Starting an English School in China

[yaoluck]

I am white collar worker with chinese roots. I have always wanted to take the chance to explore china, and maybe to live there for awhile. Part of the reason that is holding me back is because of job security. As you can imagine, leaving a comfortable job in europe is not easy, especially at times like this.

I have always thought of going out on my own in China, one of the possibility is to setup a english school for adults in China. I know the big cities are flooded with english centers, but there must be room for more - judging from how desperate schools are looking for teacher. So I thought, heys, why let them make money when I make it myself.

I grew up speaking Mandarin chinese and considered myself very fluent in English(though not native). My scetch-up-unproven plan is to go to a tier2 city, maybe Chengdu, and rent an office space and get a few foreigner(possibly even as business partners) start from there.

do u think this plan is feasible? Or am i totally out of touch? I count myself very chinese, and understand how business is run there, but i am, afterall, still a overseas chinese.

It will be great if i can know from those that have been on the ground, teaching in china and know how the scene is like.

[anonymoose]

The competition is very fierce. I don't know for sure, but I guess there isn't an awful lot of money in it.

[yaoluck]

can u share some examples of how things are?

my friend keeps encouraging me to go, saying that there are still alot of room despite many players already.

Why do u think it's not good money? I heard chinese are willing to pay alot just to learn english

[BrandeX]

Are you a PRC citizen? Foreigners can't just come in and start setting up businesses as they wish. If you can manage a WFOE it costs like half a mil RMB. Otherwise, you will need a chinese partner who will actually own the business.

Edited July 25, 2009 at 12:00 PM by BrandeX
fixed the currency marker

[yonglin]

but I guess there isn't an awful lot of money in it.

I believe New Oriental has made quite a bit of money on teaching English (they even have a Toronto branch, in Chinatown!).

[anonymoose]

In the large cities, it seems like the market is fairly saturated. In Shanghai at least, there are reps on the streets everywhere desperately trying to pull in customers. There is one particular english school close to where I live that usually has their own rep standing outside, as well as several from other schools, and scuffles for customers often break out.

I used to work in an English school in a second-tier city. I don't know the details of their finances, but just making a rough estimate from the number of students, and the fees, I don't think an awful lot of money would be left over after expenses are accounted for.

I'm not saying that you couldn't make this work. However, I guess there are more lucrative opportunities in China if you know how to tap into them.

Bare in mind, also, that the largest chain of English schools in Japan went bankrupt two or three years ago. I know the cost stucture is different in Japan, but I guess the market situation is similar to China.

[HashiriKata]

I wouldn't advice people to just jump into a market and have a go. To ensure some chance of success, you'd need passion or experience, or both, as well as the necessary capital.

[imron]

If you can manage a WFOE it costs like half a mil usd.

Are you sure? Speaking to people who have done it, I seem to recall it being significantly less, more like RMB 100,000 or approx USD $15,000. It depends a lot on the type of business you want to establish though as different business types have different registered capital requirements. In any event, technically, it doesn't *cost* you that much. That money is your own capital that you can use as you wish for the business.

[yaoluck]

I have a PRC partner, and I should be able to gather capital to open a small school.

I am more concerned about if the market is, like some of you mentioned, oversaturated.

how is the price structure of english classes in China? And also number of students?

[kdavid]

Part of the reason that is holding me back is because of job security. As you can imagine, leaving a comfortable job in europe is not easy, especially at times like this.

You're not going to live comfortably over here.

What many foreigners in China fail to realize is that English schools in China don't make a lot of money.

The Chinese can put up with working many hours per week to NET 3000 RMB a month. In some exceptional cases, a big, well-run school may make up to 10,000 RMB a month. And though that is "tons" of money here in China, it is less than US$1500, which is, for the average family in the West, bordering the poverty line.

Not to mention that you're going to have to share this profit with a Chinese partner, who probably won't take any less than 50%. So, if you're running a massive school with many branches and thousands of students, you'd be netting (if you're only splitting profit with one partner) 5,000 RMB a month, which is only US$730, which is less than most experienced foreign teachers make a month.

The hours, and headaches, involved in running an English school in China, from a western perspective, far outweigh the rewards.

I know the big cities are flooded with english centers, but there must be room for more - judging from how desperate schools are looking for teacher. So I thought, heys, why let them make money when I make it myself.

You're not the only one thinking this. English schools open and close everyday. Sure, you'd probably manage one better than the average Chinese, but you're going to be in the same market, competing for the same foreign staff and the same students.

My scetch-up-unproven plan is to go to a tier2 city, maybe Chengdu, and rent an office space and get a few foreigner(possibly even as business partners) start from there.

First, it's not that easy. To open an English school that employers foreigners in China you need to make a (last time I heard) 100,000 RMB "deposit". And that's JUST to hire foreigners. You'd also need to make a similarly sized "deposit" for the proper licenses.

Also, Chengdu is not a second-tier city. In fact, Sichuan is the most populated province in China, and Chengdu is its capital. According to wikipedia, the population is 11 million. The market in this city would be exceptionally saturated with schools.

do u think this plan is feasible?

If you want to work hard for little pay, yes. If you're thinking that you're going to come over here and rake in the cash, no.

Or am i totally out of touch?

Honestly, you're much better off getting qualified and teaching yourself. Many teaching/DOS positions pay more than what most school owners make a month. You'll be making more money for less of a headache. However, you're going to be at a severe disadvantage, and probably won't have access to these jobs, since you are ethnically Chinese.

I don't mean to discourage you. I'm sure that you have put a lot of thought into this, but the reality of the situation is that English schools don't make any money over here. In fact, many English-school owners despise their foreign staff because not only would they not have a school without them, but the school has to pay the foreign staff as much (if not more) than they themselves make, and they (the foreign staff) work half the hours.

You're much better off opening up a pillow factory or reselling toilets like the guys from "Brits Get Rich in China", an hour-long documentary I highly recommend you watch on YouTube.

[xianhua]

If you do watch 'Brits get rich in China' please just bear in mind that some of us here can string a sentence together without using the 'F word' - unlike that 'gentleman' who flogged granite work-tops...

[muyongshi]

Your biggest problem is actually that YOU cannot as a foreigner open up an English school/language training center of any sort. Even as a partnership. Why? It falls under the educations department grasp 教育部 and nothing less short of amazing 关系 or a very very substantial bribe: You'll get turned down flat.

[Scoobyqueen]

It seems that your idea of opening a school might be a way of making money (cf your previous post seeking business ideas) rather than based on your own experience in the field of education.

If this is the case, you might be faced with competition from schools and people with more experience and competence than yourself. Moreover how would you be able to judge the people you will be hiring (English teachers) for the job?

A school's success builds on its reputation and track record and it is so easy to make mistakes if you lack experience (in any business sector). These comments are of course only applicable if this concerns your situation.

[imron]

that employers foreigners in China you need to make a (last time I heard) 100,000 RMB "deposit". And that's JUST to hire foreigners. You'd also need to make a similarly sized "deposit" for the proper licenses.

These "deposits" however are your registered capital. You need to put it in a bank account and have the relevant government department issue a form that says yes you have that much money in the bank, but then that money is yours to use as your business needs it.

[Lu]

I have always wanted to take the chance to explore china, and maybe to live there for awhile.

If this is what you want, I strongly second the suggestion that instead of setting up a school by yourself, you just go and teach in one. You'll have the time to explore China and live there for a while, without all the mafan, headaches and money loss that can come of setting up a school for yourself.

As to the job security, perhaps you can arrange for a year (or so) of unpaid leave? Ok, now's probably not the best time to ask, but you can try.

[ipsi()]

Ok, now's probably not the best time to ask, but you can try.

Alternatively, now may be the best time to ask - that is, it's a time where they may be considering laying people off as they don't have the money or the work to justify their current complement of staff, and if you're willing to take a year of unpaid leave, that could, in a perfect world, enable them to retain a couple of other staff who they would have had to let go otherwise.

And when you return, business should have picked up again and everything is good. Admittedly, I wouldn't hold out much hope for that, but you never know.

[mcgau]

Is there any reason to target an adult learner? It seems to me that Chinese is more willing to spend money on their kids, not themselves, so if you haven't decided the market segmentation yet, better think of kids (the little emperor) first.

Immersion course and playgroup for kids seem to be immature for China. You're not going to teach English in a conventional way. Just gather a bunch of western faces, let parents pay for their kids to play in your place for a few hours every two day so that they will have a chance of speaking English with native speakers. You're not going just to take fixed monthly fee, but you may earn some more money by selling learning materials. I'm sure that there's a lot of these money-burning stuff to take money from parents. Think of Disney's English learning kit in Hong Kong which is, if I can remember it, sold for HK$40000. Even if parents in China are willing to pay 5%-10% on that price, it can really be a lot of money.

But parents need a brand because there are too many 'fake' and 'black-heart' products in China and a brand is the easiest way to help parents make a choice. I don't know if it's possible to license a brand on English teaching, but at least you need an "expert lookalike" and try to make some seminars to convince parents of your teaching method.

Here I mean any unconventional method. I'm pretty confident that Chinese parents love it. Some time ago, I was told by an exciting mother about the way her kid to learn english vocab.... Take 'eggplant' as an example, they cut it down into "egg" and "plant", ask you to think of an "egg" and some other plant, try to connect the vocab with an image, and help a kid memorize it. This is really an old fashioned way but the best part is that her kid can instantly (INSTANT, that's important) memorize one or two vocab by this method and it's enough to make the mother smile.

Honestly, if your teaching method is not much different from the British council or Wall street English, that means you're going to face very fierce competition.

Edited December 30, 2009 at 08:19 PM by mcgau

[rlibbey]

Give each student the opportunity to excel and gain as much knowledge to achieve their individual goals as they care to. And maybe even reach some new goals they've never before thought possible. Keeping the interest of students will be in the forefront of any teaching methods that plans on being successful. Teaching children or adults is not the issue; the customer demands of the area will dictate the age group. The issue is Quality and Integrity. I am working on a project right now that would target the 15 yr old to 30 yr old, male and female. The key is up to date text, quality instruction that engages the student to speak and the access to higher technology. Many schools just do it on the cheap, it will take money but the offshoot benefits can be great and will put profit at the bottom line. Having a plan is just like a road map; sometimes we all need directions. No risk no glory, my favorite quote is: "Opportunities are usually disguised as hard work, so most people don't recognize them."~ Ann Landers

The only reason outside of benevolence to start a school would be to make a profit and do it better than the rest!

.

[adrianlondon]

Aubergine doesn't break down so easily ;)

[zhouhaochen]

I had a friend in Foshan (Canadian) who started out as teaching English in a school, then started to get private students on the side, as those got more, switched completely to private tuition and as that got more, he opened a school (well, an office with two classrooms) and hired another teacher. And he was doing not so bad when I last saw him.

Maybe thats a better way of easing into the market, first teach, understand, get connections & students and then slowly move into having other people work for you.