BEIJING - Xueda Education Group, a provider of personalized after-school tutoring for elementary and high school students in China, expects to expand its service network and product and service offerings through mergers and acquisitions, says Xin Jin, the company's vice-chairman and CEO.
In an exclusive interview with China Daily, the 34-year-old co-founder of Xueda said learning centers in China with strong branding and a proven track record of more than 10 years of operation are attractive targets for mergers and acquisitions (M&A).
"We hope to see some action this year," he said, referring to the time frame for sealing an M&A deal, which will be financed by the group's existing cash and cash equivalents of 1.4 billion yuan ($213 million).
"Chinese people attach great importance to education, and so our services are well sought-after because parents want the best for their children," he said. At present, Xueda has 207 learning centers across China.
He predicted that the group's 2011 revenue will grow 40 percent from the $154 million earned in 2010. The planned acquisitions are in line with the group's aim of strengthening its position as a nationwide provider of private tutoring, in a country with an estimated 200 million elementary and secondary students. Together with pre-school children, these students account for one-sixth of the total population.
"Managing rapid growth will remain a major challenge. We are consciously taking steps to find the best possible fit for management, operations, talent and growing the business," Xin said.
Apart from acquisitions, he also considers partnerships with foreign educational institutions a likely expansion route for the company and a means of entering the international market.
Chinese law allows foreigners to hold an equity stake of up to 50 percent in privately-owned schools.
Xin said Xueda is also interested in acquiring technology companies with successful patents that could add value to its online tutoring services and aid expansion.
These include the ability to provide online exams, self-study, real-time learning, study packages, priority services to students and enhanced quality monitoring of students by the teachers.
With advanced technology, Xueda could diversify into the group-study market, providing classes of between two and 10 students, or larger classes for 15 to 20 students, Xin said. The company already offers one-on-one tutoring.
On average, each enrolled student spends 15,000 yuan a year on Xueda's services. Popular subjects include mathematics, English, Chinese language, chemistry and biology.
At the end of last month, Xueda had 100,000 registered students. That number is expected to increase to 150,000 this year, said Xin.
Xueda was founded in 2001 by three college graduates who saw the potential of private tutoring in the Chinese market. The group listed on the New York Stock Exchange in November 2010.
According to the research company IDC, Xueda was the country's biggest provider of elementary and high school tutoring in terms of revenue in 2009, and it operated the largest tutoring network in terms of cities covered as of June 2010.
