December Edition of the X Report
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In this month's X Report, we steer our focus to Asia, looking at EdTech in SEA, the Future of Work in Japan and the education market in China. Each month, we will share a snapshot of key trends, showcase the stars of today and tomorrow, provide some food for thought as well as mergers, acquisitions and fundraising.

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Growing EdTech Trends in Southeast Asia

Compared to other regions around the world, Southeast Asia (SEA) has been known for placing great importance on education. With a notably higher education spend per household, parents in SEA often enrol their children into tutoring or after school learning programmes to give them a competitive advantage amongst their peers. 

This dedication from parents is coupled with the wider SEA region having the highest internet adoption rates with over 97 million smart devices being purchased in 2019.1 Investors are also taking notice of the SEA region; raising $480 million in venture capital for education companies and enabling the expansion of an already booming EdTech ecosystem. 

When the pandemic was declared by the WHO in March, the number of education app downloads in SEA surged 90% compared to the weekly average in the last quarter of 2019. As educational institutions closed, many turned to EdTech solutions in remote teaching and online learning. In SEA, this rapid EdTech adoption was mainly driven by mobile apps, streaming videos, online quizzes and tutorials. 

However, the impact of COVID-19 on education created opportunities for EdTech to expand into other areas of innovation. Bhima Yudhistira from the Institute for Development of Economics and Finance in Indonesia shared in a recent interview: “EdTech is still in uncharted territory with a few players and plenty of potential. It is also very segmented, as each level of education needs a different approach; that is what makes it interesting. In the future, EdTech platforms could offer Learning Management Systems (LMS) through B2B partnerships with education institutions. There is also an opportunity to create tailor-made digital solutions and IT system development." 2

However, in rural parts of Southeast Asia, the lack of development and scarcity of trained teachers results in education not reaching all students. Prior to the pandemic, classes had a large student-to-teacher ratio, which further limited students from gaining a high-quality education. With EdTech becoming increasingly accessible, physical barriers to quality education, like distance and lack of school facilities, are removed. 

During the COVID-19 outbreak, Ruangguru, the largest tutoring platform in Indonesia, assisted over 7 million users through tutoring videos, tests and homework assistance via their website and mobile app. 

In Thailand, Singapore and Vietnam, Taamkru facilitated preschooler lessons using gamification in English, Maths and Science to enable an improvement of 27% in their app test scores over a 15-day period during the pandemic.3 

Vietnamese EdTech startup Yovel created a novel online-to-offline education model to assist in remote learning, which aimed to attract students to training centres in Hanoi and Ho Chi Minh City as schools began to reopen.

As technology, internet and personal smart devices are adopted at an increasingly high rate across the region - accessibility of high-quality education will continue to improve. With the SEA EdTech ecosystem constantly adapting and growing during the COVID-19 pandemic, there is an increasing possibility that it could begin to compete with some of the largest global EdTech markets.

2 Tech Wire Asia 
3. Borgen Project

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Spotlight: Future of Work in Japan

Improving productivity has long been promoted in Japan to drive economic growth.  It continues to be prioritised, due to the country’s ageing population and reduced size of the domestic workforce. Now, automation and digitisation become increasingly prevalent as COVID-19 forces a new way of working. 

In 2019 the aged population (65+ years) constituted 28.4% of the total population which was a record high and has been greater than the child population since 1997.1 The working population (15-64 years) only accounts for 59.7% of the population, compared to 75.3% in the UK.2 Despite continuing efforts to hire more women, retirees and foreign workers, Japan’s demographic shift threatens to stall GDP growth for the next decade. The McKinsey Global Institute (MGI) estimates that Japan will need a 2.5-fold increase in productivity over the next 10 years to maintain their recent growth rate.

The pandemic caused an unprecedented drop in economic activity but also accelerated the move towards automation and digitisation. Prior to COVID-19, Japan was on track to automate the jobs of  27% of its workforce by 2030, replacing 16.6 million people. The research estimated that automation could replace 56% of the tasks done at work in Japan.3 Eventually, companies could see a decrease in overall cost and a boost in productivity if they chose to pivot in this direction. 

Reaching these increased productivity targets could not be achieved through merely installing these automation technologies and will require a change in mindset and approach to leadership. The automation of operations and retraining of workers to deliver more value would need to stem from the commitment to digital transformation at the top of the organisation. Secondly, there is a need to develop roles and skills alongside one another. While technologies can replace certain tasks, new roles will be required to support this way of work. Japan’s 2019 AI strategy highlighted the need to train 250,000 people annually in corresponding fields. This includes the new role of business translators who work to match talent, skills and technology with the priorities of the company. 

The need to minimise contact during the pandemic also accelerated the move towards establishing flexible working models. This created hiring opportunities for those who could not work under less flexible conditions such as parents with childcare responsibilities or people who are based further away or abroad. Finally, there would be the need to continuously re-skill and re-train as competition for talent and pressure to innovate continues to increase. Small to medium enterprises are more likely to have the resources to adapt to rapidly changing technologies and workers will need more flexibility to go where their skills and training are in demand. This could mean companies partnering with the government to develop training programmes which help match graduates with employees. 

2020 has significantly changed the way we live and work. For Japan, seizing the opportunity to accelerate automation could be critical for the country’s economic growth. If leaders in the public and private sectors can work toward a common goal, Japan could not only recover but become leaders in the next digital revolution. 

1 Office for National Statistics
2. Statistics Bureau of Japan
3, McKisney and Co - This spotlight was based on the article:"The future of work in Japan: Accelerating automation after COVID-19". Read the whole report here.  

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Education market round up
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Work market round up
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Wolrd Bank Investment
Forbes Investment
EdSurge Investment
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M&A Highlights
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Valuation Benchmarks

Spotlight: China's Education Market

China’s rapid growth as a global economic power is being echoed in the education space - with a growing population and a culture that is committed to education, we are seeing explosive growth in all areas of learning, teaching and training. Significant uptake in EdTech usage has improved the reach of supplementary educational resources; this has driven a substantial B2C tutoring market, particularly during the COVID-19 pandemic, and seen companies like Yuanfudao reaching a valuation of $15.5bn after closing a $2.2bn round in October. Prior to COVID-19, China had already demonstrated its appetite to compete in the more traditional higher education market. It opened 400 new universities between 2008 and 2018, more than one every ten days, and is becoming an attractive destination for students globally as the cost of living remains considerably cheaper than Europe or North America, and its tuition fees are relatively low. Enrolment of African students in particular increased by 64% between 2015 and 2018. These are just two key examples of China positioning itself as a competitor in global education.China Chart One

Unsurprisingly, EdTech share prices have surged in 2020, and Chinese EdTech companies are further outperforming as China emerges as a leader in EdTech. 80% of the new listings on NASDAQ and NYSE in the past 3 years have been Chinese education services and EdTech companies, and the opportunity to target China’s c.400 million learner base is drawing ever more startups. Despite COVID-19 depressing investing activity globally in 2020, the effect on Chinese education companies was far less noticeable, with the likes of Yuanfudao securing 3 rounds of funding since March and VIPThink securing $180m in Series C funding in the last month. Average deal values in the region are reaching their highest levels to date - perhaps the region is starting to mature as clear winners emerge and attract large sums. Eight of the top 14 most capitalised EdTech companies in the world are now based in China, and this majority is likely to continue as the region grows in strength.

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EdTechX Global Report - 2020 Guide to Education & Training