Fenbi partners with Huatu, forming alliances in the civil service exam track
Zebra Consumer Fan Jian
In the examination halls for civil service exams, it is not uncommon to see thousands of candidates competing for a single position. This has given rise to a highly competitive and booming market for civil service exam training.
Training institutions have gone all out to attract students, employing tactics such as low prices and guaranteed passes, leading to a market flooded with subpar offerings.
Surprisingly, in this already fiercely competitive market, a rare scene of harmony has emerged. On December 12, two leading companies in the civil service exam training sector, Fenbi and Huatu, announced a strategic partnership. The two sides will explore collaboration possibilities in areas such as investment, corporate governance, and technological development.
The alliance between these two giants could significantly mitigate the cutthroat competition in the civil service exam training industry, and a major industry reshuffle may soon follow.
A Powerful Alliance
Two companies that were once fierce competitors in the same market have suddenly joined hands.
On December 12, Fenbi (02469.HK) and Huatu Shanding, two leading players in the civil service exam training industry, announced the signing of a "Strategic Cooperation Agreement" to optimize the competitive environment of the recruitment exam training market, enhance user experience, achieve complementary resource advantages, jointly expand the adult non-degree training market, and promote industry standardization and high-quality development.
Under the agreement, the two sides will explore collaboration possibilities in areas such as investment, corporate governance, technological development, and channel cooperation.
The collaboration will extend to the shareholding level, including but not limited to strategic investments, mutual shareholding, and the establishment of joint ventures. They may also appoint directors to each other's boards, establish regular communication channels, and learn from each other's advanced management experience.
For the application of cutting-edge technologies like AI in the industry, the two sides will leverage their respective technological advantages, exchange insights on integrating these technologies into courses and service products, explore the prospects of jointly developing innovative courses, and organize core technical teams to share development experiences, aiming to create a new model for industry development.
Huatu's strength lies in offline operations, while Fenbi started online. The two will integrate their respective channels to enhance operational efficiency.
Additionally, the two sides will jointly advocate for industry self-discipline and accept user supervision, aiming to set industry benchmarks through high-quality services and teaching standards while resisting unethical practices.
Huatu Shanding (300492.SZ) believes that with its extensive offline branches and deep industry experience, combined with Fenbi's technological and operational strengths in online education, the two sides will explore multi-dimensional collaboration in investment synergy, governance structure optimization, technological cooperation, resource sharing, industry standard development, and user service system upgrades. The partnership will further consolidate their leading positions in the industry and enhance overall competitiveness.
Fenbi noted that Huatu has a wide offline presence, while it possesses user traffic and technological advantages. Their collaboration could raise industry entry barriers and further consolidate the sector.
Huatu Shanding's board has passed a resolution to appoint its chairman, Wu Zhengkao, as a director of Fenbi.
Unexpectedly, the alliance between Fenbi and Huatu Shanding failed to generate much market interest. On December 15, the first trading day after the announcement, both companies' stock prices fell.
Challenges on Both Sides
Fenbi's strategic partnership with Huatu may be linked to the early career of its founder, Zhang Xiaolong.
After graduating from university, Zhang worked as a civil service exam trainer at Huatu Education for years before joining Yuanfudao in 2013 to lead its civil service exam project. He later became CEO of Fenbi.
Huatu Education was where Zhang Xiaolong began his career, providing a solid emotional and trust foundation for the collaboration.
Huatu Education's founder, Yi Dinghong, worked as a university lecturer at Guangdong University of Finance and Economics for six years after earning his master's degree in 1994. In 2001, he left his stable job to start Huatu Education in Beijing, entering the booming civil service exam training market.
By the end of 2005, Huatu Education had become the market leader in Beijing's civil service exam training sector. With strong marketing and capital backing, it later became the national leader.
As early as 2012, Huatu Education sought to go public. However, after a decade-long IPO journey, the company failed to list.
In 2023, it finally achieved a backdoor listing by injecting its business into Huatu Shanding.
During this period, Offcn Education (002607.SZ) emerged as a dark horse, overtaking Huatu Education to become the industry leader. It successfully listed on the A-share market in 2019 via a backdoor listing with Yaxia Auto, becoming the "first stock in civil service exam training."
Meanwhile, Huatu Shanding's actual controllers, Yi Dinghong and Wu Jingyu, became embroiled in multiple lawsuits or arbitration cases due to the VAM agreement during Huatu's IPO process, involving massive share repurchases.
Of the 92.7436 million shares held by Yi Dinghong in Huatu Hongyang, the indirect controlling shareholder of the listed company, 97.80% have been pledged and frozen by court order. If creditors act on these shares, Huatu Shanding's control could change.
Fenbi's troubles lie in its operations. After going public in 2023, the company finally turned around its losses and raised revenue to 3 billion yuan.
However, in the past two years, due to intensified competition and individual trainers on self-media platforms undercutting prices, its revenue has declined. In 2024, revenue fell 7.66% year-on-year to 2.79 billion yuan, and in the first half of this year, it dropped another 8.50%.
A New Reshuffle?
In the current job market, college students increasingly prefer stable jobs, making civil service exams the top choice for many graduates. This has led to overcrowding in the exam sector and lower success rates.
The boom in civil service exams has further fueled the training market. Industry data predicts China's vocational exam training market will exceed 100 billion yuan by 2026, with civil service exam training alone reaching 20 billion yuan.
For candidates, the primary considerations when choosing a training institution are teaching quality and pass rates.
Offcn Education once overtook Huatu Education with its "guaranteed pass" model, becoming the industry leader. However, this gamble backfired due to low exam pass rates, leading to massive refunds that nearly pushed the company into ruin.
In recent years, Offcn Education has scaled back and tried to recover but has yet to fully heal from its aggressive expansion.
Meanwhile, many new players are entering the civil service exam training market, hoping to grab a share of the pie. This has led to price wars and uneven market quality.
China's vocational training market is vast but fragmented, with low concentration. In 2021, Offcn Education's revenue reached 6.9 billion yuan, but its market share was only 10%. The top five players combined held just 22.1%.
Times change. Offcn Education, once the "king of civil service exams," saw revenue shrink from a peak of 11.2 billion yuan in 2020 to 2.627 billion yuan in 2024. In the first three quarters of this year, revenue fell another 21.09% year-on-year to 1.657 billion yuan. Meanwhile, Huatu Shanding bucked the trend, with revenue up 15.65% year-on-year to 2.464 billion yuan in the same period, surpassing Offcn Education in scale.
Now, with Fenbi and Huatu joining forces, the civil service exam training market may face another reshuffle.
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