China takes another step towards global dominance. This time, by restricting investments in core sector.

In 2020, Chinese Ed-tech attracted over USD 10 billion from lenders including SoftBank, Tencent and Alibaba among other investors. This was over 5-times the investments US received in Ed-tech. China already has more Ed-Tech unicorns (private companies valued at over USD 1 billion) than the U.S. One of the leading Chinese unicorn, Zuoyebang, raised $1.6 billion in a single round, having 50 million students on its platform (compared with 77 million students in the entire U.S.).

The Chinese Ed-tech benefits from having 283 million students from pre-kindergarten to higher education. By comparison, the US market is approximately 77 million students. Club this with the attitude of families towards ‘investing’ on education plays a vital role. It is now a generally accepted fact that Asian parents, especially Chinese and Indian parents are more willing to pay for their children than western parents. Globally, parents in Hong Kong spend the most on children education, with an average of $132,000, states an HSBC report. US parents in comparison spend $58,000 and Chinese around $43,000.

That’s not the complete story for the Chinese parents as they spend approximately the same amount of money just to prepare their child for university. This makes the industry attractive for the investors from across the globe… well, until recently…

With Chinese Premier now seriously considering declaring those businesses operating in this sector as non-profit, we could end up witnessing a disruption never seen before anywhere in the world. For the starters, such an act would force the US based investors among others to shy away from the sector, thus giving a control to the Chinese Premier to shape it. Considering the value education generates in the growth of any economy, this decision would have a long term impact. If and when this decision is implemented, education will end up being affordable, which will help the citizen of the country attain greater heights, economically and otherwise. The other side of this story is a bit scarier for the investors in the sector. This decision by the Chinese government would lead to registering losses by the big investors sitting across the globe, who preferred to invest in Chinese Ed-tech for the profit, impacting the GDP to some extent. We may notice that investors in Alibaba (Yahoo! And SoftBank among others) are facing the heat, even as the Chinese government starts the process of dismantling Alibaba’s businesses across sectors. Didi, another tech giant, is under scrutiny in China, after the IPO, which the Chinese government had asked the promoters to differ. In this war for resources, China is playing its cards closer to chest, with every decision taken by the Chinese government, crafted to impact the core values of globalism with one single agenda of world dominance.

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Ph.D. in Economics, Passionate about Game Theory, a biker, a Father, Son, a brother, a husband, a friend, and unfriend … just like you!

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Sandeep Bhasin

Sandeep Bhasin

Ph.D. in Economics, Passionate about Game Theory, a biker, a Father, Son, a brother, a husband, a friend, and unfriend … just like you!

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