China: A Booming Certification Market

1. China: A Booming Certification Market Sponsor Session Alex Tong China: A Booming Certification Market Sponsor Session Joyce Bian/Alex Tong ATA

2. Growth Drivers Booming Economy Raises Demand for Talents Job Competition Becomes a Market Driver For Certification Shortage of Supply of Qualified Talents A Certification Driven Society

3. Growth Drivers Government Policies Support Employment Qualification System Specialization of Services Massive Technology Infrastructure Makes CBT a Reality A Certification Driven Society - cont’d

4. From 1978 to 2007 Average annual GDP growth: 9.8% In 2007 GDP grew another 11.4%, of which: Agriculture: up 3.7 % Manufacturing: 13.4 % Services: 11.4 % In 2007 alone 10 million new jobs were created 25 million people were seeking for jobs (new workforce, unemployed…) an employment gap of more than 15 million Booming Economy

5. Huge population (1.3bn) and concentration of skilled workers in metropolitan cities Data by Ministry of Human Resources and Social Security from 2006 to 2011, young people entering the workforce each year: 24 million new positions created and those made vacant by natural retirement: only 11 million Data gathered by Chinese Social Academy: 90+% of young graduates are frustrated with job hunting, with 8.3 % even considered suicidal actions. 69.2% of students are willing to accept “zero salary” to get their first job experience, despite the fact that this is against the law Job Competition Reality

6. IDC report on “China Computer-based Testing 2006-2010 Analysis and Forecast” In 2006: 122.7 million candidates participated in exams for licensure, certification and academic areas, year-on-year test volume growth rate: 8.9%. Spending on all kinds of tests grew by 13.8% The testing market revenue will increase at a 10.7% compound annual growth rate through 2010, driven significantly by the strong demand on the vocation-related licensure and certification tests Job Competition Fosters Market Growth

7. Economic transition: From primary and secondary industries to tertiary industries Shortage for specific knowledge domain According to a survey by Manpower, a NY Stock Exchange listed Chinese HR consulting company: In 2008, The top 10 positions being most difficult to find the right talents: Technical staff Sales rep Management/senior management staff Sales manager Mechanist/machine operator Production line operator Technician (electrician, carpenter and welder) Skilled workers Restaurant and hotel workers Data by Ministry of Human Resources and Social Security: in the IT industry, the shortage for testing engineers in China is nearly 300,000 and still growing at 20 percent each year Skilled Workers Short of Supply

8. Occupational Qualification Certification system Set up in 1994 by Ministry of Human Resources and Social Security NVQ standards for more than 90 occupations In 2007, the Chinese government announced 1,979 occupations, of which 1,200 will be regulated with occupational standards before 2010 high-tech and modern service industries including environmental protection, electronic information and aeronautic and astronautic industries to be included Professional bodies to regulate licensure and certification Exam laws and legislations in progress to protect test integrity First draft in 2005 The worst penalty is up to 7 years imprisonment Still improving and soon expected to submit to the State Council for legislation Government Support

9. The emergence of professional test delivery service providers Test sponsors transitioning into policies and standards setters P&P are being transformed to CBT for logistical and security reasons Examples: The qualification examination for the China Securities Professional by China Securities Regulatory Commission (CSRC) Used to be a yearly, p&p test Now a quarterly CBT program with more than 180,000 test-takers annually Specialization of Services

10. China’s rapid economic development is also supported by technology infrastructures build out, such as telecommunication and Internet access Numbers say for itself: In 2008: More than 32 million personal computers (PCs) were sold in China in 2008 alone, up 15.2 percent In 2008: total mobile users: over 555 million As of Dec. 31, 2008 more than 298 million Internet users in China A significant increase 42% from previous year broadband users reached 163 million of which 140 million have broadband Internet access at home, up by 35.7 percent Technology Infrastructure Makes CBT a Reality

11. Regulatory authorities Tightening rules and regulation on operations which demands more staff training and assessment for a higher competence level at work Example: Financial Sector Increase the number of qualification tests that are required for workers in the financial sector Increase the number of people required to take these tests Individuals Brush up knowledge and acquiring new qualifications for job security; Who benefits Training institutions Certification/license Owners The Impact of the Recent Financial Crisis

12. The following facts illustrate the transformation of China certification market: China was the first country to introduce simulation items in Microsoft MCP programs, doing so back in 2004 before any global launch. Out of 2 million computer-based tests recorded by the Ministry of Human Resources in China, more than 70 percent of these tests have been simulation-based exams since 2000. IDC did a survey in 2006 and concluded that, in 2005, the total spending on all kinds of tests reached $2,006.2 million and 112.6 million candidates participated in the exams for licensure, certification, and academic areas , with a year-on-year growth rate of 10.3 percent. The scale of testing is daunting: 150,000 testing computers were launched in a single test (China Banking Professional Certification). Performance-based testing is being widely used as a way to combat cheating. Advanced technologies and stringent test-management procedures are being applied to ensure test security.  The Forecast

13. IDC’s “China Computer-based Testing 2006-2010 Forecast and Analysis” states The China CBT market revenue in 2006 reached $321.4 million with a year-on-year growth rate of 14.5 percent, number of candidates increased by 19.6% The market will reach 166.4 million candidates by 2010 with a 2006 to 2010 compound annual growth rate estimated at 18.5 percent, over 10 percentage points higher than that of the overall testing market. The market expansion comes from the emerging computer-based testing (CBT) test fields, the conversion of traditional paper-and-pencil testing to CBT, and the growth of the testing market itself. The testing market revenue will increase at a 10.7% compound annual growth rate (CAGR) through 2010, driven significantly by the strong demand on the vocation-related licensure and certification tests. The Forecast – cont’d

14. In 2008, the China CBT delivery services market is estimated to enjoy an annual growth rate of 37.7 %. With the China CBT market maturing over the past few years, the delivery services market will continue to show strong growth through 2010 and is expected to increase at a compound annual growth rate of 45.9 percent through 2010 The Forecast – cont’d

15. With huge social demand, government support and technology platforms readily available, China’s certification and testing market has undergone a transformation and explosive growth is expected to come. This has gone far beyond the imagination of anyone from the outside China offers great opportunities for global certification players, with the right approach and partner Conclusion

16. http://www.chinaenglish.com.cn/html/2008-08/26214.html Chinese see dramatic rise in quality of life: Economist http://www.ahedu.gov.cn/xsc/ahedujob/text.jsp?id=186 Blue book of China’s economy: analysis and forecast on China’s economy 2007 IDC: China Computer Based Testing 2006-2010 Analysis and Forecast, 2007 http://www.ccmw.net/article/24030 ManPower survey shows shortage of talents in 2008 http://jjckb.xinhuanet.com/xwjc/2008-03/17/content_89551.htm 70% of CEOs are confident about Chinese economy http://it.sohu.com/20080202/n255039131.shtml Software engineer in demand, shortage over 300K still increasing at 20% every year http://news.xinhuanet.com/legal/2005-09/14/content_3486782.htm Exam law draft completed, worse penalty for national educational examinations upto 7 years imprisonment http://www.chinadaily.com.cn/bizchina/2009-02/19/content_7493114.htm China PC sales up 15.2% despite market gloom http://www.waiqi8.com/?action-viewnews-itemid-14002 China Internet users soar to 298 million http://www.nytimes.com/2008/12/26/business/worldbusiness/26exam.html?_r=1&th&emc=th Qualifying Tests for Chinese Financial Workers References

17. Thank You !