cpt.v could be ripe for profit also.
China Hires ITT Educational's Technology Curriculum to Train Workers
May 30, 2002 3:43pm
May 30--Here's a situation that looks ripe for profit:
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For every four units of product the market demands, suppliers can provide only one.
And you've just landed in the market as a newly established supplier.
The units in this case are hardly widgets. What's in such big demand, and short supply, are technology-trained workers in China.
That's the situation where ITT Educational Services Inc. hopes to profit.
Earlier this month in Beijing, ITT Chief Executive Rene Champagne signed a licensing deal with Beijing Polytechnic University and a Canadian firm, putting ITT on the map in the world's most populous country.
The demand of China's burgeoning economy in fields like software engineering, Web-page designing and graphics, is 400,000 new workers each year, Champagne says.
The annual output from the nation's schools: 50,000.
"So there's a major mismatch," he says. "The big opportunity is, can we fill part of the void, or most of the void? It looks like it won't be very difficult to do that."
In the United States, ITT offers post-secondary degree training in a range of technical fields to students at its 71 campuses in 28 states.
In China, ITT is selling only its curriculum and teaching techniques. The grunt work -- marketing the courses, signing up students, finding classrooms and hiring teachers -- falls to Beijing Polytechnic and ITT's partner, the Canadian Institute of Business Technology Corp.
For ITT, the costs of this new venture are negligible. Says Champagne, "I have zero exposure, and only upside opportunity."
The opportunities for selling in a nation of 1.3 billion people would seem limitless.
And the business climate seems to be improving. China's recent entry into the World Trade Organization promises lower tariffs and more open markets.
The U.S. government is encouraging American businesses to get involved. In Indianapolis next month, for instance, the U.S. Department of Commerce export office will offer a seminar on doing business in China.
If things were only that simple.
Western businesspeople have long dreamed of making a fortune in the huge China market, says China expert Scott Kennedy.
"People thought all you've got to do is show up, and make a mint," says Kennedy, who teaches at Indiana University. "That's not been the case."
One big reason: For all of its growth in the 1990s, China remains relatively poor. Its per-person income averages $1,000, he says, versus about $30,000 for the United States.
Incomes are higher in larger cities, maybe $3,000 per person, on average, Kennedy says. He pegs the number who can afford to buy American goods and services at no more than 200 million -- less than one-sixth of the entire population.
Still, Kennedy says, that's been enough for profitable ventures by U.S. corporations like Procter & Gamble and McDonald's.
And now, CEO Champagne is betting, ITT Educational Services.
Starting with a few hundred students this fall, he envisions rapid growth to thousands enrolled. And profits coming in as early as 2004.
Brushing aside any doubts, he enthuses, "Who knows how big big could be?"
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