Andy Liu
Thank you, Raymond. Hello, everyone. Thank you for joining us for our earnings call today. I would like to start with some updates of the company.
The company has ceased offering tutoring services related to academic subjects to students from kindergarten through the last year of senior high school in Mainland China by the end of 2021. To comply with the "Opinions on Further Alleviating the Burden of Homework and After-School Tutoring on Students in Compulsory Education," also known as the Double Reduction Policy, and applicable rules, regulations and measures.
At the same time, we have quickly formed new business strategies in response to the new regulatory environment. Leveraging our extensive knowledge and expertise accumulated through serving China's education authorities, schools, teachers and students over the past decade, we have adapted our business and organizations to focus on 2 key business areas.
First, for our in-school business, we launched our new teaching and learning -- teaching and -- first, for our in-school business, we launched our new teaching and learning SaaS offerings as an upgrade to our previous in-school products and services. The new offerings are aimed at facilitating the digital transformation and upgrade of Chinese schools with a focus on improving the efficiency and the effectiveness of core teaching and learning scenarios such as homework assignment and in-school (sic) [ in-class ] teaching.
Second, for our after-school business, we have started to offer a personalized self-directed learning product to Chinese families as a substitute for the original after-school tutoring services that we offered historically. The product utilizes our technology and data insights to provide personalized and targeted learning and exercise content that is aimed at improving students' learning efficiency. This is not a tutoring services and is consistent with some of the key concepts and philosophies of 1 of the 10 case studies selected by the Ministry of Education's General Office for the implementation of the Opinion.
Now let me explain in detail the logic and the progress for our business transformation and how the 2 businesses fit the new era of China's education market and user needs both in in-school and after-school segments.
On the in-school side, we are seeing 3 main themes driving the development of the industry. First, China's education informatization kicked off in 2012 when the government published the blueprint of the 3 accesses and 2 platforms. Under the initiative, the government took a lead to improve Internet infrastructure and build multimedia classrooms for schools. By 2018, school network infrastructures for online or digital teaching were mostly in place.
In the same year, the government released the work plan version 2.0 for education digitalization, which aims to achieve 3 full coverages, 2 improvements and 1 platform. Since then, the focus of the education informatization market has shifted from education infrastructure to digital tools for teaching and school management as well as digital teaching resources to build an "Internet plus education" platform that is aimed at improving teaching result and efficiency.
According to estimates based on numbers from National Bureau of Statistics of China, the annual budget for education digitalization reached RMB 340 billion in 2020. Under the backdrop of education digitalization version 2.0, we believe the growth trajectory will continue in the next few years as China's GDP expands.
Second, education informatization investments generally fall into 2 categories: 1 teaching and learning-related; and the other not. The first category includes hardware and software, which are directly used in teaching and learning processes, including teaching and learning management systems. A typical example is our homework management system that allows schools and teachers to evaluate and track students' mastery of different knowledge points through homework and assign personalized homework accordingly with the support of both hardware and software.
1 of the 2 categories, investments in teaching and learning-related education informatization are steadily taking up an increasing share in the annual budget. In earlier years, the purchase of nonteaching and learning hardware was the biggest component.
Third, in recent years, we have also observed that teaching and learning-related digital products shifted away from smart classrooms and exam [ marching ] towards homework-focused teaching and learning products. This was a result of a few key changes in the education philosophy and guidelines from the Ministry of Education.
First, the discouragement restriction on using exams and promotion of homework as the main tool to evaluate student's academic performance. Second, the need for an advanced information-based system to achieve the personalized and the tiered homework promoted under the Double Reduction Policy. Third, China's latest curriculum standard -- standards published in 2021, which is refreshed every 10 years, put more emphasis on students' comprehensive academic competency and the more proactive participation by students during class in the form of in-school -- in-class exercises. All of these would not have been possible with the historical manual approach and created a surge in demands for dedicated and comprehensive teaching and learning management systems centered around homework and exercises that integrate both hardware and software.
Homework has thus become an ideal scenario for evaluating students' learning progress and a core to connect all other teaching and learning scenarios and teaching management. Our teaching and learning products focus on homework assignments and can generate data that enables comparison between classes and schools for a selected time period. This makes it a very powerful tool for school principals to manage the teaching progress at school, and for education officials to check on the teaching management on district level. It also reduces the burden of both teachers and students as it is designed to improve the efficiency of homework assignments as related to teaching and learning scenarios.
This has opened up enormous business opportunities for us. For the technology, data insights, content and brand power we have gained through the past 10 years invested in homework development, we have been chosen by a number of regional education authorities to become a partner of choice of homework-focused teaching and learning management systems. There is one difference this time. In the past 10 years, we have provided more basic services on a free-of-charge basis. Now, on the new teaching and learning SaaS offerings are paid products which integrates both software and hardware in one package and also feature data-driven recommendations and other value-added functions and cater to the needs of schools and education authorities. Purchases are mostly made by the district education authority on behalf of a group of schools.
Our product offerings are based on tailored combination of a number of standardized modules covering classrooms, question bank, homework assignments, self-directed learning and multi-role reporting to suit the needs of different users. We are also seeing increasing acceptance of the SaaS subscription model by governments instead of the more prominent onetime software construction projects, which was more common in nonteaching and learning-related investments.
To date, we have successfully entered in-depth cooperations with a number of regional education authorities across multiple districts in China, including Shanghai Minhang District and Beijing Xicheng District, which are among the 10 case studies selected by the Ministry of Education's General Office for the implementation of the Opinion. Projects of different scales are already being implemented using our teaching and learning SaaS products across more than 50 cities.
Turning to our new business model for the after-school business. As we all know, Chinese families put strong emphasis on students' education. Before the Double Reduction Policy, such emphasis and needs were mostly satisfied by after-school tutoring services, which created a huge market, some estimate it to be as large as RMB 1 trillion. The New Regulations have dramatically changed the supply and the nature of products in the education industry.
Marginal demand in the market previously provoked by massive promotion campaigns were indeed discouraged by some degree, but we see needs from core user groups remain intact and deeply underserved with the highly affected tutoring services. The good news is that such user needs tend to be more resilient.
Due to the Double Reduction Policy, school vocations and weekends, which used to be the major battlefields for the after-school tutoring services, will, for the first time in decades, become family time in a vacuum of tutoring services. During this 2-month break and all subsequent holiday and weekend periods, Chinese parents will be in urgent need for high-quality self-directed learning content to keep their children occupied.
To address these needs, we started offering a personalized self-directed learning product to Chinese families. This product is based on our premium contents and insights into students' learning progress and difficulties. It is designed with a core aim to be compliant with new regulatory environment. In a nutshell, it is a self-directed learning, Qiaohu-like product that supplements the in-school studies of primary and middle school students. Each month, our users will receive a material package consisting of customized exercises based on their personal academic profile, diversified learning tools, expanded learning videos, family education magazines. The monthly package provides the basic materials and elements for parents to guide their children's learning program.
The core component of our self-directed learning product is a personalized and targeted exercise book, formulated every month based on last month's learning progress and weakness. Which -- with our in-school business over the last decade, we have accumulated huge educational content and the school- and district-level data insights across China, which give us a deep understanding about our users and the content of local exams so that we can develop personalized exercise books to meet their needs.
In addition, we have designed a set of effective systems to motivate children to develop through self-directed learning habits. In the meanwhile, we also allocate a personal learning partner to each of our users and provide them with learning customization and guiding services. Personal learning partners customize the learning materials and plans for our users on a monthly basis and follow-up with the implementation of their learning plans.
Our self-directed learning product is charged for each subject. And the subscription fee for 1 subject is in the range of RMB 2,500 to RMB 3,000 per year. We expect that it will take some time for the market to get familiar with this new product format. But we are happy to see more than 30,000 (sic) [ 300,000 ] paid subscriptions in the product since we launched this product around a month ago.
We believe that we have a strong competitive advantage with our new business models. This advantage comes from the millions of paid users who trust us, from the localized teaching content, massive data, brand recognition and the reputation we have built up over the past 10 years, providing free in-school homework services. It is with the decade-long accumulation that's on the in-school side, we quickly launched the new teaching and learning SaaS offerings to provide personalized teaching assistance and the personalized self-directed learning products in the after-school business.
This is our transformation strategy, which is based on what we believe can best leverage our decade-long experience and expertise in the in-school business. As the industry is undergoing tremendous transformation, the companies that comply with New Regulations and meet the changing user needs will emerge strong.
Now I will turn the call over to Michael, our CFO, to walk you through our latest financial performance. Thank you.
