Cracking down the education sector?

Following the tech crackdown, Chinese Government has announced massive changes to the local education sector – it will probably destroy the industry.

Destroy?! 😱 What happened?

To summarize, this is a sweeping overhaul to the local education sector. The government bans off-campus tutoring agencies from taking foreign capitals, going public, and even making profits. 🙅

  • Must go non-profit! For firms teaching school curriculum, they must go non-profit.
    • No IPOs. School curriculum tutoring institutions can no longer pursue any IPOs or take foreign capital. Those who have done so need to rectify.
  • Holiday is just a holiday. So all tutoring during vacation and holidays will be banned.

Other details include banning foreign curriculum and foreign teachers, and banning new entrants… Still quite big but compared to the top 3 above, they are not that shocking.

That’s crazy… Why are they doing this?

The tutoring industry has gotten very popular for the past few years, but the Government was concerned that this has created so many troubles. 🤯

  • Education should be equal: Poorer children found themselves at a disadvantage, unable to afford tutors.
  • Low birth rates: The prices of private tutoring put a financial strain on parents, who could no longer afford to give their children the best possible education.

It was a horrible day for education companies 📉 TAL Education (TAL.US) and New Oriental (EDU.US), the largest education companies listed in US, have all plunged 70% and 54% respectively in one day. Other Chinese names were also negatively hit by the regulatory risk. 

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