Online tutoring and after-school enrichment programs have been a rapidly expanding industry in China for the past several years. The Chinese government has been working to ensure that this industry is properly regulated and that students and families are protected. In the past year, there has been a significant increase in new regulations and most recently a new agency has been created to oversee the industry: the Department of Supervision of Off-Campus Education.
The new Department of Supervision of Off-Campus Education will primarily focus on private in-person and online tutoring companies that work with middle and primary school students. It will also oversee other off-campus activities like competitions and provide more standardized regulation.1
This recent increase in oversight includes, among other things, ensuring that teachers’ credentials are legitimate and that pricing is transparent.2 Changes have also been made to how far in advance tuition fees can be paid due to concerns about overleveraging. And, there have also been investigations into ensuring marketing is not misleading.3 5.7 million dollars in fines have been levied against 15 educational companies who were found to have engaged in deceptive practices. Included in those 15 companies were two of the biggest startups Alibaba-backed Zuoyebang and Tencent-investee Yuanfudao.4
In addition to the already in place regulations on tuition fees and teacher credentials, more regulations are expected to be announced shortly and likely to take effect next month. These regulations are reported to include both restrictions on advertising and a trial ban on both on and offline tutoring during the summer and winter holidays.5 If implemented, the trial ban would first begin in 9 major cities and municipalities and then be applied to the rest of the country after a year. The ban would likely require many after-school tutoring companies to significantly change their business models.6 This is particularly the case as regulations are also expected to ban tutoring during weekends during the school year.7 One law that has already gone into effect is The Law on Protection of Minors. This law “bans tutoring institutions (and kindergartens) from offering primary school-level lessons to pre-schoolers.”8
This rumored ban could help give Chinese students more downtime, ensuring that their summer is not simply a “third semester for learning” as some parents have described it. 9 In addition to reducing stress levels for students, this ban could also reduce the expense of raising a child, as many families feel they have to pay a great deal of money to ensure their children are doing enough after-school tutoring to get into a competitive school.10 Some researchers, including Chu Zhaohui, a researcher with the state-run National Institute for Education Sciences, argue that a better way to help over-stressed students and parents would be “through providing balanced education resources and changing the score-based evaluation system.” Regardless of the methods used, working to protect students’ and families’ mental and financial health is clearly a major goal of the new Department.11
Reports that private education companies may not be allowed to be publicly traded have also been circulating and combined with the reports of strict regulation on tutoring times, many companies have seen their stock prices fall dramatically.12 This includes TAL Education Group and New Oriental Education and Technology Group. According to an article from Reuters.com, shares in publicly traded stock “have fallen 23% and 26%, respectively, this year, compared to a 13% gain in the benchmark NYSE composite index.”13 And “plans for several mega-IPOs have been halted, with Tencent-backed VIPKid and Huohua Siwei putting off U.S. listings.”14
With stock prices dropping, fear of the unknown is causing chaos in the educational tutoring market, with some companies halting advertising15 while others have begun layoffs.16 Business news publication Yicai Global reported that Gaotu will stop registering children aged 3 to 6, and lay off as many as a third of the staff.17 To stay relevant, companies will have to adapt to the changing times and possibly diversify their class offerings and keep salaries in line with the Chinese economy. Companies like ALO7 are opting to maintain current salaries while reducing costs where possible, expanding into new markets, partnering with more public schools, and staying on the cutting edge of educational innovation in China.
Until the Department of Supervision of Off-Campus Education releases the finalized regulations, the educational stock market will most likely remain volatile. At the end of the day, the companies that survive will be the ones who are able to pivot to meet the needs of parents while playing by the government’s rules.
1,5 Feng, J. (2021, June 21). China creates dedicated department to regulate private tutoring industry. SupChina. https://supchina.com/2021/06/16/china-creates-dedicated-department-to-regulate-private-tutoring-industry/.
2,3 Che, C. (2021, May 24). Beijing rolls out tuition guidelines for after-school tutoring sector. SupChina. https://supchina.com/2021/05/22/beijing-rolls-out-tuition-guidelines/.
4 Jao, N. (n.d.). China’s online tutoring crackdown punishes parents trapped in a merciless system. Quartz. https://qz.com/2029682/online-tutoring-flourished-in-anxious-china-until-beijing-stepped-in/.
6, 10 EXCLUSIVE-China to unveil tough new rules for private tutoring sector-sources. (n.d.). https://www.msn.com/en-us/news/world/exclusive-china-to-unveil-tough-new-rules-for-private-tutoring-sector-sources/ar-AAL7KAG.
7, 11 China Plans New Rules to Curtail After-School Tutoring, Target Academic Pressure Amid Scandals. China Digital Times (CDT). (2021, June 22). https://chinadigitaltimes.net/2021/06/china-plans-new-rules-to-curtail-after-school-tutoring-target-academic-pressure-amid-scandals/.
8, 14 Bloomberg. (n.d.). Why China is Cracking Down Now on After-School Tutors. Bloomberg.com. https://www.bloomberg.com/news/articles/2021-06-09/why-china-s-cracking-down-now-on-education-tech-firms-quicktake.
9 Times, G. (n.d.). Policy tightening for after-school tutoring. Global Times. https://www.globaltimes.cn/page/202106/1226610.shtml.
12 Wang, B., & Yang, G. (n.d.). IPO Ban Coming for Private Education Stocks? Caixin Global. https://www.caixinglobal.com/2021-05-26/ipo-ban-coming-for-private-education-stocks-101718317.html.
13 Thomson Reuters. (n.d.). TAL.N – TAL Education Group (ADR) Profile. Reuters. https://www.reuters.com/companies/TAL.N.
15 Yingzhi Yang, J. Z. (2021, May 12). EXCLUSIVE China planning new crackdown on private tutoring sector – sources. Reuters. https://www.reuters.com/business/finance/exclusive-china-planning-new-crackdown-private-tutoring-sector-sources-2021-05-12/.
16 Yuan, S. (2021, June 25). China moves to discipline ‘crazy tutoring scene’. Education News | Al Jazeera. https://www.aljazeera.com/news/2021/6/25/china-moves-to-discipline-crazy-tutoring-scene.
17 Gaotu to Lay Off Staff as China Tightens Online Tutoring Rules. Yicai Global. (n.d.). https://www.yicaiglobal.com/news/gaotu-to-lay-off-staff-as-china-tightens-online-tutoring-rules.
Lauren Krystaf has been teaching with ALO7 since 2017 and loves having the opportunity to teach English from anywhere with an internet connection. She enjoys traveling, reading, hiking, and spending time with her family.
Lauren has a bachelor’s degree in Anthropology from SUNY Buffalo and a master’s degree in Library and Information Science from Drexel University. She also has a 120 hour TESOL certificate. Lauren is a member of the Phi Beta Kappa and Beta Phi Mu honor societies.