China's Policy tightening for after-school tutoring
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China's after-school education institutions are anxiously waiting for further government instructions with many adjusting their business models to comply with policy changes, as the government's regulation of the lucrative industry continues.
On Tuesday, China's Ministry of
Education (MOE) said that it will establish a specific department to
supervise the after-school education and training businesses. In a
statement published by the MOE, it noted that the new department will be
responsible for "strengthening care for the next generation", while
deepening reform of after-school education in China.
This is the
latest, but likely not the last measure to be announced by the Chinese
government to rein in the troubled after-school tutoring business.
In
late January, five government departments released a document that
addressed the delivery of online education for middle school and primary
school students; in early May, the regulators fined both Zybang and
Yuanfudao, two well-known after-school training platforms backed by
Alibaba and Tencent respectively, a maximum fine of 2.5 million yuan
($389,000) each. In April and May, a number of Chinese provinces and
municipalities rolled out new guidelines to govern local after-school
tutoring business.
Many believe the storm of after-school
business regulation will accelerate, particularly as the government has
revised policies to allow a couple to have up to three children after
census data showed a steep drop in birth rates.
Shock to the system
With
regulators taking a top-down approach to rein in after-school education
market, the industry is now experiencing significant volatility, with
investments to the sector likely to drop.
Around one hundred
billion dollars' worth of value evaporated on the US stock markets for
Chinese after-school education companies in the past two weeks. The
stocks of NASDAQ-listed New Oriental had seen its price halve so far
this year, while the stock price of Gaotu, also listed in the US, had
slumped by 73 percent in 2021.
"Impacted by the policy
tightening, large tutoring companies with abundant access to capital
could many to survive, but the majority of weaker institutions may have
to die," Angelo Han, founder of online education platform Weland Global
told the Global Times on Thursday. He also predicted that the size of
China's after-school training market might shrink to about 30 percent of
their original scale.
Many companies have begun to take
measures to adjust their business. An employee from the Chinese branch
of a well-known overseas after-school education group said that they are
starting to make some changes to their business model especially in
underage children training, contracts and charges, to comply with the
policies, the Global Times learned.
Wang Sifeng, founder of
Beijing Chunfeng Shiyu Education Technology Co, told the Global Times
that although many education institutions have started to adjust their
businesses to survive, the new policy trend remains murky.
Wang
noted business adjustments include ensuring their products are in line
with new regulations, clearing some products including pre-school
education and laying off some redundant staff. Some institutions have
stopped opening new branches which could incur higher losses. Employees
from after-school tutoring institutions said the industry was waiting
for further regulatory guidelines now, the Global Times has learned.
A chaotic market
The government's decision to
rectify the after-school tutoring market came at a time when the demands
for after-school tutoring have surged to such an extent that a lot of
institutions have mushroomed or expanded in China, with the help of
rising investments.
According to a report compiled by market
research firm Zero Power Intelligence in September 2020, the number of
after-school training institutions in China had reached about 200,000,
with total market size surpassing 1 trillion yuan.
A teacher at a
Kunming-based private primary school told the Global Times that at her
class, all students took after-school training lessons including art
classes. Most students take two or three of those lessons, which means
they will do at least another hour of homework apart from that assigned
by school teachers.
"I think it's a result of the changing
dynamic, where parents fear their children will lag behind in peer
competition. Also, some parents hope after-school tutoring institutions
could help teach their children knowledge," she said.
Pan Xiaoer, a parent at Yuyao city, Zhejiang Province, said she had
bought six after-school education classes for her daughter, who is a
primary school grade one student.
"In my circle, it's a norm
that parents would buy after-school lessons for their children, and each
child would take 3 or 4 curriculum on average. As a result children
hardly have weekends now, and the summer vacation is like a third
semester for learning," she said.
She added that she believed
children would learn more from a training intuition over what is taught
at schools. "It's better than letting them waste time on the Internet."
However,
the explosion of after-school training market has created many
problems, which caught regulators' attention and prompted them to
rectify the industry.
"This has become an industry with low
threshold and ample capital, which has caused significant problems,"
said Han, "some after-school education institutions require payment in
advance and then shut down suddenly. Others hire unqualified teachers,
and there is no rule for charging fees."
Pan said that some
after-school education institutions she knew don't have stringent
requirements on the teachers they hire, especially for art class
teachers. For example, those institutions sometimes hire teachers with
no certification, she said.
And the problem is not just about
lack of industry standard or arbitrary charges, it's also about pushing
the cost of education to a very high level that are beyond ordinary
families' budget.
"When after-school training industry is inflated through access to
rising investments, many teachers are flowing from schools to those
institutions to earn a higher salary, which is a threat to the country's
teaching system," Han said, adding that it also led to a surge in
education costs, which made couples reluctant to have children, posing
an obstacle to the country's third-child policy.
However, experts also noted that the rectifying should not be restricted only to the supply side.
According to Wang, as the pressure from high school and college entrance
examinations has not changed, there will continue to be growing demand
among Chinese parents for after-school education products.
"A lot
of research has been done into education institutions, but I think more
investigation should be carried out into how parents' demands for
after-school tutoring can be reduced," he said, adding that the role of
schools should be further strengthened.
Source: https://www.globaltimes.cn/page/202106/1226610.shtml, ByXie Jun
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