China’s after-school tutoring crackdown goes nuclear
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•New draft rules circulated today would force China’s private education companies to turn nonprofit. Share prices of tutoring companies plummeted, and some see the end of a highly lucrative industry.
In an unprecedented escalation of China’s crackdown on education companies, China is considering forcing its after-school tutoring companies to become nonprofits, according to a draft policy circulated today.
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The document, titled “On the further alleviation of compulsory education: Opinions on the burden of homework and after-school tutoring,” offers 30 measures to rein in the education sector. They include steps to reduce homework load, raise education quality on services during and after school, and standardize education services.
But the most damning measure of all is number 13: In addition to preventing the registration of new after-school tutoring institutions, it calls for existing tutoring institutions to be “uniformly registered as nonprofits.”
The measures would ban tutoring companies from going public or raising capital. Those that are already listed would be barred from investing or acquiring other education services — in other words, from growing.
“Making the sector nonprofit is just as good as eradicating the industry altogether,” said Wu Yuefeng, a fund manager at Funding Capital Management (Beijing) Co. It “would make being a listed entity meaningless,” added Justin Tang, head of Asian research at United First Partners.
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