China's online tutoring opportunity
We see a structural growth opportunity in online tutoring driven by technology, scale effect and rising online acceptance. However, while some leading providers outperformed amid the COVID-19-driven spike in demand, overall users are back to pre-pandemic levels amid persistent concerns among parents about interaction, kids' self-discipline and eyesight damage. The recent army of new online users was also not all 'new'. COVID-19 has presented an opportunity to cultivate potential users, but converting them will take time. Besides parents' concerns, another key challenge for quality and profitability —the mainstream 'big class' offers lower tuition fees but less interaction; the one-on-one model delivers quality but is costly.
The power of AI
Technologies like AI can help address these pain points. For example, AI-powered education could improve efficiency and interaction in the online space via technologies like voice, facial recognition and NLP. Service providers could also leverage AI to address supply bottlenecks and cost constraints via AI assistants. The recently introduced AI-powered class is well-accepted by younger kids. Several leading players are also working on Al assistants for big classes. Gaining a footprint in AI education needs lots of capital and, more importantly, raw data. Ultimately, unleashing the power of AI will be core to the ability to thrive in the education vertical.