(Yicai Global) Nov. 27 -- A rise in Chinese incomes, a shift in young parents' ideas on consumption and a change in China's family planning policies are driving up the demand in the country's preschool education market, attracting investors.

Chinese mothers birthed 16.92 million babies in 2014, the year after China announced that it would relax the one-child policy. Many of these kids headed off for early education this year. The Chinese preschool market will continue to grow, analysts predict. The sector was worth USD57.56 billion (CNY380 billion) last year, and its value is set to surpass CNY540 billion in 2020.

The number of investment cases in the primary market for preschool education was less than 10 each year before 2011. That number reached 16 in 2011 and went up 105 percent from 2014 to 2015.

Young parents' focus on early education fed the market's rapid expansion. Some 44 percent of parents spend CNY2,000 to CNY5,000 on preschool each month, while 40 percent spend CNY1,000 to CNY2,000, per Analysis data. Many parents born in the 1980s think that the older generations' ideas on education are outdated and want their kids to be schooled as early as possible.

Changes in family planning policy and insufficient quality public education resources drove demand for private preschools. Schools in the industry can yield earnings of 25 percent to 35 percent, allowing investors to take back their initial outlays in a few years, per Guangzhou Hang Seng Advisory's analysis on profitability in the industry.

About two-thirds of preschools in China are private. State-run schools aim to offer stability and quality learning environments. Market concentration has bred fierce competition among private schools. The top five brands share 2 percent of the market. These schools frequently have unqualified teachers and the education quality often suffers.