On February 9, 2022, the Beijing Municipal Education Commission issued the "Implementation Plan on Optimizing Fertility Policies and Promoting the Long-term Balanced Development of the Population", which emphasizes that kindergartens with conditions should be encouraged and supported to open nursery classes to recruit 2-3-year-old children and provide childcare services on the basis of meeting the admission of 3- to 6-year-old children; strengthen the construction of community childcare service facilities to create a "quarter of an hour" childcare service circle.
In the context of the opening up of the three children, it is unknown whether Beijing's move can truly encourage fertility, but it has opened up new development space for private international schools and kindergartens.
Source: The official website of the Beijing Municipal People's Government
The business of international schools has sunk
For the international education industry, the sinking of business has also quietly occurred. The new theory found that many international schools this year have said that they provide "2-year-old +" education in their admissions brochures.
For example, Since 2020, Shenzhen Canterbury King School has increased the kindergarten system to small classes and enrolled children aged 2-6; in 2021, xiamen Changjing Foreign Children's School has enrolled children over 2 years old in the first year of enrollment and set up childcare classes accordingly; Taicang Experimental School affiliated to XJTLU has designed a 16-year consistent education model covering all sections from early childhood education, kindergarten, primary school, junior high school to high school at the beginning of its establishment.
Yew Chung Education Group, which has been in the field of early childhood education since the 1970s, has also been practicing for many years in the childcare phase, such as the YCIS School of Expatriates in Shanghai, which enrolls children aged 2+ years.
The new doctrine has found that there are three main reasons behind this phenomenon.
First of all, the market background of kindergarten sinking childcare is that "the peak of fertility has passed, and the enrollment dividend brought by the two-child policy to kindergartens has decreased." According to industry sources, 80% of public and private parks will have empty classes in 2021. For example, on August 25, 2021, Liaoyuan, Jilin Province, issued an announcement saying, "According to The Liaocai State Assets [2020] No. 501 document, the second kindergarten in Liaoyuan City is now being auctioned publicly, with a reference price of 12.38 million yuan." ”
Source: Liaoyuan Municipal Education Bureau
Secondly, on July 9, 2019, the National Health Commission promulgated the "Standards for the Establishment of Childcare Institutions (Trial) (Draft for Comment)", which clarifies that in the field of childcare for 0-3 years old, it will be guided by the nature of for-profit and non-profit, and the market will play a decisive role in resource allocation.
This has prompted some kindergartens to explore the layout of the childcare market and grab students from a younger age by building a childcare integration. Many independent community childcare institutions are seeking cooperation with kindergarten resources, including brand cooperation, cost facilities and teacher reuse, and enrollment degree commitment, which is a good opportunity for kindergartens to reuse resources and expand their business.
Finally, compared with the education investors who directly entered childcare, schools that extend their business downwards on the basis of kindergartens have stronger operability and more obvious advantages in the sinking childcare market:
First, kindergartens do not need to re-apply for qualifications;
Second, the kindergarten has the advantage of the venue, the cost of renovation is low, and then some facilities are purchased accordingly, and teachers can be recruited;
Third, entering the nursery classes offered by high-quality kindergartens is regarded by many parents as the early locking of kindergarten seats. This has also prompted changes in the location of many nursery schools, many kindergartens have been located around high-quality kindergartens in the past, but as kindergartens enter the nursery field, kindergartens near nursery schools have gradually become a minus point for their location.
But some of the schools or kindergartens that have entered childcare also face challenges. According to Zhou Yan, president of the Shanghai Ziteng Education Research Institute, at present, 80%-90% of the nursery schools carry out 2-3-year-old childcare, if it sinks to a smaller age group, the requirements for kindergarten soft bags, instruments, teachers and other aspects are higher, and the school needs to increase the corresponding education investment.
What are the realities of the childcare industry?
As the childcare track becomes crowded, industry professionals should also consider the realities of the childcare industry. Zhou Yan said that before entering the childcare industry, investors should comprehensively consider market cognition, cost, profit model and other factors.
The childcare market is lowly recognized
In 2016, the average enrolment rate of children under 3 years of age among OECD members was 33.2%, 61.8% in Denmark, and the childcare rate in Belgium, Iceland, France, Israel, the Netherlands, Norway and other countries was also close to 60%, while the overall nursery rate in China was less than 10%. From the perspective of regional market awareness, the parental awareness of Chengdu parents, the "childcare education paradise", is even at the forefront of Shanghai.
Zhou Yan believes that the current development status of the childcare industry is similar to that of kindergartens more than ten years ago, and with the continuous deepening of policies, nursery schools will become complete, deepening parents' trust, market recognition, or will be conducive to the development of childcare.
The cost of running a nursery school is high
Affected by parental awareness and other aspects, the student mobility of nursery schools is large, and most parents generally regard childcare as a buffer stage of kindergarten, choosing to let their children enter the nursery school at the age of two and a half years old to connect with kindergartens. This phenomenon makes the nursery school need to roll enrollment, and the cost of customer acquisition is high.
The high cost of the nursery school is also reflected in the process of continuous standardization of policies, and the investment in rent, personnel and other aspects has gradually increased. Taking Shanghai as an example, as the city at the forefront of childcare standardization, Shanghai has carried out more comprehensive requirements for childcare, including the floor, room orientation, number of security personnel, monitoring, etc., and the corresponding education investment in the kindergarten is also high.
The profit model needs to be broken
Zhou Yan introduced that at present, the childcare industry is exploring standardized operation methods and models. Her Shanghai Ziteng Education adopts the operation mode of "big headquarters", the advantage of this model is the standardization of management, and high-quality decoration, personnel, courses, market enrollment are responsible for the headquarters, but how to share the cost of the headquarters is a problem. In addition, Shanghai Ziteng Education is also exploring the community-based childcare model of "whole childcare + early education + parent-child education + family education", but this model has higher requirements for teachers.
Don't expect quick returns
The state has issued policies to encourage the development of childcare, and has also made a lot of investment, but the childcare industry cannot achieve a return on investment soon. Zhou Yan reminded investors that before testing the water nursery, they need to clarify the original intention and educational feelings of education.
While sinking, pay attention to policy changes
In order to develop childcare education, in addition to the above problems, it is also necessary to pay attention to policy changes. From 2018 to 2021, two major normative policies have been introduced in the field of early childhood education, and the development of preschool education has changed.
The number of private kindergartens has decreased
According to the National Statistical Bulletin on the Development of Education released by the Ministry of Education in the past decade, the new theory found that private kindergartens had maintained an increase of 5,000 per year, but in 2020, the number of kindergartens had dropped sharply by 5,280 year-on-year.
In 2018, the State Council issued the "Several Opinions on the Deepening Reform and Standardized Development of Preschool Education" (hereinafter referred to as the "Opinions"), which pointed out that "private parks are not allowed to be listed separately or as part of the asset package", which cut off the road to capitalization of kindergartens, and once the policy was introduced, the industrialization operation of a large number of groups such as red, yellow and blue stopped.
The opinion proposes that by 2020, the coverage rate of inclusive kindergartens (the proportion of children in public parks and inclusive private parks) will reach 80%. After this, private kindergartens embarked on the road of transformation into private puhui parks or public parks.
In the past three years since the release of the Opinions, some private parks have been converted to Puhui Parks or simply completely converted to public parks, while other private parks have chosen to dig deeper and expand childcare services. According to the Plan on December 14, by 2025, the coverage rate of inclusive kindergartens will reach more than 85%, and the proportion of children in public kindergartens will reach more than 50%. This may mean that the living space of private parks will also be compressed.
The school-running behavior is more standardized
On December 14, 2021, the Ministry of Education and nine other departments put forward two major normative points on the "14th Five-Year Plan" Preschool Education Development and Upgrading Action Plan (hereinafter referred to as the "Plan"):
First, the government can implement government guidance price management for non-profit private parks, clarify charging standards, and resolutely curb excessive charges and excessive profit-seeking behavior.
Second, all localities should clean up and rectify the words "China", "China", "National", "International", "World", "Global", etc., including foreign language words, foreign country names, and place names, use "bilingual", "art", "Chinese studies", "private schools" and other one-sided emphasis on curriculum characteristics and names with religious overtones, as well as the use of public school names or abbreviations in private parks, and complete rectification by June 2022.
As early as the 2018 Opinions, the charging issues involved in it have given clear requirements, that is, the charging items and standards of private parks are reasonably determined according to factors such as the cost of running the park, market demand, etc., and are publicized to the public and subject to the supervision of the relevant competent departments.
The name of the private park was previously implemented in Article 9 of the Interim Provisions on the Administration of the Names of Private Non-enterprise Units, which stipulates that the words "China", "The Whole Country" and "Zhonghua" shall not be crowned. This policy specification is more detailed.
According to the school database data of the New Doctrine Four Libraries, the number of private kindergartens in the mainland containing bilingual, foreign country and place names, public school names or abbreviations is relatively large, and there may be a wave of private kindergartens renaming next year.
On the whole, the norms of private kindergartens are becoming stricter, and although there is room for investment in the childcare market. But education is a patient undertaking, and investors should consider a variety of factors before entering the market.