China Strengthens Control Over EdTech, Impacting Private Tutors

The Chinese government is taking further steps to regulate its struggling online education industry, indicating that it is not ready to relax its restrictions on tech companies in this area. This shows that Beijing is still not willing to give private tutoring services more freedom.

Following the Ministry of Education's announcement of new regulations for private tutoring services for primary and middle school students, edtech companies have seen a sharp decline. These restrictions include ending physical classes by 8:30pm and online sessions by 9pm, as well as capping one-time charges at 5,000 yuan ($720) and requiring a special trust account with state-designated banks for pre-paid fees.

On Thursday, Scholar Education Group experienced a significant drop of up to 30% in Hong Kong, the most significant decrease since Beijing implemented sweeping restrictions last July that caused a $100 billion industry to collapse. New Oriental Education saw a 9.3% decrease, and other companies such as Virscend Education Co., China Education Group, and Hope Education Group experienced similar or more severe drops.

The Chinese government's recent policies have had a negative effect on private education services, which have been struggling since the government's unexpected decision last year to prohibit these companies from making profits, raising capital, or going public. These new restrictions from Beijing, which has labeled the sector as "broken" and "taken over by capital," appear to be in line with President Xi Jinping's goal of controlling China's growing private sector.

On Thursday, similar language to that used during the 2021 restrictions was repeated. Tutoring companies that are looking to go public will be subject to a rigorous examination by regulators to prevent the "uncontrolled expansion" of the sector.

The Chinese government is planning to make major changes to its education system, which has been taken over by capitalistic interests. These reforms are intended to ensure that the educational system is focused on providing quality education to its citizens. The government hopes that these changes will help to create a more equitable and fair educational system.

Chinese President Xi Jinping's recent move to crack down on capitalism has caused a $1 trillion reckoning. This action has had a significant impact on the global economy and has caused many to take a closer look at their investments. The ramifications of this decision are still being felt and it is likely to have a lasting effect.

The Chinese government has called together banks in an effort to bring back stability after the recent stock market crash. Officials are hoping to restore confidence in the market and prevent further losses.

China is taking steps to limit after-school tutoring due to its potential to create an unhealthy educational environment. The Chinese government is concerned that the pressure to succeed academically can lead to stress and exhaustion for students. As a result, they are implementing regulations to reduce the amount of tutoring available. This QuickTake provides an overview of why China is taking this action.

Thirteen government agencies, including the nation's top securities regulator, have released a document outlining their commitment to improving the quality, safety, standards, and pricing of tutoring services to reduce the financial strain on households. Tutoring companies must comply with the new regulations by June 2023 or face serious repercussions.

The agencies stated that it is essential to define the domestic and international market standards and procedures of the non-curriculum tutoring organization, to keep a tight rein on the gates, and to provide effective regulatory oversight and guidance to prevent uncontrolled expansion.

Despite the Chinese government's recent willingness to loosen restrictions on tech giants such as Tencent Holdings Ltd. and Netease Inc. in order to stimulate economic growth, new curbs have been put in place. The Covid Zero restrictions have had a major impact on the Chinese economy, and the recent shift towards reopening suggests that officials are eager to promote a recovery.

China's education technology industry has seen tremendous growth, reaching a value of $100 billion as companies strive to meet the demands of parents who want to give their children the best possible opportunities. This expansion has attracted billions of dollars from major companies such as Alibaba Group Holding Ltd. and Tencent, as well as international investors like Temasek Holdings Pte and Tiger Global Management.

A strong reaction developed against companies that used aggressive sales strategies to pressure parents into spending large amounts of money on tutoring services. Numerous specialists voiced their disapproval of the growing number of expensive online courses, citing a range of issues such as poverty, disenchanted young people, and a declining birth rate.

As Beijing's ambition to take charge of a data-driven digital economy grew, it all culminated in the momentous internet industry crackdown of 2021.

A number of China's most well-known online tutoring companies have either closed, reduced their size, or changed their focus to other businesses, such as livestreaming, which has become increasingly popular.