffectiveforstudentswithweakormediocreself-learningabilitiesEntrylevel:Limitedeffectasteacher’sroleisweakeningAdvanced:Effectiveasteachers’guidancecountsmostRelationshipbetweenlearningandteaching:Teachingismoreimportantthanlearninginstudent’searlyschoolagesandforstudentswithweakself-learningabilities,andviceversawhenstudentsaregettingolderandimprovetheirlearningcapabilitiesPrivatetutoringeffect:ForstudentsatanearlyageteachingcanguidethemalongthewaytobecomeinterestedinlearningForstudentsenteringsecondaryeducation,tutoringmakes1)straightAstudentsachieveevenbetterresults,2