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K-12 tutoring boosts New Oriental growth

China’s largest private education provider, New Oriental, has published a report on the 2019 fiscal year showing an increase in revenue and students, driven by double-digit growth in after school tutoring classes for primary and secondary school children.

new orientalNew Oriental is the country's largest provider of private education services. Photo: Pixabay

"We are delighted to conclude the fiscal year with continued robust growth on the top line and improvement in our operating margin"

Over the year, student enrolments increased by 32.4%, net revenue by 26.5%, and operating income by 16.2%, according to New Oriental.

“Our key growth driver, the K-12 after-school tutoring business, achieved a year-over-year revenue growth of approximately 28.5%,” Michael Minhong Yu, New Oriental’s executive chairman, said.

“We are delighted to conclude the fiscal year with continued robust growth on the top line and improvement in our operating margin. In the fourth quarter, we recorded a top line growth of 20.2%.”

According to Minhong Yu, New Oriental’s U-Can middle and high school after-school tutoring business, as well as its POP Kids program, grew by by around 27.2% and 31.0% respectively.

The year marked an enrolment increase in K-12 after-school tutoring of 32.4% to approximately 8,382,700. This is despite continued attempts by the government to limit student study time.

“We added a total of 152 new facilities, including 141 new learning centres in existing cities, nine offline training facilities in six new cities, and two dual-teacher model facilities in two low-tier cities,” explained Chenggang Zhou, New Oriental’s chief executive officer.

According the South China Morning Post last year, Chinese parents spend an average of 120,000 RMB annually on their child’s education.

“Extracurricular activities immensely improve the quality of education in China. However, many parents forget that training and cram school classes have diminishing marginal returns,” David Weeks, co-founder and COO of Sunrise International, told The PIE News.

“There are five different types of extracurricular learning that the report touches on. Some of them are good while others are mixed in their outcomes and effects,” Weeks said.

Weeks defined these services as after-school subject tutoring for boosting grades in a particular class; after school student-run clubs such as drama, debating and basketball; standardised test prep classes; boutique high end cram schools that resemble college elective classes; and college admission counselling, where the objective is just to get a student into a better college.

“Many parents forget that training and cram school classes have diminishing marginal returns”

“Students need some enrichment, but overbooking students’ schedules can be very counter-productive.

“They are pushed too hard, and everyone is to blame. Short of students having nervous breakdowns or being so stressed that their grades suffer, there aren’t many constraints or checks against overburdening them.”

The past few years have also seen extra-curricular studies increase for even younger children. More than 60% of primary school-aged children attend tutoring for key subjects outside of school.

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