Chinese online tutor company New Oriental has laid off 60,000 employees since Beijing banned the private education industry from making $ 100 billion a year in profits, the group’s founder said.
Yu Minhong, chairman of the New York-listed company, said he laid off about 60 percent of his workforce in the wake of the ban, but “with everyone’s hard work, the company has managed to survive and some to retain power “.
New Oriental has lost 90 percent of its market value, in common with other U.S.-listed Chinese online education companies, since the ban, which was part of a broader government effort to reduce childcare costs and help boost the country’s low birth rate give.
“In 2021, New Oriental has faced too many accidents due to factors such as policy, the pandemic and international relations,” Yu said.
Prior to the ban, New Oriental enrolled more than 5 million children in after-school courses, but since then, revenue has dropped by 80 percent. It turned out to be new revenue streams, including summer camps, dance and drawing classes and the establishment of courses for overseas foreigners to learn Mandarin.
Ekaterina Kologrivaya, co-founder of Edtech Expand, a Beijing-based consulting start-up company, said New Oriental was the fastest of all the online teaching companies to comply with the regulations. “It still has a strong brand and has used it to develop new products,” Kologrivaya said.
Yu urged his employees in the WeChat post to be “bold” and find “new business opportunities” that align with key policies that are “constantly changing”.
On December 31, authorities in Beijing and Shanghai released new guidelines on pricing for nonprofit core curriculum education, saying that hourly rates for online classes for one student should be set at Rmb20 ($ 3.14), in a sign that the government will soon be online will allow classes to start again.
But as one father of a 14-year-old boy in Shanghai, who did not want to share his name, remarked, “it will be very difficult to get good quality education at these low prices”.
He said the regulations forced Chinese parents to switch to foreign competitors to New Oriental, several of which targeted the Chinese market by offering classes from overseas, but in Beijing time. “There’s not much the authorities can do, all you need is a VPN connection,” he said, referring to the digital backdoor route used to bypass China’s censored internet.