Baidu turns to Wanxue for education content

However, Beijing-based Wanxue, which has a network of more than 100 schools in 25 Chinese cities, was keen to develop its online teaching business and Baidu was an obvious conduit. With interests aligned, last week Wanxue announced a RMB100 million ($16 million) Series C round funding led by Baidu. Hao Capital and existing backer DCM also participated.

The company has now moved to a new domain name under Baidu's existing platform - wanxue.jiaoyu.baidu.com, from which it will provide cloud-based online teaching courses. But Wanxue's options remain open.

"This investment does not mean that Baidu is integrating with Wanxue, distributing all online learning material mainly through the Baidu platform," says Kenneth Yan, principal at Hao Capital. "Wanxue can deliver its training courses through different online channels."

The eight-year-old education provider specializes in training students for postgraduate entrance examinations and claims to control 15% of this market niche. Wanxue secured $16 million in its previous round of funding from DCM, Sequoia Capital, Legend Capital and F&H Fund Managment in 2011. Three years earlier it raised $10 million from Sequoia and Legend.

The company started offering online services in 2011 but growth was slow, with most revenue coming from offline schools. When domestic rival New Oriental Education & Technology formed a joint venture with Tencent earlier this year, Wanxue knew it had to up its game.

"Even though Wanxue has already reported a profit, it isn't in a rush to launch an IPO. The company is well-placed to address the growing demand for online education and it still has much room to grow. Baidu can help fill the gap," adds Yan. The new funding will go towards launching a variety of online curricula aimed at students preparing for civil service, English language and recruitment tests.

According to iResearch, China's online education industry generated RMB83.9 billion in revenue last year and will reach RMB173.39 billion by 2017. All of the major domestic internet companies have entered the space, although their self-run platforms have been criticized for lacking quality.

Tencent built a teaching function into is QQ Messenger application and is now working on an English-learning app. Meanwhile, Alibaba has moved to improve its content by leading a $100 million investment in online tuition provider TutorGroup.
"Offline teaching will become tightly integrated into the online community," Yan says. "As an investor, we will look at potential investees with strong capabilities on both sides."

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• Topics
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• Baidu
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