China Liberal Education Holdings Stock

China Liberal Education Holdings Limited operates as an offshore holding company. The company is an educational service provider operating under the ‘China Liberal’ brand in the PRC.

The company’s operations are conducted in China through its wholly owned PRC subsidiaries, China Liberal Beijing, China Liberal Fujian, Oriental Wisdom, and Fujian Wanzhong, as well as the affiliated entities. The company directly holds 100% of the equity interests in its subsidiaries.

The company provides a wide variety of educational services and products intended to address the needs of schools and the company’s students:

Operation of colleges, which is the core of the company’s business. Prior to August 2022, the company generated revenue from providing services under Sino-foreign jointly managed academic programs (‘Sino-foreign Jointly Managed Academic Programs’) offered by colleges in China.

Sales of textbooks and course materials.

Technological consulting services provided to targeted Chinese universities to improve campus information and data management systems and optimize teaching, operating and management environment, creating a ‘smart campus’; these consulting services include campus intranet solution buildout, school management software customization, smart devices (mainly Internet of things, or IoT devices, extending the Internet connectivity to physical devices) installation and testing, and school management data collection and analysis, all of which can be specifically tailored to meet a client’s particular needs (‘Technological Consulting Services for Smart Campus Solutions’).

Tailored job readiness training to graduating students (‘Integration of Enterprises and Vocational Education’), acting as the key bridge between the company’s partner schools and employers.

Sales of the company’s proprietary AI-Space products, all-in-one machines designed to provide highly integrated visualization solutions in classrooms and other professional settings.

Services and Products

The company primarily generates revenue from providing the following services or products:

Educational Services Provided through Operating Colleges

Through Wanwang, the company operates two colleges, FMP and Strait College.

Fuzhou Melbourne Polytechnic, or FMP, is a junior college co-sponsored by Minjiang University in the PRC and Melbourne Polytechnic in Australia, which grants students diplomas after three years of study. Fujian Wanzhong was the sole investor of FMP, and pursuant to a cooperation agreement with Minjiang University on the formation of IEN College, the predecessor of FMP, Fujian Wanzhong is able to consolidate the financials of FMP into its own.

Strait College of Minjiang University, or Strait College, is a four-year university formed by Minjiang University in 2009, which grants students bachelor’s degrees after four years of study. Similar to FMP, Fujian Wanzhong was the sole investor of Strait College, and pursuant to a cooperation agreement with Minjiang University on the formation of Strait College, Fujian Wanzhong is able to consolidate the financials of FMP into its own.

Student Enrollment

Chinese universities and colleges, such as FMP and Strait College typically recruit students through the National College Entrance Examination that takes place in June each year. In addition, as a three-year junior college, FMP admits students from Fujian Province, where FMP is located, through the Higher Vocational Education Examination each spring.

As of December 31, 2022, FMP had a total of 2,886 full-time students, and Strait College had a total of 2,175 full-time students.

Licenses, Permits and Approvals

Under applicable PRC laws and regulations, FMP is required to obtain school operation license and institution legal person certificate from the applicable governmental authorities in the PRC. As of December 31, 2022, FMP had obtained the required license and certificate from applicable authorities for its operations. Under PRC laws and regulations, as a university formed by Minjiang University, Strait College is not regarded as a separate legal person from Minjiang University, and thus is not required to obtain school operation license, institution legal person certificate, or any other permits, licenses, or approvals for its business operations.

Education Services and Degrees

FMP and Strait College offer education services to their students, including courses encompassing a variety of subjects and categorized by majors and degree programs.

FMP offers a total of thirteen majors to students under four degree programs, namely international commerce, information engineering, hospitality, travel and tourism management, and English. To obtain the diploma of their chosen majors after three years of study, students are required to earn course credits by attending required and elective courses in their curriculum and obtaining passing scores.

Strait College, on the other hand, offers its bachelor’s degree through two different programs, such as Fujian-Taiwan Universities Joint Talent Training Program (the ‘Joint Talent Program’), which was established in September 2011 between Strait College and Taiwan Chinese Culture University; and International General Education Courses Program.

Joint Talent Program

The Joint Talent Program follows the ‘3+1’ dual campuses model. Students spend the first two years and the last year of their university studies at Strait College and their third year at Taiwan Chinese Culture University. At graduation, students receive a bachelor’s degree from Minjiang University and certificate of completion or academic credit certificate from Taiwan Chinese Culture University.

International General Education Courses Program

The International General Education Courses (‘IGEC’) program is a Sino-foreign joint education program developed and introduced by the Chinese Service Center for Scholarly Exchange (‘CSCSE’), a public organization under the MOE of the PRC, in order to improve the overall reform and internationalization of PRC’s higher education. As a nationwide program, it is designed to encourage the exchange of teachers and students and the recognition of academic credits and degrees between Chinese and foreign universities.

The Strait IGEC Program was launched in July 2013. Students enrolled in this program typically follow the ‘2+2’ model which requires them to study at Chinese host Strait College for at least the first two years. Following the initial two-year term, students may choose to finish their remaining two years’ academic study overseas. Students in the ‘2+2’ model under the Strait IGEC Program can transfer their academic credits to a partner school overseas, and upon graduation, will receive bachelor’s degrees from both Strait College of Minjiang University and the foreign university. Other students may choose the ‘4+0’ model and spend the entire four years studying at Strait College, upon which they would receive an undergraduate degree from Strait College. For those students who choose the ‘4+0’ model, the company’s educational services and responsibility cover the whole four-year period.

Sales of Textbooks and Course Materials

In connection with the company’s prior business of providing educational services to students enrolled under the Sino-foreign Jointly Managed Academic Programs, the company was responsible for recommending foreign faculty to teach in Chinese host universities / colleges, and was responsible for the development and delivery of major course content and teaching materials to ensure that the teaching quality meets international standards. As of December 31, 2022, the company had developed, edited, and published 12 English textbooks and course materials with emphasis on language training (including reading, writing, speaking and listening skills) and had distributed those to the Chinese host universities to be used in the joint education programs. The company owns the copyright to its textbooks.

Technological Consulting Services for Smart Campus Solutions and Technical Support Services for Other Entities

The company has started to provide smart campus related technological consulting services to targeted Chinese universities since 2017. The company’s Technological Consulting Services for Smart Campus Solutions utilize advanced information technology, such as cloud computing, mobile internet, artificial intelligence and big data analytics to provide overall solutions to Chinese universities in order to improve their teaching, research, student data management, storage and processing, and campus life services; and to optimize their teaching and operating environment and improve operational efficiency. By leveraging hardware, such as sensors, digital portals, electronic blackboards, smartboards, projectors, LED display panels, high-definition classroom audio and sound system and other lab-based equipment, together with data management applications, the company’s solutions are built on both software and hardware to deliver capabilities for real-time and predictive analytics, increased collaboration and performance management. By way of illustration, some of the services the company provides include campus intranet solution buildout, school management software customization, smart devices (mainly Internet of things, or IoT devices, extending the Internet connectivity to physical devices) installation and testing, and school management data collection and analysis, all of which can be specifically tailored to meet a client’s particular needs.

The company’s Technological Consulting Services for Smart Campus Solutions agreements are primarily on a fixed-price basis. Typically, the company is required to perform services, including project planning, project solution and design, data management application customization, installations of hardware equipment and components for digital classrooms and academic experiment centers or labs, integration of hardware and software application, and post-contract continuous maintenance support, based on the specific needs from each customer. Upon delivery of services, project completion inspection and customer acceptance are generally required. The company may also be required to provide post-completion maintenance support for a period ranging from several months to three years after customized smart campus solutions and services are delivered. Since 2017, the company has successfully provided such technological consulting services to several Chines universities, including but not limit to, FMP, Strait College, Capital Normal University, Beijing University of Chinese Medicine and University of International Business and Economics.

In December 2020, the company successfully provided services under four agreements (the ‘WWH Agreements’) with Wuhan Wangjie Hengtong Information Technology Co., Ltd. (‘WWH’), one of the service providers of State Grid Corporation of China (‘SGC’), a Chinese state-owned electric utility corporation, to provide technical support services for SGC. Pursuant to the WWH Agreements with terms ranging from one month to one year in 2020, the company agreed to provide technical support for the construction of the comprehensive operational capacity of SGC’s power supply command center, in order to achieve the function of multi-location video conference, which is used for scheduling meetings, consultations, discussions and training sessions. The company also agreed to develop remote video interactive information system for SGC and optimize the operation of SGC’s service power supply supervision and management platform. In 2021 and 2022, the company’s agreements with WWH were not renewed.

Case Study: Smart Campus Solutions for FMP

Pursuant to the company’s 2017 Smart Campus Project Agreement with FMP (the ‘2017 FMP Smart Campus Agreement’), the company retains the copyrights of the 20 software it developed for this project.

Big Data Center: The company’s big data center is a business systems cluster based on SaaS, or software as a service, a software licensing and delivery model in which the licensing is on a subscription basis and is centrally hosted. The company developed and maintains all of the business systems, which include mobile online learning system, registrar administration system, office automation system, teaching resources database system, and human resources system. These systems are used by students, management and teachers of FMP, as the case may be. As of December 31, 2022, the company had already completed and delivered such big data center.

Smart Classroom: The company sets up the multimedia system, recording system, internet of things system, classroom cloud desktop, wireless network coverage, speech laboratory, trapezoid classrooms, and premises distribution system for FMP.

Business Experimental Center: The company also built out the business experimental center for FMP by providing internal design installment, hardware device and teaching resources software.

Pursuant to the 2017 FMP Smart Campus Agreement, the company also acts as a general contractor to procure software and hardware required by the overall smart campus solution. The company has entered into several procurement agreements with software providers, such as e-commerce virtual simulation systems, cloud teaching systems, simulated trading analysis system, digital sandbox software, virtual business society environment comprehensive practice teaching platform.

In 2019, the company entered into a new ‘smart campus’ agreement with FMP to help FMP create an information engineering laboratory training center and an experiment-based simulation center for its hotel management major (the ‘2019 FMP Smart Campus Agreement’).

Information Engineering Laboratory Training Center: During Phase I of this project, the company installed required hardware and software in and further decorated the computer training rooms, IoT training room and digital classrooms on FMP campus. During Phase II of this project, the company installed hardware and software for FMP’s cloud computing and big data room.

Experiment-based Simulation Center for Hotel Management Major: The company also built out the experiment-based center for FMP’s hotel management major by providing internal design installment, hardware device and teaching resources software.

Technological Consulting Services for Companies and Businesses

In addition to serving universities and colleges, the company is actively seeking opportunities to utilize its rich experiences in providing technological consulting services to serve private companies. In 2020, the company entered into four agreements with WWH, one of the service providers of SGC, a Chinese state-owned electric utility corporation, to provide technical consulting and support services for SGC. Under these agreements, the company provided technical support for the construction of the comprehensive operational capacity of SGC’s power supply command center, in order to achieve the function of multi-location video conference and could be used for meetings, consultations, discussions and training sessions. The company also developed remote video interactive information system for SGC and optimized the operation of SGC’s service power supply supervision and management platform. In 2021 and 2022, the company’s agreements with WWH were not renewed.

Integration of Enterprises and Vocational Education (Tailored Job Readiness Training Services)

In order to further diversify the company’s business and to utilize its resources and network, the company rolled out a new line of business, i.e., Integration of Enterprises and Vocational Education in late 2019. The company contracts with employers to provide job readiness training to graduating students from the appropriate partner schools so that such students would be better equipped to serve the employer at their respective job positions. Typically, the company forges partnerships with selected Chinese vocational schools or colleges to provide tailored job readiness training services to students. The partner schools utilize their existing administrative ability, campus classrooms and facilities to recruit students into such training programs. The company selects, recruits and appoints qualified faculty, trainers or professionals to provide trainings and bears related costs, develop and deliver major training content and materials to students to optimize their learning outcome, improve their social and technical skills, coordinate with employers to provide internship job opportunities to students and eventually help students to find appropriate jobs after completion of the trainings and graduation. The company actively supports and interacts with enrolled students to ensure completion of the trainings, which normally takes several months to three years. The company’s contracts with partner schools are fixed price contracts, pursuant to which, the company is to receive a fixed portion of training fees for services rendered. The training fees are collected first by partner schools from enrolled students before the training services start, and then remitted to the company.

On-campus Overseas Study Consulting Services

In January 2019, the company entered into a cooperation agreement with the School of Continuing Education of Beijing Foreign Studies University for a German language program (the ‘2019 German Language Program Agreement’). In November 2018, the company entered into a cooperation agreement with the China Academy of Art for an Italian language program (the ‘2018 Italian Language Program Agreement’), in order to provide the company’s Overseas Study Consulting Services utilizing these partnering schools’ facilities and other hardware. The Italian language program was subsequently suspended as a result of the travel restrictions due to the COVID-19 outbreak. In April 2021, the company renewed its cooperation agreement for the German language program with the School of Continuing Education of Beijing Foreign Studies University. In March 2021, the company also entered into another cooperation agreement with the School of Continuing Education of Beijing Foreign Studies University for a Russian language program. The company’s on-campus overseas study consulting services are similar to those the company provided under its one-on-one model, including school application review, visa application and interview preparation.

For the year ended December 31, 2021, there were 27 students enrolled in the School of Continuing Education of Beijing Foreign Studies University German program, 27 students enrolled in the School of Continuing Education of Beijing Foreign Studies Russian program, and no students enrolled in the China Academy of Art Italian language program. The company discontinued its Overseas Study Consulting Services in January 2023.

Seasonality

The company has experienced seasonal fluctuations in its operations, primarily due to seasonal changes in student enrollments. Historically, the company’s one-on-one consulting services tend to have the largest student enrollments in the company’s third and fourth fiscal quarters, which run from July 1 to December 31 of each year, primarily because many students enroll in the company’s courses to prepare for admissions and assessment tests in subsequent school terms, and the Sino-foreign joint programs typically make payments to the company for its language training courses in October or November based on their student enrollments in the fall.

Branding and Marketing

Chinese universities and colleges, such as FMP and Strait College typically recruit students through the National College Entrance Examination that takes place in June each year. In addition, as a three-year junior college, FMP admits students from Fujian Province, where FMP is located, through the Higher Vocational Education Examination each spring.

Competition

The company faces competition in each line of business, each major program the company offers and each geographic market in which the company operates.

Educational Programs Services: Suzhou Centennial College and Zhengzhou Asia-Europe Communications Vocational College.

Technological Consulting Services Provided for Smart Campus Solutions: Wasu Media Holding Co., Ltd.; Newcapec Electronics Co., Ltd.; and Zhejiang Zhengyuan Zhihui Technology Holdings Limited.

Integration of Enterprises and Vocational Education: Shiji Dingli Holdings Limited; Shanghai Xin Nanyang Angli Education Technology Holdings Limited; and Changsha Kaiyuan Instrument Co., Ltd.

Intellectual Property

The company’s intellectual property rights include ten trademark registrations in the PRC and six domain names registrations. The company owns two patents through one of its PRC subsidiaries, China Liberal Beijing, including one utility model patent and one design patent.

Copyrights

As of December 31, 2022, the company had registered 12 copyrights in the company’s textbooks in the PRC, and 12 textbooks have been published.

As of December 31, 2022, the company had registered 64 software copyright registration in the PRC.

Trademarks

As of December 31, 2022, the company had 10 registered trademarks in the PRC.

Domain Names

As of December 31, 2022, the company had registered the following two domain names in the PRC.

Regulation

The company operates its business in the PRC under a legal regime consisting of the State Council, which is the highest authority of the executive branch of the PRC central government, and several ministries and agencies under its authority, including the State Administration of Foreign Exchange, or SAFE, MOFCOM, the National Development and Reform Commission, or NDRC, the Ministry of Education, or MOE, the General Administration of Press and Publication, or GAPP, the State Administration for Market Regulation, or SAMR, formerly known as the State Administration for Industry and Commerce, the Ministry of Civil Affairs, or MCA, the Ministry of Culture, or MOC, and their respective authorized local counterparts.

History

China Liberal Education Holdings Limited was founded in 2011. The company was incorporated in the Cayman Islands in 2019.