Korean parents spend a lot of money on their children`s education, believing entry into prestigious schools is key to their offspring`s success.
Despite the country`s slowing economy, Korea`s private education market has been growing by an annual average of 12.2 percent, according to data from Hyundai Securities.
Domestic and foreign investors have been betting on the expanding private education market, especially the e-learning market.
The online education market has been expanding by an average 14.5 percent during the five past years, boosted by the zeal for private education and high broadband penetration rate.
The market is expected to skyrocket to 2 trillion won ($2.1 billion) in 2010, from 1.6 trillion won in 2006, Hyundai Securities said.
One of the leaders in the market has ample reason to see huge growth potential in the future.
<**1>"We have been focusing on our e-learning business, and plan to expand it because the world is gradually turning to the online market," said Son Joo-eun, CEO of Megastudy, the country`s top e-learning company.
Megastudy, which was launched by the star lecturer-turned-CEO, mainly provides online education to junior high and high school students.
Since its launch in 2000, the firm has been doubling its revenues every two years -- to 20.4 billion won in 2002, 50.3 billion won in 2004, and 101.3 billion won in 2006.
Its revenue reached 162 billion in 2007, with the CEO expecting 2008 revenue to surge to exceed 210 billion won.
The company, a household name among students and parents, is a favorite in the Korean stock market. Foreigners now hold 49.9 percent of its shares listed on the Kosdaq market.
Not content with the success and to sustain growth, Megastudy has also been expanding into the adult education business.
Just last month, the company acquired 86.96 percent of Pareto Medical Academy, an educational institution specializing in medical/dentistry eligibility tests (MEET/DEET), for 5 billion won. Students who want to go to the four-year medical or dentistry graduate schools are required to take MEET or DEET starting since 2003.
Korea will also adopt an American-style law school system next year, which is creating a new market for the Law Education Eligibility Test (LEET), modeled after the U.S.` Law School Admission Test (LSAT).
Son said the company is considering entering the LEET market too.
"We are preparing to enter the law school market. We are waiting for the right time," Son said in an interview with The Korea Herald.
Megastudy also eyes the overseas market, primarily Japan, whose education system is similar to Korea`s, he said.
"We will begin preparing for business in Japan in the first half of this year."
Regarding the outlook for the 2008 private education market under the new government to be led by President-elect Lee Myung-bak, Son said, "There is both opportunity and danger."
Lee`s promise to expand elite high schools could potentially cool private education fever by improving the quality of public education. On the other hand, Son said, such a policy would also create private education demands from students who want to go to elite high schools, he said.
"There will emerge a strong market for special-purpose high schools," he said, referring to top-notch high schools specializing in foreign language and science education.
Therefore, the company plans to bolster its middle school education unit, Mbest, the CEO said.
Son also hinted that the firm could make a foray into non-education business.
"We can do a totally different business. I think that a company should be able to make a surprise transformation by launching a business which it believes would be a success."
He said detailed plans have not been made.
The company shined on the Kosdaq market last year, with its shares jumping by three times from January. Its market capitalization once exceeded 2 trillion won this year, topping the secondary stock market. Its share price closed at 269,000 won on Dec. 28 last year.
By Jin Hyun-joo
(hjjin@heraldcorp.com)