[Education Industry in the AI Era] Struggling to Escape Deficits... Will Edutech Turn the Tide?

⑤Cheonjae Education Reports First Operating Loss Since Establishment Last Year
Faster Edutech Transition Compared to Competitors
Under-the-Radar Succession Process Remains a Variable

Editor's NoteTraditional education companies, which grew centered on workbooks, are pouring company-wide efforts into digital transformation using the know-how they have accumulated in response to 'Edutech.' Emerging Edutech companies are threatening existing companies with their unique technological capabilities. We looked into what changes education companies are making in the Edutech era.

Choi Jeong-min, Chairman of Cheonjae Education.

Choi Yong-jun, the founder and former chairman of Cheonjae Education, graduated from Seoul National University’s Department of Mathematics Education in 1965 and worked as a math instructor at an academy. In 1974, he became a leading instructor in the entrance exam field by creating the high school study reference book 'Haebub Math.' At the time, this book gained fame as a representative domestic math reference book alongside 'Mathematics of Jeongseok.' Thinking that he should spread his educational know-how more widely, Choi founded Cheonjae Education in 1981 and officially entered the education business.

Cheonjae Education grew steadily for about 30 years until the mid-2010s, becoming a solid mid-sized education group. It publishes an average of about 3,700 types of reference books annually for infants, toddlers, and elementary to high school students. It successfully launched famous reference book brands such as 'Doljabi,' 'Big Kids,' and the 'Haebub Series.' Beyond reference books, it expanded its presence in the public education textbook market by publishing numerous national, certified, and approved textbooks from the 5th curriculum (1987?1992) to the currently applied 2015 revised curriculum. It also produces and supplies overseas textbooks for countries such as the Philippines, Mozambique, and Spain. Sales grew from 63 billion KRW in 2002 to about 300 billion KRW in 2015.

The rapid growth stopped there. Sales fell below 200 billion KRW in 2017 and shrank further to 140 billion KRW last year. Operating profit, which reached 47 billion KRW in 2015, recorded the company’s first-ever operating loss of 5 billion KRW last year. The company is currently in a state of emergency.

Education companies that grew based on traditional reference books, workbooks, and publishing have generally experienced poor performance since the mid-to-late 2010s due to structural factors such as declining school-age populations and the digital transformation trend including Edutech. Cheonjae Education is no exception. However, during this period, internal factors such as business succession also added another burden to its performance.

Image of 'MilkT,' the edutech brand of Cheonjae Textbook. [Photo by Cheonjae Education]

In 2018, the second-generation management began when former chairman Choi stepped down and his only son, Choi Jeong-min, took over as chairman. Chairman Choi is a dermatologist by training and also completed an MBA program at Duke University in the United States. The Cheonjae Education Group’s governance structure is divided into two main axes. One axis consists of subsidiaries including Cheonjae Education, in which former chairman Choi holds an 85% stake, and the other axis is AP Company, wholly owned by Chairman Choi, which oversees affiliates such as Haebub Edu, Prinpia, and Cheonjae Textbooks. Since former chairman Choi still holds most of the shares in Cheonjae Education, the group’s core company, succession work is expected to accelerate in the future. Cheonjae Education was also embroiled in allegations of preferential transactions when Chairman Choi began management training as head of the management planning division in 2012. This is a typical method of succession involving transferring company profits to a company owned by the heir through internal transactions, increasing the value of that company’s shares, and then merging or listing it.

Currently, the Cheonjae Education Group is striving to overcome the crisis through Edutech. The Edutech Center established in 2015, the AI Center opened in 2018, and the Cheonjae IT Education Center opened last May are the three core hubs for Edutech. They conduct startup acceleration specialized in the education field, research and development (R&D) in the Edutech sector, and research in artificial intelligence (AI) and big data.

The main Edutech brand is 'MilkT,' launched in 2015. It offers smart learning programs and one-on-one customized learning for students from infants to high schoolers. Currently, Cheonjae Textbooks leads Edutech-related businesses including MilkT and digital textbooks.

The company is also actively investing in projects that integrate Edutech into public education. Last year, through the teaching and learning support service ‘T Selpa,’ it opened the 'ZEP Metaverse Classroom,' a virtual classroom space that can be accessed in real classrooms. This immersive service uses the metaverse platform 'ZEP' to learn textbook content. Teachers share invitation links to meet students in specific maps, and students can move to various locations to study. A Cheonjae Education official said, "Edutech helps bridge educational gaps among students and enables teachers to prepare quality lessons." He added, "We will leap forward as a leading Edutech company through continuous R&D leveraging our 43 years of experience."

Interior view of the Edutech Center at Cheonjae Education.
[Photo by Cheonjae Education]