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ASEAN Business File

Singaporean education companies expand overseas presence

English and math teaching expertise driving success in China, Vietnam and beyond

A MindChamps preschool in the United Arab Emirates.

SINGAPORE/YANGON -- Scholastic groups in Singapore are busy answering demand for first-class education in a region where parents are known for their strong focus on children's education.

On Sunday, Singaporean for-profit education group MindChamps PreSchool announced it will set up a $200 million fund to expand the MindChamps franchise in China. The company is partnering with Hong Kong-based investment house China First Capital Group, one of MindChamps' key investors, to manage the fund and run the franchise operation.  

MindChamps had earlier signaled its intention to open preschools in big Chinese cities, starting with Beijing this year. The top 5% of income earners, who are typically eager to provide their children with high-quality education in English and other subjects, form the target market. 

Back in December, MindChamps PreSchool signed a franchise agreement with Evergrande Group of Vietnam to establish a network of 20 education centers in Vietnam.

"We brought Singapore's No. 1 premium preschool brand to our country to take the No. 1 position in Vietnam," said Pham Tuan Son, chairman of Evergrande's Vietnamese unit.

The deal came amid the Vietnamese government's push to expand early childhood education. MindChamps also inked a franchise deal in Myanmar with a local partner.

Founded in 2008, MindChamps' preschools charge 1,800 Singapore dollars ($1,364) in monthly tuition. Despite the hefty sum, the company achieved growth by sparing no expenses, partnering with neuroscientists and educational specialists from Australia, the U.K. and the U.S. Its number of franchises expanded to 47 preschools and reading centers within Singapore, and 10 locations overseas.

MindChamps debuted on the Singapore stock market in November, raising S$46.2 million in the process, and the group is using those funds to accelerate its international expansion. Tuition at its Vietnamese locations is to be set above $1,000 -- which is steep considering Vietnam's average income levels -- but the company sees strong interest from wealthy parents.

MindChamps will be following the path of its forerunner EtonHouse International Education Group, which is also headquartered in Singapore and specializes in preschool to high-school education. The group already runs international schools in about 20 Chinese cities and also plans schools with student bodies of 5,000 -- bigger than previous institutions in its portfolio.

EatonHouse schools in Singapore have become popular among wealthy local parents.

EtonHouse's footprint extends across about 100 schools in 12 countries, including Indonesia, India and even Japan. In its home base of Singapore, the group has opened schools that draw upper-middle-income families through affordable tuition. That strategy will likely be replicated internationally.

The demand for English-language education across Asia has been fueling the expansion in for-profit education centers in the region. This niche used to be filled mostly by British and American international schools. But the Singaporean educational industry is steadily capturing market share in the region, leveraging its experience in providing bilingual English and Chinese education in domestic classrooms.

Singaporean conglomerate Fraser & Neave positions education as its third-biggest segment behind dairy products and beverages. The group has poured resources into exporting educational materials, both digital and otherwise. Group publishing unit Marshall Cavendish Education has provided math textbooks to public elementary schools in Chile since 2014.

In Singapore, schools teach math concepts by drawing blocks and bars. Visual understanding allows children to solve complicated math problems before learning formulas. Because the city-state is home to multiple ethnic groups, this approach serves to get past the inevitable language barriers in early years. Critics outside of Singapore say that method of teaching makes learning more accessible. It is within this context that Marshall Cavendish publishes educational materials in 45 nations in Asia and the West in local languages.

Singaporean educational outfits are riding on the brand strength that the country has built in recent years, said Aaron Koh, associate professor at The Chinese University of Hong Kong. Koh said the reputation spread as Singaporean students achieved top scores at international examinations. However, the country has also drawn criticism for the stress placed on schoolchildren. Not only do they have to deal with piles of homework and exams, but many also start attending cram schools beginning with preschool.

Yet Singapore-style education still commands strong demand, especially in Asia, due to the heavy emphasis that the region's societies place on academic records. Parents will only become more obsessed with education as they try to ensure that their children can adapt to changes such as the adoption of artificial intelligence, said Koh.

In Myanmar, Japanese cram school operator Gakken Holdings is stepping up efforts to bolster its presence in order to capture rising demand ahead of rivals. The company plans to double the number of schoolrooms in the Southeast Asian country to 30 by fall of this year. The company launched in Myanmar in 2013, and currently has two Gakken Classrooms under direct control, along with 12 run by franchisees.

A classroom in Yangon, Myanmar run by Gakken Holdings.

The education company already touts the largest network of cram schools in Myanmar, but it envisions a chain of 100 classrooms in 2023. "There are also many people in provincial cities that wish to open [franchise] classrooms," said a Gakken representative.

Class sizes range from 20 to 30 students, mostly from upper-income families. Monthly fees for two classes a week are 60,000 kyat ($45). Although Myanmar education is dominated by rote memorization, Gakken stresses critical thinking that can be applied to the real world.

Asia's growing education market lures Singaporean businesses to accelerate overseas expansion, pushed by the limitation of the country's small domestic market. The EY-Parthenon education practice of Ernst & Young estimated that spending for private education in the Asia-Pacific region reached $260 billion in 2015, second only to North America's $480 billion. "[A]s demand for education has risen, governments have struggled to match the supply," a Parthenon report said. "The burgeoning middle class in emerging markets has turned to private education to meet the demand for high-quality education."

Amitabh Jhingan, a partner with Transaction Advisory Services, Ernst & Young, forecast that private consumer spending in education across the Asia-Pacific region would grow 7-11% annually in the next five years. "The sector is only beginning to see education businesses consolidate in the marketplace and businesses around the world expanding overseas," he noted.

Demand for international schools is rising, "largely driven from affluent locals," said Rohit Hemnani, spokesperson in Singapore for the education and health care businesses of property consultancy JLL. These parents see high-quality, English-medium education as "a springboard into Western universities," Hemnani said. Mainland China, Hong Kong, Thailand, Malaysia and Vietnam will see particularly strong demand, he noted.

To bank on the demand, educational institutions from developed markets are firming their footholds in Asia. Duke University, based in the U.S. state of North Carolina, will start an undergraduate degree program later this year at Duke Kunshan University in China's Jiangsu Province. In 2017, the first cohort of students graduated from the Malaysian campus of the U.K.'s University of Reading. That campus is located in the southern state of Johor.

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