Strict regulations are holding back China’s $75 billion online education sector


A student at Jinyuan School in Beijing puts his mobile phone in the safe set up in the classroom on March 1, the first day of the new semester. Photo: Li Hao/GT

Some of China’s online K-12 education providers have stopped hiring and some have even reportedly cut staff as tighter regulations dampen the country’s booming and lucrative one-to-one tuition market, valued at over of $75 billion.

Tightening regulatory scrutiny of online education platforms is part of China’s national efforts to tackle what have been described as chaotic market operations as well as ease the burden on students. While causing immediate effects on the industry, the efforts will ensure long-term healthy development, analysts said.

“There are still jobs for experienced workers in the online education sector, but vacancies have fallen from the first quarter and much of last year,” a headhunter said. based in Beijing, which has long-term contracts with some of the major online education platforms. told the Global Times on Monday on condition of anonymity.

A Shenzhen-based private tutor for an online education platform, who prefers not to be identified, told the Global Times on Monday that the school is limiting teachers’ class hours, likely due to tighter regulatory scrutiny. .

K-12 education platform Gaotu is said to have laid off 30% of its employees, meaning several hundred or even 1,000 jobs, starting this week as part of a “strategic adjustment”.

According to the news site, the programs to be cut relate to elementary education services for children aged 3 to 8 years old.

The adjustment follows China’s new law on the protection of minors, which will come into force on Tuesday. Under the new law, kindergartens and private schools are prohibited from providing primary education to preschool minors.

Last week, China’s top leaders called for easing the burden on elementary and middle school students, as well as comprehensive regulation of private tutoring institutions.

The message sent shares of US-listed Chinese online education operators plummeting, with some plummeting by more than 20%. It has also raised concerns about the fate of planned IPOs of some tutoring companies.

Another major online education company, Alibaba-backed Zuoyebang, has also reportedly halted recruitment of sales and tutoring staff since Wednesday.

On Chinese social media platforms, some recent university graduates have complained that their contracts with online learning institutions such as Tencent-backed Yuanfudao and Zuoyebang have been canceled by employers as recruitment plans are canceled. .

A college graduate named Ji in northern China’s Tianjin Municipality received an offer from Yuanfudao and was due to go to work on Monday. But Ji told the Global Times that a member of the company’s human resources staff suddenly informed her at 6 p.m. Thursday that the offer was canceled, citing a lack of training resources for new employees.

“Yuanfudao hasn’t given me any compensation for their mistake yet,” Ji said, noting that she was waiting for further notification from the company.

Some industry insiders also worry that capital is being taken out of online education and flowing into other sectors.

“The enhanced monitoring will help dispel chaos and is conducive to the long-term development of the industry, forcing online education operators to return to the substance of education,” a spokesperson for the agency said on Monday. Chinese tutorial platform VIPThink to the Global Times, dismissing secularists. – out of worries.

The regulatory changes will create a healthier growing environment for students and reduce parental anxiety, the spokesperson added.

China’s online education sector has grown rapidly, with middle-class parents splurging on private tuition for their children to ensure they outperform their peers in exams.

The COVID-19 outbreak, which prompted classroom instruction to move online, also fueled the boom. In 2020, China’s online education industry was valued at 480 billion yuan ($75.41 billion), with a user scale of 351 million people, according to a report by iiMedia Research.

Analysts said the overhaul will also help the industry address lingering issues with misleading advertising and overpricing.

In early May, the Beijing Municipal Market Supervision and Administration Bureau imposed sanctions on Zuoyebang and Yuanfudao for unfair competition and misleading advertising.

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