23:35 (GMT +7) - Friday 20/10/2017

Vietnam Today

Key requirement

Released at: 08:18, 20/05/2017

Key requirement

Photo: Viet Tuan

Ever-increasing demand for English skills in Vietnam presents huge possibilities for investment in English centers that meet needs.

by Hong Nhung

In the latest research on English language skills among countries and territories worldwide, Vietnam was ranked 31st among 72 countries in the EF English Proficiency Index (EPI), released at the end of last year by EF Education First, a global language training company. The global survey conducted on nearly 1 million adults links English proficiency with income, innovation, and quality of life. Vietnam, which has remained at the medium level, with a score of 54.06 out of 100, follows only Singapore, Malaysia, and the Philippines in ASEAN and is in seventh position out of the 19 countries in Asia.

The English language skills of Vietnamese people have improved significantly over the last few years, as EF EPI had recorded Vietnam at a low level between 2011 and 2014. English is considered as one of the best tools for Vietnamese people in promoting their careers, and hundreds of local as well as foreign English training centers have opened over the last decade to meet increasing demand among diverse age groups and students, parents, and employers of different stripes.

Boom in openings

Vietnam’s English language training market is growing quickly and seen robust expansion in recent years, evidenced, for example, by the massive openings of Apax English learning centers around the country in only the last two years. Apax English was launched in early 2015 by Apax Holdings, a subsidiary of the Vietnamese Online Education Game JSC (EGroup). In mid-2016, the leading Vietnamese adaptive learning company signed a strategic partnership setting up a joint venture with Chungdahm Learning, a South Korean education group, to create diversified English learning products for the local market.

The company, along with EGroup, is to develop advanced digital learning products that are specifically tailored to meet the needs of students, especially those aged six to 14, according to Mr. Kim Young Hwa, CEO of Chungdahm Learning. Apax Holdings is now operating 36 English training centers with more than 20,000 students being trained by 400 native-speaking teachers in nine cities and provinces, concentrated in the northern market, with 28 locations in Hanoi, Bac Ninh, Vinh Phuc, Hai Phong, Quang Ninh, Thai Binh, Thanh Hoa, and Nghe An, while it has eight branches in Ho Chi Minh City.

While Apax English has been dominating the north, the country’s south has so far been dominated by Vietnam-US Society (VUS) training centers. Founded 20 years ago, VUS is considered a pioneer and leading English training center in Ho Chi Minh City, with eighteen branches. It is the largest English language training name in the country in terms of scale, with more than 200,000 young students ranging from four to 15 years old as well as adults enrolling every year. It took initial steps to penetrate into the northern market by opening its first center in Hanoi last September.

Another long-standing English training center in Vietnam since 1994 is Apollo Education and Training Organization. It was the first 100 per cent foreign-owned English training center in the country and been operating nearly 30 schools in seven major cities. Apollo has a wide range of students, from three to 16 years of age in its Junior program and young professionals from 17 and above in its Apollo 360 program, which provides students with both English skills and soft skills via its exclusive methodology (LETS - Learning English Through Subjects), which follows the latest trend in teaching English, of guiding children to think and learn independently from the teacher.

Different from other English education systems, British Council is also known as the UK’s international organization for cultural and education development and arrived in Vietnam in 1993. It has been working with the Ministry of Education and Training (MoET) to support improvements in language testing and assessment, as that drives improvements in public education at universities. The British Council has contributed to the Vietnamese Government’s Foreign Language Project 2020, trained more than 3,500 English teachers, and held the largest Asian foreign language conference in Vietnam. 

Although the British Council has long targeted cultural exchange and received support from UK Government, given the major demand among Vietnamese people to study English, in 2013 it set up two more training centers in addition to its two bases in Hanoi and Ho Chi Minh City. Through this expansion, the British Council aims to provide English training to improve the quality of English language skills among Vietnamese people. 

ILA Vietnam, meanwhile, has an imposing number of locations, with 31 branches in six major cities training 40,000 students and 400 foreign teachers. Since its foundation 16 years ago, it has trained more than 125,000 students, a number other English center chains aspire to reaching. 

A number of different English training centers have launched fairly recently, especially in Ho Chi Minh City and Hanoi, such as VASS, ACET, Wall Street English, Cleverlearn, and IvyPrep, taking the competition to a new level. The fierce competition explains why many English centers have quietly disappeared from the market.

English training centers, by name

Source: VET Research

Skills in need of improvement

Source: Q & Me Survey, 2016

Tough market

Ms. Nguyen Thu Nga, Managing Director of Rise, an English training center from the US based in Ho Chi Minh City, acknowledged that investment in English education has never been easy, especially in the current context of English centers continually expanding by seeking large investment in both quality and scale. Any enterprise, she said, needs to set up long-term investment strategies and must even accept not earning a profit in the initial years. “Location has always been a factor affecting quality and business proficiency, and all major English training centers have also focused on developing their own training programs,” Ms. Nga said.

Apart from training programs that follow a particular curriculum to provide international English certificates to their students, like IELTS or TOEFL, VUS, Apollo, and other names have expanded their portfolio to English training courses in secondary education as well as specific programs dedicated to company staff. This localization of training programs expresses the determination of these foreign investors to conquer Vietnam’s English training market. 

According to one education expert, however, English training centers have been growing too quickly over recent years while the number of local teachers of suitable quality hasn’t kept pace. There also remains a shortage of qualified foreign teachers in Vietnam, sparking a battle among centers for talent. “Staffing costs are higher than for infrastructure, followed by marketing,” he said. “The core characteristic of this sector in being successful is not investment but staffing.” Mr. Andrew Hollins, the former CEO of ACET, agrees that the greatest challenge for English centers in Vietnam is personnel.

Potential remains

As at March, Vietnam’s education market had 320 foreign direct investment (FDI) projects with total registered capital of more than $684 million, accounting for 1.3 per cent of all FDI projects but just 0.2 per cent of capital, in which foreign language training represents just a small proportion of numbers and capital. Vietnam’s education market in general and English language education in particular therefore remain fertile ground for international investors.

At the end of last year, Chungdahm Learning committed to financing $10 million in a joint venture with EGroup to enhance investment and development in Vietnam’s education market, including the chain of Apax English centers, by accelerating the portfolio of products students use at home, in the classroom, and within after-school study programs. 

According to Bloomberg, HPEF Capital Partners Limited, a Hong Kong-based private equity fund, together with other shareholders, wishes to sell its controlling stakes in ILA Vietnam. Some local experts have said if any investor agreed with the price tag of $150 million for the 60 per cent, it would be ranked as one of the largest education M&A deals in the world in terms of scale.

Education companies are also appealing to private equity firms in Vietnam. Mekong Capital invested $6 million in Vietnam Australia International School (VAS) in 2010. Lotus Impact, sponsored by VinaCapital, also made an investment in the KOTO Catering occupational training center. And the World Bank’s private lending arm, the International Finance Corporation (IFC), last year committed to co-invest in a $10 million round into VUS.

Overseas investors have been attracted by Vietnam’s rising middle class, and nearly 60 per cent of the population is under 35 and around 42 per cent are under 24. Mr. Nguyen The Bao, Chairman of the Vietnam American School System (VASS), said that investment in Vietnam’s education sector as well as in English language training are still regarded as having lower risk than investment in other sectors.  

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