New Oriental will close K9 tutoring operations within its company by the end of November, the company announced on October 25.
The company estimates that in the two fiscal years previous to May 31, 2021, the K9 age bracket accounted for 58-73% of K12 education revenue, and industry insiders have speculated that an announcement about further scaling back for older students may soon follow.
The news comes following months of changes within the Chinese for-profit tutoring sector as new government regulations limit the ability of companies to provide certain services.
Among them, after school tutoring companies will be prohibited from offering core curriculum classes from January 2022, and there will be new restrictions on the times that classes can take place, as well as limits on using teachers based outside of China.
“We will continue to operate businesses that are not related to compulsory education, shift our focus and resources to other educational products and services, explore new business opportunities and continue to be ‘lifelong learning partners’ for students,” said New Oriental in a statement.
“In view of the impact of the ‘double reduction policy’ [a government policy attempting to limit the pressure on students from both school homework and after-school tutoring], transformation is inevitable for New Oriental,” Chu Zhaohui, a researcher at the Chinese Academy of Educational Sciences, told local media.
“This decision in November [provides] a buffer time for internal business adjustments”
“While New Oriental didn’t announce the suspension of off-campus training services in September, it did announce this decision in November, providing a buffer time for internal business adjustments.
“Based on the fact that New Oriental’s original business has suffered so much from the policy impact, and that we have not yet seen a good transition track, future challenges are still very arduous.”
While some education companies have closed over the last few months, others are looking to pivot to new markets such as vocational education, adult education and even elderly education.
The Chinese government has announced measures to promote vocational and skills-based education, with the aim of college-level vocational education accounting for 10% of all undergraduate enrolments by 2025.
It also plans to make its vocational education among “the best in the world” by 2035.
However, according to media outlet Caixin, “small and midsize companies are hesitating whether to transform their businesses over concerns that they will not be able to bear the high debts needed to increase their investments to complete the licensing process”.
Since July, teachers have reported drops in available teaching hours, salary cuts and terminations, both in China and abroad.
Teachers working in other countries tutoring Chinese students online for platforms such as VIPKid and Whales English have seen their contracts terminated.
Parents demanding refunds and former employees whose salaries have been left unpaid have also been protesting outside the OneSmart Education headquarters in Shanghai, following the company’s announcement it would be suspending off-campus K12 tutoring services.
“We will spare no effort to fulfil our corporate and social responsibilities”
“While the ongoing reform in China’s education industry has created uncertainties and challenges, we believe that an optimised regulatory environment will benefit the industry’s long-term healthy development,” said Yi Zhang, founder of tutoring company Zhangmen.
“In line with our commitment to complying with laws and regulations, we will spare no effort to fulfil our corporate and social responsibilities and actively promote the implementation of relevant regulatory policies.
“Looking ahead, we will prudently follow the guidance of the government to adjust our business models to provide quality-oriented education and on-campus education services leveraging on our existing propriety intelligent teaching platform.”
