Cost Structure of the Kindergarten

Yesterday, I posted about the new kindergarten near my home. In the comment section, people are very interested in the low tuition – 180 RMB per month per person. That is just the tuition. The meal per day is 6 RMB, which is about 120 RMB, plus some minor fees. In total, it is not expensive at all. Why?

The Public School Sponsored by Developer

It is a public school. Most private school charges much higher than that. Before, Yifan attended a pre-kindergarten care. That charges about 1600 RMB per month – a pretty normal one. The better private day care charges about 300 RMB per day, which is basically 6000 RMB per month, which I didn’t choose.

Public schools are typically cheaper.

The Developer – Dahua

This particular kindergarten is not 100% government school. The land was sponsored by the developer, and the developer built the building – a very nice one.

By developer, I mean the Dahua Real Estate Development Company (their actual translation may vary). They built the building for free and gave it to the government. Why?

The whole Dahua residential area was developed by a single developer. They got huge piece of land in the middle of Pudong. They are going to build 3 million square meter of commercial building in more than 10 years. Yes. I didn’t made a mistake here. It is 3 million square meter! Altogether, 100 – 200 thousand people will be living in the building they developed. That means, it is bigger than most cities in the States by its own.

The tricky part of the story is, when Dahua got the huge piece of land about 10 years ago, the house price per square meter was 3000 RMB. I moved here in 2004. The house price was about 6000 RMB. Now, the newly built house is priced at 20-30K per square meter. The land price didn’t change. Think about it. If they can make a profit at 3000 RMB, what the profit it will be at 10x of the original price.

To support the high house price of the area, the developer also need some basic infrastructure. So they want the best kindergarten, and school to move it. Compared to the huge profit they are making, the building of kindergarten is even smaller than a rounding error.

The Government

According to the president of the kindergarten, besides the developer Dahua, the local district government also put 2 million RMB per year into the school. Since it is in the public school system, it is the routine.

The Kindergarten

Finally, when the building is ready, and the money is ready, then there comes the kindergarten. With the urbanization process, it is easier to build the building, to have the land, and the money ready, it is harder to get the right process. So they invited the Oriental Kindergarten staff to run this newly built kindergarten.

Finally, the three parts were put together to make this one possible.

3 thoughts on “Cost Structure of the Kindergarten

  1. You are right, on the surface it appears that the cost for kindergarten in your district is inexpensive, but the real cost is being paid by the new buyers of condos in your district. These people paid 20-30K/meter^2, and foot the bills for the rest.

    If we consider the real cost of buying a condo in your district, the actual cost of sending kids to this kindergarten is very high.

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