RMB80 billion market driven by liberal education

With the recent robust economic development, “liberal education” is gaining popularity in China. Compulsory and basic education no longer takes up the majority of mainland households’ spending on education, instead, expenditure on non-compulsory education, represented by arts education and after-school tutoring, is increasing as a percentage.

Training programs in musical instruments, dancing, visual arts, languages and sports are among the main streams of after-school liberal education for the youth. That being said, they are not limited to teenagers and children, as more and more adults enroll in these programmes to meet friends, seek entertainment and cultivate temperament. In 2015, the market size of adult arts learning exceeded RMB11.3 billion, up 44.87% over the previous year.

The penetration of liberal education and life-long learning has greatly promoted the development of arts education in China. According to the statistics from the Forward Industry Research Institute, the PRC arts education market has grown at a CAGR of 32.62% to RMB46.2 billion in 2015 and is expected to exceed RMB80.0 billion by 2018. The market is rocketing and the influx of capital represents a golden investment opportunity. As shown by rough statistics, there were a total of 97 investment projects in Hong Kong shares, A shares and NEEQ-listed companies in the liberal education sector from 2011 to 2016. In particular, visual arts education, as well as non-visual arts education on musical instruments, singing, dancing and the Four Arts, are the niche markets that are highly sought after.

The upgrading education expenditure has fueled the growth of the arts education and training industry. Responding to the trend of modern consumption demand and mode of consumption, the services sector, which includes the education services segment, sees ample market opportunities. Well-established and promising arts institutions with sound management are expected to garner available capital and the support from listed companies and professional institutional investors. While replenishing funds and expanding the size of operations through financing, they will push forward the development of the industry.

CFCG has been closely monitoring the development of the arts, culture and media education market. The Group and its subsidiaries have entered into agreements of acquisition, investment and strategic cooperation with various educational institutions in the market, which include the Kunming Professional College of Arts, the Singapore Raffles Music College, the Wenhua College of Yunnan Arts University and the University of West London.

We believe that the relatively low market concentration and the developing landscape will lead to market consolidation and benefit top-tier education brands and investors who are ambitious to enter the education industry. Looking forward, arts educational institutions with scale and branding effects will enjoy competitive edges.