Millions of Chinese pay for virtual vocational courses, invest in themselves with architecture, design among popular choices

Tan Qiang, 36, from Qimen, Anhui province, recently completed a one-time online photography class.

The 54-minute session cost him 185 yuan ($23.5). Although he works hard at a factory for his keep, he still jumped at the chance to take the course.

"It was during the pandemic that I realized having a skill is a must. I took the class to be a part-time, even full-time, photographer later to add a source of income for the whole family," he said.

Millions of Chinese like Tan are paying for online vocational courses and investing in themselves, where they seek new skills to improve themselves, especially when the country is undergoing a huge industrial upgrading and transformation after the COVID-19 pandemic.

As a shutterbug, Tan was always asked by his family members and friends to take pictures of them. Given the factory he worked at has laid off many workers due to a tough period caused by the pandemic, Tan decided to develop his interest into a marketable skill.

In China, the online vocational education market has been booming at an unprecedented rate in recent years, with demand for vocational skills enhancement on the rise.

According to a report by market consultancy iResearch, China's vocational education market is expected to hit 19.19 billion yuan this year, of which the online vocational market has been soaring 20 percent per year.

"The online vocational education market will become the mainstay. The average revenue per user will gradually increase as heavy training replaces light training," said Ge Wenwei, partner of Duojing Capital.

"The market will continue to boom and will have a higher penetration rate than the K-12－kindergarten to 12th grade－period," Ge said.

The iResearch report said COVID-19 has put online vocational education in the fast lane of development, which is likely to greatly accelerate the overall online education development.

According to a report released by Tencent Classroom, an online vocational education platform by tech giant Tencent Holdings Ltd, users paying for medical and healthcare classes have seen strong recent growth.

Architectural engineering, graphic design, practical English, medical and healthcare and artistic painting are among the top 10 most popular course categories.

Tencent CEO Pony Ma has called for accelerated efforts from famous schoolteachers and training institutions to develop online classrooms to allow society to "vigorously develop online vocational education".

"The main goal is to help various groups to improve their business skills and increase employment opportunities, especially with the development of the industrial internet and the acceleration of digital transformation and upgrading of the overall economy," Ma said.

He said emerging technologies are accelerating the integration and innovation of different traditional industries, giving birth to a large number of emerging occupations.

"The country is seeing urgent demand for high-quality compound talent with strong practical ability and innovation ability, such as 5G, artificial intelligence, the industrial internet and other new jobs," Ma added.

The State Council earlier launched a document targeting reform of China's vocational education system, which strongly advocates for the integration of industries and education by encouraging universities and enterprises to work together to deploy training plans.

Moreover, the reform also unveiled a pilot program－"1+X "model－utilizing academic and vocational skill level certificates to encourage students to acquire more skills while obtaining a diploma.

"1" symbolizes a strong foundation of knowledge via traditional degrees, and "X" stands for embracing the future, represented by vocational certificates.

In the online vocational education market, exam training continues to be a significant portion, where consumers, mostly students, take courses to prepare for the national civil service exam, public institution exams and graduate school exam.

Hou Yue, 25, a graduate from Nantong, Jiangsu province, recently shelled out 8,000 yuan for an online training for her postgraduate exam.

"Those high-quality offline classes related to the postgraduate exam are often held in top-tier cities. The cost is high for students like me as we have to pay extra money for transportation and lodging. But now I can take such online courses anywhere and anytime. Tutors from online vocational platforms are also some very famous teachers who have worked in the area for decades," she said.

Compared with the K-12 education market, characteristics of the vocational market are mostly part-time employees or students who take the initiative to learn, said Lyu Senlin, founder of Guiding Light Think Tank, an education consulting company.

"They are suitable for the online teaching model which breaks limitations of time and space," Lyu said.

A report showed that only 5 percent of employees have a bachelor's degree or above, leaving huge space for online courses aimed at helping people pass through key exams, experts said.

Such demand for higher degrees or career advancement has boosted vocational companies like Offcn Education Technology Co Ltd and Beijing Fenbilantian Technology Co, which both have seen significant growth these past few years.

Fenbilantian, better known as Fenbi, announced in February that it raised $390 million in its series A round of fundraising.

Led by IDG Capital and Trustbridge Partners, the new round attracted several other key investors.

"After the pandemic, we switched part of the offline business to online education and have quickly developed more all-around plans offering online courses for students to choose from," said Zhang Xiaolong, CEO of Fenbi.

Founded in 2015, the company leverages internet technologies to offer professional training and tutoring for key tests.

"Such measures have boosted business. More than 80 percent of our offline users have chosen to switch to online options and revenue from its online business has increased 100 percent since the adjustments were made," Zhang said.

While the online education industry continues to boom, Zhang Lijun, an education veteran and partner of Sinovation Ventures－a venture capital firm founded by famous investor Kai-fu Lee－pointed out that many challenges still exist.

"It will be difficult for companies to retain users on a sustainable basis and for them to become loyal customers after the pandemic. Whether the online education sector is likely to replace offline businesses in the long run remains to be seen," she said.

Gao Yan from online vocational livestreaming platform Xuehui added that although people have learning goals and the willingness to invest in themselves, the renewal rate is usually low due to limited time and energy.

"Solving the problem of low user renewal rates has become a challenge for many vocational education institutions. Online vocational education institutions should rethink their profit model to check whether they can go deeper into a certain segment," Gao said.

"They are expected to develop products and services that can be repurchased by users so as to improve the LTV, or lifetime value of vocational education users," Gao added.