When faculty at Beijing’s RYB Kindergarten were accused of child abuse in late 2017, parents began to worry more about their children’s safety at school. RYB is a high-end kindergarten run by a New York-listed company, so, despite the fact it was not the first time abuse had occurred in a Chinese kindergarten in recent history, the public was particularly incensed.
The scandal made Ye Renqian think of an afternoon he had picked his daughter up from her kindergarten three years earlier. The school guard didn’t know who he was but let him take his daughter home anyway. This earlier incident inspired Ye to found Zhang Tong Jia Yuan, a mobile interactive platform for early childhood education, in September 2014.
Goal 1: Protecting children
Facing competition from more than 300 other Chinese early childhood education platforms, Zhang Tong Jia Yuan chose to work in an often overlooked market – non-chain private kindergartens in third- to sixth-tier cities – rather than chasing opportunities in the oversaturated education markets in cities such as Beijing and Shanghai.
Shenzhouying, the parent company of Zhang Tong Jia Yuan, had previously developed and patented an ultra-low bit rate video technology. This technology enabled Zhang Tong Jia Yuan to provide its primary service to kindergartens and parents in 2014: real-time broadcast via a mobile app of teachers’ and children's activities in kindergartens.
The service has reduced parents’ complaints about kindergarten teachers by 30%. Having that extra layer of security has also helped parents build trust with kindergartens.
Zhang Tong Jia Yuan’s R&D team has since added other functions to its platform, such as child pick-up confirmation, tuition payment and daily sign-in. Parents may authorize someone besides themselves to collect their child by sending that person’s photo to a teacher or school guard.
Parents can also use the app to take pictures of their children and share them on the “child growth archive.” These photos can subsequently be uploaded to other social media platforms. Most importantly, when parents want to check in on their children at school, all they have to do is click the live streaming button on the app.
Goal 2: Making a profit
Many other early childhood education platforms provide free services to kindergartens and parents in order to boost adoption during early stages. But convincing users to pay for products and services is difficult when they are accustomed to getting them for nothing.
Knowing the pitfalls of such an approach, Zhang Tong Jia Yuan has charged parents for its live video streaming service since its launch. Parents rarely hesitate to pay for a service that relieves fears about their children’s safety. As of March 2018, parental subscriptions make the platform RMB 10 million daily.
Ye believes that charging reasonable fees – access to Zhang Tong Jia Yuan costs parents RMB 100–300 per child each semester – makes it possible for the startup not only to achieve sustainable growth, but also to offer users better services. Zhang Tong Jia Yuan has added quality content to its platform by partnering with companies such as Kaishu Story, a children’s storytelling startup with tens of millions of followers.
The startup’s business model has attracted attention and investment from US-listed New Oriental, the largest provider of private education services in China. “Parents are 100% willing to pay for quality child care and education. We see a promising future for this company,” said New Oriental founder Yu Minhong.
The only profitable platform in China’s early childhood education market, Zhang Tong Jia Yuan is now digging deeper into its economic potential.
Using big data analysis, the startup has added customized service recommendations. Earlier this year, it delivered a push notification ad for a Shanghai Disneyland event – 75% of app users bought tickets after viewing the ad. Advertising now makes Zhang Tong Jia Yuan nearly RMB 100,000 per day.
Since China’s new two-child policy took effect in January 2016, an anticipated increase in the birth rate is expected to eventually drive up demand for early childhood education nationwide. Because of this demographic shift, Yu is confident that, by 2022, Zhang Tong Jia Yuan will be a listed company with a higher valuation than New Oriental, which market value exceeded US$10 billion in 2017.
Goal 3: Helping reduce the regional education gap
Kindergarten teachers play an important part in Zhang Tong Jia Yuan’s business model: “Parents will use your product only when their children’s teachers opt to use it,” said Ye. On average, one active teacher user brings in ten active parent users.
Zhang Tong Jia Yuan has added a rating system to its platform: parents rate their children’s kindergarten teachers on a scale of five stars. Teachers with five-star ratings receive bonuses from the startup.
In 2017, Ye decided to put RMB 10 million into training teachers who use the app and live in remote inland areas. After teachers complete the training course, Zhang Tong Jia Yuan tops up their current salaries based on parental rating.
Having fulfilled its initial goal to relieve parents’ worries about child safety, these new measures are part of Zhang Tong Jia Yuan’s plan to tackle the problem of the regional education gap. Poor inland areas struggle to find and pay high caliber teachers, whereas first-tier cities like Beijing and Guangzhou have the money and resources to attract and maintain the best talent.
The financial rewards Zhang Tong Jia Yuan offers might make teaching in rural areas more attractive and could help schools recruit higher qualified candidates to work in kindergartens. If the training initiative is successful, children in inland areas will receive better early childhood education, and teachers can sharpen their skills and earn more money.
There are no easy answers, but Zhang Tong Jia Yuan has taken specific steps towards creating a more promising future for both the startup and the children it serves by providing quality education resources and training rural kindergarten teachers.
