A student watches an online course given by Shanghai Jiao Tong University via his iPad on April 16, 2013. Photo: IC

Like millions of Chinese university students, Li Hao has enrolled in all kinds of traditional tutoring classes to sharpen his English skills during his vacations. But not this summer.

This year, Li registered for online courses to prepare for an English exam. "Going online means a flexible schedule, affordable price and more options," Li says.

Like a growing number of young Chinese, he is eschewing the rigid teaching style, fixed schedules and costs of bricks-and-mortar tuition in favor of massive open online courses (MOOCs).

Over the past decade, soaring rents and labor costs have challenged the traditional education model. Diverse learning needs, including smaller class sizes and tailored services, have driven expansion in the online education industry.

China's education market will transform in the next three to five years, with "40 percent online and 60 percent offline," forecasts Yu Minhong, CEO of New Oriental Education & Technology Group (NOETG), a listed education company. 

Meanwhile, the government is building the Open University of China, enabling students to earn qualifications online, and the Ministry of Education is asking key universities to offer MOOCs supported by subsidies under the National Outline for Medium and Long-term Education Reform and Development (2010-20).

According to the Report on the Diversification of China' s Education Industry 2014 issued by Deloitte, China has seen 2.3 online education startups spring up every day in the year to the end of March 2014 and the market was worth 80 billion yuan ($12.5 billion) last year.

Wei Xiaoliang worked as a tutor and a course manager in NOETG for nine years. In 2014, he created smartstudy.com and 20 teachers tutors left NOETG and joined his company within a month. Li Hao was a student and keen fan of Wei's courses in NOETG and enrolled in his online TOEFL Speaking and Writing Courses on smartstudy.com.

Li Hao goes to smartstudy's learning center in Beijing. "I think it's better than facing a computer alone at home. The teaching supervisor follows my learning schedule and guides me," Li says.

Wei believes that online education is more than a simple online course. "When students come to the learning center, teaching supervisors arrange the schedule and chart their learning progress. Online and offline is cohesively intertwined," Wei says.

"It's like going to the gym. Some are fine with self-training; others need a trainer. Some are more social, and can learn within a pair or group; others are more independent, so they only need Internet access at home."

 China's three Internet giants -Baidu, Alibaba and Tencent-have all made major investments in online education since 2014.

In September last year, smartstudy.com announced that Baidu had invested $10.6 million in its A round of financing, putting smartstudy's estimated value at $100 million, a record for an online education startup in China.

Alibaba has opened an online education platform, xue.taobao.com. Taobao students can watch live courses or videos with their own accounts.

One of the most popular courses is a Keynote course taught by Xu Cen. It now has more than 100,000 hits.

"Online learning is really convenient, but putting videos of traditional classes on the Web is common and should not be called online education," Xu says.

Xu majored in recording and film-making in college, and has many skills that other Internet tutors lack. His courses are like movies-with a rhythm and a storyline.

"Online courses require better presentation. Only courses with quality content, good presentation and excellent promotion are received well," says Xu.

Unlike students in a traditional class, online students will stop learning at any time if they tire of a course.

Xu is proud of his course's quality. A recently released guitar course sold 1,000 copies on the first release day.

Despite the growing demand, many online schools find it hard to recruit students. One big problem is that online education lacks innovative or original content, leading to piracy. Xu turned to Taobao for help to combat the piracy of his courses, but received no satisfactory answers.

The lack of tutors is another problem. Xu wants to gather as many good tutors as possible and produce only quality courses.

Smartstudy.com spends 30 percent of its resources on research and development, hoping to develop new learning technology.

A wearable device to assist online learning could be a reality in two and a half years. "For instance, if you put on a helmet, two people in different regions can communicate. If you are in Beijing, you would see a teacher in Los Angeles writing on a board," Wei says.