Public Policy Affecting Business
Chinese tutoring firms adapt to core subject ban with hands-on courses
Reuters - 25 Aug, 2021
BEIJING, Aug 25 (Reuters) - Chinese tutoring firms are having to learn new ways of making money after a ban on teaching core subjects left them promoting classes such as drama and even parental training in a scramble to replace at least a fraction of a once-lucrative business.
Firms including New Oriental Education & Technology Group Inc (9901.HK) and U.S.-listed Gaotu Techedu Inc (GOTU.N) have added a miscellany of courses and even new businesses after the government last month prohibited for-profit tutoring in any school subject and offering classes on weekends or holidays.
The ban is aimed at easing pressure on six- to 15-year-olds in compulsory education as well as reducing the cost burden on parents. However, it threatens to decimate an industry which executives and local media said employs 10 million people.
The industry, catering to three- to 18-year-olds, was worth 800 billion yuan ($123.24 billion) in 2019 and set to reach 1.4 trillion yuan by 2025, consultancy Oliver Wyman said last year. Yet now, while many firms have worked quickly to adapt, thousands of others have closed, local media reported.
New Oriental this month announced "quality education" to teach, for instance, computer coding, calligraphy and chess. It also, separately, established a housekeeping services company.
The firm has also ramped up promotion of its parental training class, teaching skills such as time management and which it said aims to help parents better understand children.
Gaotu has upgraded its app to focus on adult education with classes such as foreign languages, and maths tutor Gaosi Education has begun "traditional Chinese culture" classes, taught over three weekends for 19,800 yuan. It will be "absolutely impossible" for such classes to support the scale of private tutoring giants, said Tong Diyi, general manager of Beijing-based private equity firm Longwin Asset Management.
Such classes fall into what analysts categorise as "quality education and vocational education", which was worth a third of the pre-ban private education sector, estimates showed. "There are already many players in the quality education sector, and at the moment it's unclear how much bigger this market can grow to accommodate more participants," Tong said.
BEIJING, Aug 25 (Reuters) - Chinese tutoring firms are having to learn new ways of making money after a ban on teaching core subjects left them promoting classes such as drama and even parental training in a scramble to replace at least a fraction of a once-lucrative business.
Firms including New Oriental Education & Technology Group Inc (9901.HK) and U.S.-listed Gaotu Techedu Inc (GOTU.N) have added a miscellany of courses and even new businesses after the government last month prohibited for-profit tutoring in any school subject and offering classes on weekends or holidays.
The ban is aimed at easing pressure on six- to 15-year-olds in compulsory education as well as reducing the cost burden on parents. However, it threatens to decimate an industry which executives and local media said employs 10 million people.
The industry, catering to three- to 18-year-olds, was worth 800 billion yuan ($123.24 billion) in 2019 and set to reach 1.4 trillion yuan by 2025, consultancy Oliver Wyman said last year. Yet now, while many firms have worked quickly to adapt, thousands of others have closed, local media reported.
New Oriental this month announced "quality education" to teach, for instance, computer coding, calligraphy and chess. It also, separately, established a housekeeping services company.
The firm has also ramped up promotion of its parental training class, teaching skills such as time management and which it said aims to help parents better understand children.
Gaotu has upgraded its app to focus on adult education with classes such as foreign languages, and maths tutor Gaosi Education has begun "traditional Chinese culture" classes, taught over three weekends for 19,800 yuan. It will be "absolutely impossible" for such classes to support the scale of private tutoring giants, said Tong Diyi, general manager of Beijing-based private equity firm Longwin Asset Management.
Such classes fall into what analysts categorise as "quality education and vocational education", which was worth a third of the pre-ban private education sector, estimates showed. "There are already many players in the quality education sector, and at the moment it's unclear how much bigger this market can grow to accommodate more participants," Tong said.