a business initiative for launching an education portal in china presented by

A Business Initiative: Education Portal in China 1

A Business Initiative for LaunchiA Business Initiative for Launchingng

An Education PortalAn Education Portalin Chinain China

Presented byPresented byAplus Business Consulting Ltd.Aplus Business Consulting Ltd.

Newton Press Ltd.Newton Press Ltd.Zenocom Ltd.Zenocom Ltd.July 15, 2000July 15, 2000


Chinese Cultural BackgroundsChinese Cultural Backgrounds

Population: 1.26 billion Urban: 29% ( = 0.37 billion) Ethnic groups: Han Chinese, 92% Education: Compulsory, 7 - 17

Literacy (1996): 82%

Age Distribution (%)

40-5922%

60 +10%

20-2918%

< 1932%

30-3918%

Over 70% of Chinese people are still living in rural areas under poor conditions



The Han Chinese culture has been dominated the Chinese history of more than 5,000 years

Though different pronunciations have resulted in hundreds of dialects, the written Chinese language is one and the same

The unified written Chinese language has been the major driving force in shaping the Chinese national identity



In China, the ability to read and write is the highly respected prestige for people

Teaching children to recite and learn to appreciate ancient poems and articles constitutes the most important part of pre-school education

Ancient Chinese texts of 2000 years ago are far more closer to modern Chinese people than the ancient Greek texts to modern Western people



Based on its unified cultural heritage, today’s China could constitute the largest single media market in the world. The one and the same Chinese language has been the most cherished fortune for Chinese people through the history to today.


Chinese Economic IndicatorsChinese Economic Indicators

GDP Growth Rate

0%

2%

4%

6%

8%

10%

12%

'81-90

avg.

'95 '97 '98 '99 '00estm.

Source: IMF

Per Capita Annual Income

US$0

US$500

US$1,000

US$1,500

US$2,000

US$2,500

US$3,000

'97 '99

Rural Ten Big Cities


Chinese Economic IndicatorsChinese Economic Indicators

The Purpose for Saving0% 10% 20% 30% 40% 50% 60% 70%

For sickness orinjury

To financeeducation

For old age

For child'smarriage

To finance ownbiz

To buy homeappliance

To remodel thehome

Source: Gallup

Household Spending Distribution(%)

Clothing7%

Home9%

Dailygoods ex.

food8%

Education7%

T&E7%

Insurance4%

Medical3%

Food39%

Saving16%

To finance education is among the top priority for Chinese people.


Chinese Economic IndicatorsChinese Economic IndicatorsHousehold Ownerships

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Color TV

Phone

Pager

Portable Stereo

VCD

CD Player

Mobile Phone

Rural Ten Big Cities Source: Gallup 1999

So, what is next for people to own? Computer and Internet access!


Chinese Media OverviewChinese Media Overview

Like everywhere else in the world, TV is the single most powerful medium in China At least 55% of the total population is covered by various TV programs, i.e., total TV

audience is more than 700 millions.

Penetration of TV0% 20% 40% 60% 80% 100%

Rural Urban

TV Audience0 100 200 300 400 500 600 700 800

Rural Urban Total

Millions


Chinese Media OverviewChinese Media Overview

While TV is the strongest medium, Chinese people keep very strong reading propensity According to the SRG research, over 80% of residents in the big three cities regularly

read at least one newspaper Penetration ofnewspapers

0% 20% 40% 60% 80% 100%

Beijing

Shanghai

Guangzhou


Internet: The Emerging New MediaInternet: The Emerging New Media

In the past years, number of Internet users has been doubled every half year

Source: CnNIC, IDC

Number of Internet users in China

0.1 0.2 0.5 0.9 2.04.6

8.913.0

20.0

45.0

0

10

20

30

40

50

Dec '96 Jun '97 Dec '97 Jun '98 Dec '98 Jun '99 Dec '99 Jun '00 Dec '00 Dec '02

Millions

Forecast


Internet: The Emerging New MediaInternet: The Emerging New Media Main Internet players in China:

Sina.com (Nasdaq: SINA) Sohu.com (Nasdaq: SOHU) Netease.com (Nasdaq: NTES) China.com (Nasdaq: CHINA) 8848.net

Main Investors: IDG Intel Dell Yahoo!

Sina.com is dominating the Chinese Web-based news service


Internet has brought to Chinese people totally new experience: A new world of information A new world of communications A new world of business

With the advent of Internet, e-Business has become a dominant theme



Internet: The Emerging New MediaInternet: The Emerging New Media Internet users tend to be:

Young and energetic Well educated Eager to try new things

Age breakdown of Chinese Internetusers

Above 406%

36~406%

31~3510%

25~3034%

Below 2444%

88% of users are aged below 35 84% have taken at least 3-year college education

Education breakdown of ChineseInternet users

University orabove52%

3-Yr College32%

High Schoolor below

16%

Source: CNIC, Jan 2000


While sina.com is dominating the Internet buzz in China, other e-business-oriented web sites are growing faster than the news-oriented sites.



Problems in e-Business development in China: Lack of infrastructures: Payment, credit system, bandwidth Speculation / gamble motives Lack of clear business model and profit zone Lack of long-term objectives Lack of experience Lack of capital market

All these problems suggest that we need more sophisticated thinking on the e-Business developments



The current dominant portals are all news-oriented and difficult to present visible profit zones The current e-commerce portals are difficult to present their business models because of the yet-to-complete infrastructures In contrast, the demand for on-line education is outstanding and will constitute a profit generator in the very near future.

Why Education?Why Education?


To whom the education portal we can address? For getting better career opportunities, large quantity of Chinese business people who are eager to learn business management knowledge and to obtain diplomas from world-known education institutions Corporate clients who want to improve their employees’ business qualifications Western business people who are eager to learn Chinese business systems and environment.

Why Education? DemandWhy Education? Demand


To create a web site that is centered with education- and knowledge-related contents and therefore to create a very large web-based community for learning

Provide aggregated entry into online education business, one of the key components of the larger knowledge-related e-commerce in China

Establishing and deepening Chinese educated net citizenship to create new base of customers for cross-selling products and services

Create new, enhanced operating platform for expanding other online knowledge shopping capabilities

On-line education offeringsOn-line education offerings


I. Vast education- and knowledge-related contents: Daily campus news of both domestic and international

universities Info of education opportunities within and outside China On-line editions of both Chinese and European academic

journals and other academic resources Who-is-Who directories of outstanding Chinese and European

professors and researchers On-line directories of library resources Free educational contents

On-line education OfferingsOn-line education Offerings


II. Paid educational contents Business management courses for Chinese students Corporate training programs Introduction of Chinese business to European

businessmen

On-line education OfferingsOn-line education Offerings

III. Derived E-Commerce Activities


The education portal will adopt an external vendor strategy for customer service

Business Model – Customer ServiceBusiness Model – Customer Service

Considerations: Rapid time to market Avoidance of heavy fixed investment Ability to leverage vendor experience in online services

Vendor Selected: Those who have significant resources in business education

Europe: University of Cergy, ESSEC, University Without Walls, Transcultural Network, etc.

China: Chinese Academy of Sciences (CAS), Chinese Academy and Social Sciences and several outstanding universities

Other: Earnest & Young and Aplus Business Consulting Ltd. for corporate training


Low risk cost structure Limited up-front investments Strong push for variable cost structure Low break-even point

Aggressive outsourcing Rapid time to market Ability to flexibly test and analyze multiple offers Soft / gradual launch

Business Development StrategyBusiness Development Strategy


Phase One (Oct 2000 ~ Mar 2001) Overall designing of the architectures, especially the

database structure Setup of the operation entity and the work team Integration of major academic resources: at least 20,000

contents pages Key government relations

Timing & ScheduleTiming & Schedule


Phase Two (Feb ~ Jun 2001) Definite designing of the paid education contents Construction of paid contents Launch of the free contents Construction of physical education institution Integration of related parties in Europe and China Integration of the work flow Test of the learning programs



Phase Three (Jul ~ Sep 2001) Completion of the paid contents construction and final

test of the learning programs Pre-launch marketing Launch of the Europe MBA and the corporate training

programs Student enrollment: Europe MBA and corporate training

programs



Cost & revenue constituentsCost & revenue constituents

Revenues Membership fee Tuition fee: Regular students Tuition fee: Corporate clients Advertising E-commerce

Costs Variable cost Research, public relation & promotion Overheads


Financial forecast:Financial forecast:Revenue & costRevenue & cost

020004000

60008000

1000012000

140001600018000

Yr 0

0

Yr 0

1

Yr 0

2

Yr 0

3

E-commerceAdverisingTuition fee: Corporate clientsTuition fee: StudentsMembership fee

US$,000)

02000

4000

60008000

10000

1200014000

1600018000

Yr 0

0

Yr 0

1

Yr 0

2

Yr 0

3

Overheads & G&AResearch & promotionVariable cost


Financial forecast: P&LFinancial forecast: P&L

P&L Yr '00 ~ 03

-10,000

-5,000

0

5,000

10,000

15,000

20,000

Yr 0

0

Yr 0

1

Yr 0

2

Yr 0

3

Revenue Cost Net Income

(US$,000)

Cum P&L Yr '00 ~ 03

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

Yr 0

0

Yr 0

1

Yr 0

2

Yr 0

3

Cum Revenue Cum CostCum Net Income

(US$,000)


Leading entities Aplus Business Consulting Ltd.: A leading consulting firm specializing in

marketing communications and customer publishing for international IT clients. In the past years, IBM, Cisco and Compaq are among its client list.

Newton Press Ltd.: An affiliate to Aplus, specializing in print magazine publishing business and consulting for international publishing companies.

Zenocom Ltd.: Also an affiliate to Aplus, specializing in development of Web business. In addition to its “Science on Line” (SOL) Web site, it is providing Web content service to IBM, Cisco, Compaq and iTeleWeb Inc.

These three entities, all under the leadership of Mr. Lu Xiang, will join hands together to form partnership with European institutions. Their resources relating to Web content creation will be integrated into one force.

Participants in ChinaParticipants in China


Supporting entities Chinese Academy of Sciences.: The leading and the largest

scientific research organization in China. Chinese Academy of Social Sciences.: The leading and the

largest research organization specializing in humanities and social sciences.

Fudan University, Nanjing University & other universities.: Major leading universities in China

China National Library.: The largest library in Asia.

Participants in ChinaParticipants in China


Mr Lu Xiang3/F, Building C, A3 Baijiazhuang Road, Beijing 100020

*Tel

(86-10)65923373, 65867609*

Fax(86-10)65859114

*Email

[email protected]@aplus.com.cn

ContactContact

a business initiative for launching an education portal in china presented by

Documents

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