Decline of English Center Giant Spells Opportunity for FDI

In the wake of a number of troubles facing Apax Leaders, once one of Vietnam’s biggest English language training providers, foreign firms may find a fertile market entry opportunity. Here’s what foreign firms working in this space should know.

Apax Leaders, a private chain of English language training centers in Vietnam, is facing a decline in enrollments amid damage to its reputation over failing to pay its staff and poor teaching standards.

Many parents whose children attend Apax Leaders English centers in Ho Chi Minh City have expressed dismay with the company, citing breaches of the teaching contract, fraudulent activities, and misappropriation of assets, and are demanding fees already paid be reimbursed.

Only one in 41 Apax centers in Ho Chi Minh City remains operational, with the remaining centers closed and sealed off. As Apax looks to downsize its operations, however, other English education brands have seized on the opportunity to expand.

Here’s what foreign English training centers should know if they are thinking about taking advantage of the current market dynamism.

What’s driving demand for English language training?

Greater international integration

An estimated 1 billion people worldwide speak English. It is an official language in 67 countries and a second language in 27. Furthermore, with the expansion of the digital economy, this is becoming more important as the bulk of information online written in English.

English is also crucial for travel, with around 350 million people communicating in English out of the nearly seven billion people inhabiting the world today. English also serves as a universal language for business communication, in particular, making it an essential skill for professionals worldwide.

It is a requirement to enter university

The Vietnam National Qualifications Framework, introduced in 2016, sets foreign language proficiency standards for entering university. The minimum requirement is a foreign language proficiency level of 3 out of 6, which is equivalent to the Common European Framework of Reference for Languages B1 level.

Most universities nowadays seek international certificates, such as IELTS, TOEIC, TOEFL, and APTIS. Numerous institutions also demand high proficiency levels, particularly in fields related to foreign languages, top-tier majors, associate programs, and certain disciplines within the realm of economics.

Score thresholds vary across institutions, with IELTS typically ranging from 5.5 to 6.0 and TOEIC from 450 to 550. Foreign language proficiency standards are considered valuable tools for students to confidently enter the job market after graduating and in the pursuit of higher-remunerated positions and to be hired in multinational enterprises.

People with English skills get paid more

English communication skills and a minimum B2 level of English are very important when applying for a number of positions, according to Luong Tu Anh, CEO of Mat Bao BPO, a leading business process outsourcing company.

Furthermore, a survey conducted by the Navigos Group found that 60 percent of job openings required foreign language skills, with 31 percent stating basic communication skills, 22 percent requiring reading comprehension abilities, and 13 percent requiring fluency in all language skills. In contrast, 34 percent of the survey participants said their jobs did not require foreign language proficiency, as reported in Thanh Nien.

This survey also revealed that 95 percent of candidates without foreign language skills had a salary of less than VND 10 million (US$424), while 37 percent of candidates with fluent foreign language skills earned a salary exceeding VND10 million (US$424). These findings suggest that employees with foreign language proficiency have better income prospects.

National Foreign Languages 2020 Project

The National Foreign Languages 2020 Project (NFL2020) is a Vietnam government initiative to enhance the quality of English language education. The project aims to strengthen the teaching and learning of foreign languages, primarily English, across all education levels. However, the project’s outcomes have not yet been met for various reasons.

In December 2017, Deputy Prime Minister Vu Duc Dam approved amendments and additions to prolong the project for 2017-2025. By 2025, all university foreign language majors must meet defined criteria in order for students to graduate. A total of 80 percent of other majors must also meet this criterion.

Challenges opening English centers in Vietnam

Manpower shortages

Vietnam’s recruitment of foreign teachers is a significant issue. With multiple job postings across a broad range of social media sites and online recruitment services, a lot of English centers struggle to recruit high-quality teachers, according to Tuoi Tre News.

This has been echoed by the General Director of EQuest Education Group, Nguyen Quoc Toan, who told the popular newspaper that the challenge of hiring foreign teachers was procedural barriers associated with applying for work permits. He emphasized the need for flexible and expedited procedures from state agencies to address the teacher shortage effectively.

Attitude toward English centers

The Apax Leaders incident has led to a shift in parents’ attitudes toward English centers. Whereas in the past, particularly with Apax, parents had paid months of fees in advance, they are now more cautious and looking to reduce their risk.

Parents have become more discerning when choosing an English center, verifying the center’s reputation, accreditation, and track record before enrolling their children and paying tuition fees.

Leading English language training providers in Vietnam

Apollo English

Apollo English is recognized as one of the oldest English language training providers in Vietnam.

Established in 1995, Apollo English claims to have successfully trained over half a million students in Vietnam.

Recently, Apollo English announced plans to expand. This expansion strategy aims to position Apollo English as the English language training provider with the largest number of high-end centers in Vietnam.

ILA Vietnam

ILA Vietnam has also emerged as a notable player in the field of English education. The company operates 60 centers across 15 major cities, catering to a broad student population.

Notably, ILA emphasizes its competitive advantage of employing a team of over 700 qualified and experienced native teachers. All instructors are required to hold a bachelor’s or master’s degree along with internationally recognized English language teaching certifications.

British Council

The British Council, established in 1934, is the United Kingdom’s international organization for cultural cooperation and education. Since its inception in Vietnam in 1993, the British Council has significantly contributed to English education within Vietnam.

The British Council also fosters cultural initiatives and educational partnerships to enhance the relationship between Vietnam and the United Kingdom. The organization promotes cross-cultural understanding and connectivity through the English language and serves as a vital bridge between two diverse cultures.

Investment opportunities in the English education market

Teaching apps

The COVID-19 pandemic has further accelerated the growth of the education technology (Edtech) market. A large portion of Vietnam’s population is under the age of 35 and the country’s English proficiency level remains low. This presents opportunities for the development of the EdTech market, particularly English language teaching apps. Notably, 3 percent of Duolingo’s daily active users hail from Vietnam.

One popular app is Monkey, a language-learning application developed in 2014. It is among the most widely used among English language learners in Vietnam. By July 2021, the application had surpassed 10 million users.

Other applications, such as ELSA Speak, are also popular.

The global EdTech market is projected to exceed US$181 billion by 2025, up from US$85.8 billion in 2020. Vietnam, where English is not widely spoken as a second language, has a significant demand for English language learning.

See also: How to Invest in Vietnam’s EdTech Industry – Vietnam Briefing News

Filling the APAX gap

With Apax Leaders downsizing, other English training providers have capitalized on the opportunity to expand and increase their market share. For example, ILA announced a tuition waiver for parents of students whose education was disrupted at Apax Leaders and IELTS Cherubim also waived tuition fees in the wake of Apax Leaders’ ongoing struggles.

BrightCHAMPS, a US$650 million educational startup, also offered three months of complimentary classes to impacted Apax students.

Regulations on foreign investment in the English education market

Foreign language training is regulated in Vietnam. Following investment registration and establishment of a business, investors are required to complete procedures for obtaining a license to operate a foreign language center as outlined in Decree No. 86/2018/ND-CP on foreign cooperation and investment in the field of education. This includes the following considerations:

• The minimum investment capital is 20 million VND per student (excluding land-use costs).
• The education entity must have organizational and operational regulations that outline teaching formats, exams, tests, and assessments.
• They must have enrollment plans that are publicly announced, with course information including curriculum, materials, learning objectives, teacher profiles, assessment methods, course commencement dates, and tuition fees.
• Certificates and diplomas must be registered with a relevant state agency for recognition throughout Vietnam.

Next steps

The current landscape of the English education market in Vietnam presents a promising opportunity for foreign investors. With the recent downsizing of Apax Leaders, a prominent player in the foreign language learning industry, the market has become more competitive, prompting other companies to vie for a share of the English education industry.

Foreign investors looking to tap into Vietnam’s thriving English education market should carefully evaluate the regulatory framework and ensure they fully understand the requirements of opening an English language training center in Vietnam. This can best be achieved with the support of trained professionals.

For support entering Vietnam’s English education market, contact the business advisory team at Dezan Shira and Associates.

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