Study lounges were doing good business in the country until the pandemic rendered their future uncertain, writes Wang Yiqing
A placid, cozy environment fostering focused thinking and unwavering concentration－on books. That's what study lounges are. Ideal for students with limited options as after-school study spaces, because home is a hassle, libraries are full, coffee shops rather costly, 24-hour eateries full of distracting chatter. Ideal, too, for younger professionals preparing for higher-level exams to further their career or enhance their knowledge. And all for a relatively small fee.
Yet this innovative concept, which led to the mushrooming of study lounges in Beijing and other Chinese cities in the past couple of years, could become an "unlucky" sector of sharing economy, as the novel coronavirus outbreak pressed the pause button on startups.
Imported business model
Study lounge is an imported business model pioneered by the Republic of Korea and Japan. Quite a few study lounge operators in China have said they learned what a study lounge is from a Korean TV drama Reply 1988. In fact, several study lounges in Chinese cities have been named"1988".
The demand for study lounges rose in China, because students can hardly find a tranquil place to study after finishing college. It's hard for them to find a place in a university even if they manage to enter the campus. There are relatively few public libraries even in big cities. And even students on the campus need a peaceful place to focus on studies.
Before 2018, there were few study lounges in China, and that too mainly in some first-and second-tier cities such as Guangzhou, Suzhou and Tianjin. In Beijing, the first study lounge opened in 2018. Yet by 2019, study lounges had become popular nationwide thanks to the wave of sharing economy.
According to market survey organization iiMedia's report, in 2019 there were about 1,000 newly opened study lounges nationwide and the number of paid users soared from 850,000 in 2018 to 2.3 million in 2019. No wonder some media outlets called 2019 the "first year" of study lounge startups.
The sector's rapid growth last year could be attributed to the increasing pressure of employment and shortage of public facilities such as public libraries. According to the 2019 Statistical Bulletin of Culture and Tourism Development of the Ministry of Culture and Tourism, there are 3,196 public libraries nationwide, meaning more than 438,000 people sharing one public library.
National Bureau of Statistics data show Beijing and Shanghai have 23 public libraries each－too few to meet user demand. And Beijing with a population of more than 21.53 million has only about 16,430 reading room seats, which means about 1,310 Beijing residents "competing" for one library seat. That the public libraries are far from many neighborhoods and have restrictions such as limited opening hours and complicated registration and membership procedure was also responsible for the study lounge's rapid growth.
The demand for higher, continuous studies is increasing day by day due to the intense competition in the job market. For instance, in 2018 the number of new college graduates was 8.20 million, with the figure increasing to 8.74 million in 2020. And while about 2.9 million students sat the postgraduate entrance exam in 2019, their number increased to a record high of 3.41 million this year.
It is not surprising therefore that the demand for study lounges was high, which helped the emerging sector to grow at a fast rate with many entrepreneurs rushing to invest in the sector because of its low access threshold. The "gymlike" business model is not difficult to understand or duplicate, especially because it doesn't require huge investment, and people don't need higher education degrees and special skills to operate them. In iiMedia's earlier estimate, the number of paid study lounges was expected to jump to 7.8 million nationwide in 2020.
But the pandemic has dealt a crushing blow to the emerging industry. Since personal contact in a closed environment is unavoidable, the pandemic forced all the study lounges to shut down for several months. And after the monthslong closure, the industry's future appears uncertain, especially due to the fear of a second wave of infections.
Lou Qingxiao, founder of Xinliuzaowu, one of Beijing's earliest study lounge brands that opened in 2018, said their first study lounge near Renmin University of China has already made ends meet even made some profits before the pandemic. But their second franchised study lounge in Beijing was opened just before the outbreak.
And its franchise lounge in Dalian, Liaoning province, was caught in another wave of infection in July, when a majority of Chinese provinces and regions had basically controlled the virus and were on road to economic recovery.
Li Hang and Zhang Yang, co-founders of Sishiloushi, a Beijing-based independent study lounge, say their business is gradually returning to normal, but they still have to "play by ear". Yet, even before the COVID-19 epidemic broke out, the industry's profit model was neither promising nor clear. Li and Zhang say the investor they talked with is unwilling to invest in the industry because, they assume, it's a low-profit sector without many "peripheral profit-making aspects".
"Rentals are a major 'rigid' cost for study lounges, especially in first-tier cities with high housing rentals," Lou says. As such, the fees for using study lounges should be relatively high, not low in the hope of attracting more users, Lou says. Because, as Li says, in a first-tier city such as Beijing, rentals comprise more than a half of a study lounge's monthly operation cost.
According to Lou, the study lounge industry is a result of consumption upgrading that "provides better time and space experience, and helps users to enhance their knowledge and efficiency while saving time". He sounds optimistic about the industry's commercial prospect, though, "because it's a blue ocean with less competition".
Better serving people
Yet Li and Zhang don't consider study lounges to be simple substitutes for public libraries, as the former provide better learning experience that people cannot get in free public libraries. But instead of exploring its commercial aspects, they are looking for opportunities to cooperate with the government. "Privately operated study lounges like ours actually make up for the shortage of public infrastructure and public services, and we are willing to cooperate with the government to better serve the public," Li says.
An increasing number of study lounge operators have realized the significance of differential operations. For example, Qudianliang, a study lounge opened in Wuxi, Jiangsu province, in June which claims to be the first 24-hour study lounge in the city, aims to ride the wave of "night economy" being promoted by the local authorities. "As for the night economy, people's demand is not restricted to leisure and entertainment but also includes the quest for knowledge and spiritual solace", according to Linlang, the study lounge's operator.
Since there is no established profit-making model besides selling time and space, Lou insists it is necessary to explore other "profit-making aspects" after "laying a solid foundation" for the study lounge business. "As long as you have a good reputation and a considerable number of users, profit will come naturally."