VIPkid (pronounced V.I.P.-kid), a four-year-old Beijing-based Chinese startup that provides online English-language courses for children globally, said it will increase investments, introduce more teachers from North America and use artificial intelligence or AI to exploit the huge potential for growth.

"We hope to change the way Chinese children learn English and offer them opportunities to experience native English teaching styles," said Mi Wenjuan, founder and CEO of VIPkid.

"We will continue to introduce teachers from North America, promote Lingo Bus, a new platform for children to learn Mandarin online, as well as apply artificial intelligence and big data to high-quality, personalized education."

The firm has been innovating English-language education by focusing on one-on-one video courses, connecting teachers in North America with Chinese children aged between 4 and 12.

VIPkid's ad appears prominently on a Beijing subway train. Zhu Feng / China Daily

The company offers a progressive pedagogy based on the United States Common Core State Standards. It serves a community of over 200,000 paying students from 32 countries and over 20,000 teachers in the US and Canada.

A fresh round of financing in August brought in $200 million, the largest such fund ever invested at one go in a firm in the K12 online education sector.

Brought into being by angels in 2013, VIPkid has since received financial backing of noted investors such as Sinovation Ventures, Matrix Partners China, Sequoia Capital, Tencent, Yunfeng Capital and Bryant Stibel.

Its monthly revenue reached 400 million yuan ($60 million) in July 2017, prompting VIPkid to raise its forecast for full-year revenue to 5 billion yuan this year from 1 billion yuan last year.

According to consultancy iResearch, by 2018, online education in China is expected to generate annual sales revenue of 200 billion yuan ($30 billion), with an annual growth of nearly 20 percent.

Mi is even more optimistic. "There is a huge growth potential for the online education market. The penetration rate was only 2 percent in the past two years. Its annual growth rate will come up to over 20 percent in the next few years," he said.

China is expected to become a key online education market in the wake of the second-child policy - married couples can now have two kids instead of one. Also, third- and fourth-tier cities in China are expected to see a consumption boom.

"At present, over 50 percent of our students are from first-tier cities. We'll put more resources in the third- and fourth-tier cities, letting children there enjoy high-quality English teaching resources."

VIPkid and the Jack Ma Foundation have launched an English-language education initiative for schools in rural China with the goal of reaching 200 schools in rural China in two years, Mi said.

The firm makes efforts to teach Chinese to non-Chinese kids as well.

"As China's presence on the global stage continues to grow, Lingo Bus has designed an immersive online Chinese learning program for students aged 5 to 12. This is expected to be a pioneer in bringing China to the world and bringing the world to China. It aims to attract 50,000 paid users and 10,000 professionally trained Mandarin teachers over the next three years," said Mi.

However, Neil Wang, president of consulting firm Frost & Sullivan in China, struck a note of caution. "The online education sector faces some challenges. It's hard to supervise and guarantee teaching quality as the quality of online teachers varies. Besides, students may not focus their attention during the learning process."

Moreover, there are no comprehensive evaluation standards in place yet to assess the effectiveness of both teaching and learning, he said.

"The key to growth is to expand the course resources. Online platforms should provide tailor-made services and recommend textbooks depending on the age, occupation, interest of students," he said.

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