When the government announced new regulations for after-school training centers in China in 2021 (the “double discount” policy), This is published an article examining the impact this could have on the industry.
READ MORE: After-school training centers in China struggle to survive
We ended this article by stating that “it’s sink or swim”, which means that companies in the sector would have to adapt to new regulations or perish.
It looked like an industry integral to education in China was about to be turned upside down.
Although there have been changes, not everything has been catastrophic. Plus, some big players that were supposed to close are still in the running.
A year after the first rumors of the redesign, we thought it would be a good opportunity to take a look at some of the major changes to after-school training centers and the tutoring industry in China.
The “double reduction” policy
On July 23, 2021, news of the rules was reported in Reuters. It was later confirmed by China’s Ministry of Education that the “double reduction” policy would come into effect, effectively prohibiting for-profit training centers from teaching core subjects to kindergarten, primary and college.
“Which subjects are the main subjects? you ask – ethics and rule of law, history, geography, Chinese, mathematics, foreign languages (including English, Japanese and Russian) and sciences (biology, physics and chemistry).
Why is the “double reduction” policy necessary? As the name suggests, there were two things that needed to be reduced, according to the government – the academic burden on students and the financial burden on parents.
Anyone who has spent time in China, especially those working in the education sector, knows how hard children study here. They spend most of their day at school, and then when the home hour bell rings, they head to training centers and homework clubs. Why? The more studies probably make you smarter, but more importantly, the more extracurricular activities you do, the more attractive you are to top schools and universities.
The second burden is an obstacle to the government’s desire for more Chinese to have children. Training centers are not cheap and more and more people are choosing not to have children, citing the cost of their education as one of the main reasons.
Those who sank
Juren Education training center in Beijing. Image via Weibo/@齐鲁一民
For some training centers, adapting to the new regulations has proven to be too cumbersome.
Juren Education had been in the market for 27 years and offered after-school lessons for students aged 5 to 18. However, in early September 2021, Juren announced that all of its centers in China would be closing permanently, as reported by Sixth Tone.
The company cited “operational difficulties” just a month after the announcement of the new regulations. The closure affected around 13,000 families, although Juren tried to transfer students elsewhere for private lessons.
On August 17, 2021, Yicai reported on a dramatic case involving the closure of UK tutoring company Holland Park. CEO Jake Hall reportedly fled Shanghai to the UK with more than $1.5 million.
Hall informed employees that investors withdrew their commitment to the company following the announcement of the new laws. He confirmed that the company had filed for bankruptcy.
Another big player to shut down due to new regulations was Best Learning.
US national Belinda, a pseudonym, worked at the company in a management position. She said This is that, having already been affected by COVID-19, the “double discount” policy was the final nail in the coffin.
Although the company tried to sell non-essential lessons to parents at schools rebranded as “Thinking Labs”, it simply couldn’t replace Best Learning’s main selling point – teaching English.
AJ English Academy in Guangzhou. Image via AJ English Academy
When This is published the article on the potential impact of the new policy, we heard from the founder of AJ English Academy in Guangzhou.
US national Adam, who asked that we only use his first name, established the English training center in 2017. The business has grown to three centers with around 500 students, aged 3 to 12, and 35 staff members by 2021.
However, AJ English Academy temporarily closed in mid-2021 and planned to reopen on August 27, 2021, but it did not.
A WeChat message on their official account at the time said the school was still trying to confirm details with ministries regarding how the “double discount” policy was to be implemented. Unfortunately, they failed to find a workable solution under the new guidelines.
Many parents were angry and demanded a refund from the training center.
Tencent Net reported on September 5, 2021 that the parents could not contact anyone from AJ for days. A relative later found Adam having dinner with other “foreign friends” at a restaurant in Xingsheng Lu in Guangzhou’s Tianhe District.
The relative informed the others and an angry mob gathered. They confronted Adam at the restaurant and demanded a refund.
We contacted Adam to clarify the current situation but received no response.
An industry survivor
An EF English First school. Image via This Is/Alistair Baker-Brian
We repeat, all is not gloomy.
EF English First, a mainstay in the Chinese English education market since 1997, is still in business. However, they had to close several schools in major cities in China.
Additionally, the company had to take drastic measures to ensure it didn’t lose money, such as temporarily freezing promotions for all staff. In addition, some local teachers (Chinese nationals) have to take care of communicating with parents without a salary increase.
EF employees in southern China said This is the situation regarding new international teachers arriving in the country. They are told that if they leave their contract early, not only will they have to pay back the money EF paid to bring them here, but also the money it cost to train them to become teachers.
EF also had to modify its teaching program. Rather than teaching English, they now focus on developing social and life skills in English and Chinese. How this isn’t an example of language learning, we’re not sure. However, this is perhaps indicative of the blurred lines between English and other non-essential (i.e. legal) subjects that some believe would emerge after the new law is implemented.
EF’s website says there are currently 38 vacancies for foreign teachers in China.
Plus, a quick look at EF Employee WeChat Moments suggests that EF English First centers are still buzzing. Although the full financial impact of the “double reduction” policy is not publicly known, EF appears to have weathered the storm.
READ MORE: EF English is the first to close in China?… No!
A new oriental training center. Picture via Weibo
Perhaps no name is more recognizable in China’s private education industry than New Oriental (Xin Dongfang).
Founded in 1993 by Yu Minhong, known by his English name of Michael Yu, the company has become a household name throughout the Middle Kingdom.
The “double reduction” policy had an unequivocal impact on the company. Sixth Tone reports that 60,000 New Oriental employees lost their jobs in 2021 as a result of the new law. Moreover, the company’s market value fell in 2021 by 90% year-on-year, while profits fell by 80% year-on-year.
The new law led the company to close schools and even to abandon whole sections of its activity. However, to some extent they adapted and, as a result, managed to stay afloat.
How did they adapt? They took advantage of China’s live e-commerce industry.
Yu Minhong (Michael Yu), CEO of New Oriental, during a livestream. Image via Weibo/@新派诗人冷雁
We watched a few clips for ourselves on the Chinese video platform Bilibili.
The videos contain both a commercial element (the animators sell products), but also an educational element (they teach English phrases and vocabulary related to the products concerned).
In one clip, the (male) host, known as Dun Dun, can be seen selling tampons. In the process of making his sales pitch, he teaches English phrases such as “she’s on her period”.
Later, Dun Dun turned to selling skincare creams, even going so far as to sing at one point…the times we live in.
In another clip, the CEO of New Oriental himself, Michael Yu, can be seen alongside another host promoting this delicious Chinese specialty – duck neck. He then holds up packaged fish and explains that it is from Fujian Province.
Near the end of the clip, one of the animators translates some of the fruit names into English; the “date” fruit sparks discussion of its homograph of a “date” with romantic interest.
Did Michael Yu envision this when he created New Oriental in 1993? Probably not. But at least his business has adapted and is still treading water.
Sink or swim?
Undoubtedly, these two years have been difficult for after-school training centers in China. The outbreak of COVID-19 in early 2020 meant many businesses were already struggling. And then came the new “double reduction” policy in 2021.
In some cases, the new law has been the final straw – training centers that sold anxious parents promises that their children would improve their performance in core subjects are no longer able to offer their main selling point. .
Moreover, as seen in the case of Holland Park, some investors lost faith in the industry very quickly after the announcement of the new law.
AJ English Academy has discovered what has happened when customers grow impatient with the continued inability of centers to reopen, but not through their fault.
However, there were also clear examples of those who could swim, including EF English First. And, as New Oriental showed with its live stream, turning to new ways of doing things can help a business stay alive.
China’s after-school training center industry has been through tough times, but it is certainly not dead.
[Cover image via Pixabay]
- Global Retail Market to Be Driven by Demand from Booming E-Commerce Industry During the Forecast Period 2021-2026 – Designer Women
- Walmart vs. Amazon – who has better deals right now? – Eat this not that
- Automotive E-Commerce Market to See ‘Explosive Growth’ to 2027 |
- 3 Business Bag Payment Aggregator License