Daily Management Review

Following Chinese Ban On Core Subject Teaching, Chinese Tutoring Firms Focus On Hands-On Courses


Following Chinese Ban On Core Subject Teaching, Chinese Tutoring Firms Focus On Hands-On Courses
Following a ban on Chinese online tutoring companies by authorities in the country on teaching core subjects and on making profits thereby, on teaching core subjects are being found out by such companies. Firms are now promoting coaching classes such as drama and even parental training as they try to find ways to get revenues from at least a part of the once booming business.
Last month, Chinese regulators ordered such online education companies from making profits by tutoring in any school subject and offering classes on weekends or holidays which has left companies including New Oriental Education & Technology Group Inc and Gaotu Techedu Inc, which is listed in the United States, to add a miscellany of courses and even new businesses.
The decision of the regulators to prevent profiteering for such companies was aimed to easing the pressure on parents of educational speeding for children aged 6 to 15 years in the area of compulsory education as well as reducing the burden of education on the students themselves. However, that decision now threatens to completely wipe out an industry that arguably employs about 10 million people, according to executives and local media.
"The educational giants are in a tight corner, but they have to move forward - like a big ship can't park in the sea," said Beijing-based private kindergarten chain operator Richard Zhang. "But demand for sports or arts training is far more elastic than for academic, so the sales cost is very high," said Zhang.
According to an estimate of consultancy Oliver Wyman last year, the industry that caters to the educational needs of students between 3 and 18 years was valued at 800 billion yuan ($123.24 billion) in 2019 and was predicted to reach 1.4 trillion yuan by 2025.
Now, however, while many of the companies in the industry are trying to quickly adapt to the changed scenario, thousands have been forced to close down, according to reports in the Chinese local media. 
For example, "quality education" to teach computer coding, calligraphy and chess was announced by New Oriental this month. A separate housekeeping services company has also been established by it.
Wider promotions of its parental training class, teaching skills such as time management, which the company says is aimed at helping parents to better understand children, has been started by New Oriental.
An upgrading of its app that now focuses on adult education with classes such as foreign languages has been done by Gaotu. Gaosi Educationwhihc teaches maths, on the other hand, has started "traditional Chinese culture" classes which will be taught over three weekends for 19,800 yuan.
"We will take students to the outskirts of Beijing to learn intangible cultural heritage skills such as kite-making," a Gaosi teacher told the media.
Tong Diyi, general manager of Beijing-based private equity firm Longwin Asset Management, said the scale of the private tutoring giants will definitely not be supported by such classes.
Analysts categorize such classes as "quality education and vocational education" which, according to estimates, has a total value of less than one third of the value of the private education sector prior to the ban.
"There are already many players in the quality education sector, and at the moment it's unclear how much bigger this market can grow to accommodate more participants," Tong said.