Lower-tier cities drive Yuanfudao growth
Yuanfudao
This points to Yuanfudao becoming a mass market consumer electronics and services company, not just an online tutoring brand. Growth in third tier cities means the winning playbook is shifting from selling premium study tools to affluent urban families, toward building local retail, lower effective price points, and parent trust in cities where offline product demos matter more and volume can outweigh margin per device.
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The product is well suited to these markets because it solves a very literal household problem. A student scans homework, gets step by step explanations, prints follow up worksheets, and keeps using linked apps on a phone. That makes the device both a one time hardware sale and an entry point for low cost monthly subscriptions starting around $3.
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The competitive pattern is moving the same way across China. The learning machine category is growing fast, the 2,000 to 3,999 yuan band has become the mainstream price segment, and Yuanfudao plans more experience stores in third and fourth tier cities. In practice, this favors brands that can combine local retail presence with software and content, not hardware alone.
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This also helps explain why Yuanfudao is leaning into physical stores. In lower tier cities, value for money matters more than in top tier markets, and shoppers often want to see the device before buying. Doubling retail footprint is therefore less about branding and more about conversion, financing confidence, setup help, and family upsell after the initial purchase.
The next leg of growth is likely to come from turning these lower tier device buyers into long duration family accounts. Once Yuanfudao has local stores and a device in the home, it can layer on subscriptions, sibling plans, parent dashboards, and school facing tools, which would make lower tier cities the base for both broader distribution and more recurring revenue.