Yuanfudao, which was China’s most beloved private online tutoring start-up a year ago, has denied plans to pull out of edtech in the face of a sweeping crackdown on the industry, claiming a recent investment in a clothing company created by its parent company. would not distract him from his educational goal.
The human resources department of the Tencent-backed company posted online job postings for fashion designers this month, sparking rumors that the Beijing-based online tutor is drastically reforming its business model in the face of uncertainties. of the digital education industry.
Instead, a source familiar with the matter told Caixin that the decision last month by Yuanfudao’s parent company, Beijing Yuanli Education Technology Co. Ltd., to establish a wholly-owned subsidiary to design and sell clothing. in a down jacket was an effort by Yuanfudao founder Li Yong. invest in a company run by one of his former subordinates, Chen Mengcang.
On Friday, Yuanfudao released a declaration on social media that the new Beijing Bingyuan Garment Co. Ltd. “has nothing to do with the educational activities of Yuanfudao” and “will be operated by a special team independently.” The statement did not give details.
Industry insiders say a more likely explanation for the surge in down jacket marketing could relate to Yuanfudao’s role as the official sponsor of the 2022 Beijing Olympic and Paralympic Winter Games. According to the state-run Xinhua News Agency, Yuanfudao will develop Olympic-related courses and help promote winter sports in China under its sponsorship deal, announced in July 2020, as the company neared its point. culminating in terms of valuation.
In October last year, Yuanfudao announced that it had raised $ 2.2 billion in late-stage venture capital funding, valuing the company at the time at $ 15.5 billion, according to TechCrunch.
The source told Caixin that Yuanfudao executives and employees viewed the investment in Beijing Bingyuan Garment as a reflection of the close ties between Yuanfudao founder Li and Chen, dating back to when he was Li’s subordinate at NetEase from 2009 to 2012. Yuanfudao will not spend much on such a small garment business, the source added. Chen is appointed legal representative of the new clothing unit, according to corporate information provider Tianyancha.
Private tutoring companies in China have been forced to recalibrate their activities since July after authorities announced severe measures this would transform them into non-profit institutions, exclude them from public procurement funding and prevent the creation of new businesses offering curriculum subjects.
In its own diversification drive, Yuanfudao recently launched a new brand, named Feixiang Planet, designed to provide educational products and services to schools and governments, according to the source. They said a team had been put in place to manage the business, adding that Feixiang Planet was likely the company’s goal following the July regulations.
For its existing business for students, Yuanfudao launched its Nangua Science brand in July, which offers extra-curricular training courses allowed by the new rules and sells smart hardware products.
Yuanfudao’s domestic rivals also struggled to reorganize their business. For example, Zuoyebang, a Baidu-backed online tutor, has started selling his Go live streaming courses on Alibaba’s Tmall Marketplace, which he says is backed by technologies like smart training partners. .
However, the sector is struggling to maintain parental trust following regulatory repression. Earlier this month, the US-listed OneSmart International Education Group reportedly shut down all of its off-campus tutoring programs and learning centers across China, sparking outrage from angry parents who demanded refunds.
Contact reporter Ding Yi (firstname.lastname@example.org) and editor Flynn Murphy (email@example.com)
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