Chinese regulators going after tutors

[evil wasabi]

https://amp.ft.com/content/fe2d8281-61ba-4b1b-8962-2496be79d8a2

About $16bn was wiped from the value of three major Chinese education companies listed in New York trading on Friday after a leaked memo suggested that Beijing might ban academic tutors from making a profit.

The document, dated July 19 and seen by the Financial Times, requires home-schooling or off-campus education companies to register for non-profit status and bars local authorities from approving any new agencies.

If the measures are enacted, it would be a heavy blow for one of China’s fastest-growing industries: tutoring children outside of school and preparing teenagers for university entrance exams.

Share prices in some of China’s largest education companies plunged on the news. TAL Education, Gaotu Techedu and New Oriental Education, which are listed in New York and previously had a combined market value of more than $26bn, all fell by close to 60 per cent in the first hour of trading.

TAL, the largest company by market value, has about 45,000 employees and runs 990 teaching centres in 102 cities.

The crackdown could also dash hopes by Yuanfudao and Zuoyebang, two leading online education groups known for test preparation, to float in the US or Hong Kong.

“There is zero chance they could still do an IPO,” said a Beijing-based private equity firm partner with connections to the securities regulator. “They are [not attuned] to policy shifts.”

China’s after-school tutoring industry has taken off in recent years as it provided an effective method for students to excel in academic tests that determine admission into top-ranked middle schools and universities.

In Beijing’s Haidian District, known for its vibrant tutoring schools, 57 students made the list of top 80 scores in the city’s college entrance examination last year. By contrast, the district’s test-takers accounted for less than a quarter of the city’s total.

“A good education provides the best way to move up the social ladder,” said David Yang, a Haidian-based office worker who has enrolled his 12-year-old daughter into three after-school courses a week. “I won’t have a second thought investing in my child’s future.”

The tutoring boom, however, has worried Beijing as it has put heavy workload on students and financial burden on parents. The authority was also concerned that the spending spree on after-school academic training may widen education disparity and stoke social turmoil.

“The government decided to kill the sector because it had created too many problems ranging from education inequality to low birth rates,” said Li Chengdong, founder of Dolphin Think Tank in Beijing.

“If the best way to get into good schools is by taking private tutoring courses, then rich kids will have an unfair advantage over poor ones,” he added.

Beijing’s latest industry overhaul aims to address the problem. The document said China would “effectively” reduce students’ academic burden and households’ education spending in one year and make “significant progress” in three years.

To meet the goal, according to the document, China will ban academic training agencies from raising capital through IPOs. The circular also prohibits listed companies from raising capital to invest in academic training agencies.

“That is going to create a credit crunch for the industry,” said a Beijing-based education investor.

To ease households’ education expenses, according to the circular, the authority will set guidance prices for off-campus training courses. “We must uphold the non-profit nature of after-school tutoring,” said the document.

These combined measures are likely to see the sector shrink dramatically. “There is going to be massive lay-offs,” said Li. “But the government thinks the benefits outweigh the costs.”

He added that the document also outlined how Beijing will “strictly” ban foreigners from tutoring Chinese children. “That could drive education technology companies like VIPKID out of business,” he said, referring to online education platforms featuring US-based teachers.

A former official at the Central Propaganda Department said Beijing made the move after it found ideological problems in private tutoring courses involving foreigners. “We must regain control in this area,” said the person.

It remains a question, however, how much the new rule will benefit average students. Yang, the Beijing parent, said he would find his daughter a new tutor if the current one goes under.

“While the government is shutting down private tutoring schools out of goodwill, they have done little to make good universities easier to get into,” said Yang. “We cannot afford to lose the race.”

Hope all is okay for Lonesage…

 

[SouthtownKid]

I thought stage was a teacher, not a tutor. In either case, it would probably be a net gain for the world at large if China starts falling behind in education.

 

[Lagduf]

One would hope they could attain a level of education to realize their government doesn’t have their best interests in mind…

…but then I look at the US where we do have highly educated people in the government and I despair.

 

[lithy]

I thought stage was a teacher, not a tutor. In either case, it would probably be a net gain for the world at large if China starts falling behind in education.

He recently mentioned he was moonlighting as a tutor.

It's canon.

 

[Lastblade]

Wow, CCP is really going after this industry. I wonder who didn't grease the pig.

 

[SouthtownKid]

One would hope they could attain a level of education to realize their government doesn’t have their best interests in mind…

…but then I look at the US where we do have highly educated people in the government and I despair.

Yeah, I don't think a legitimate argument could be made that China's government has their people's interests in mind any less than the US government does theirs. And the level of delusion on the part of the people regarding their respective governments caring about their welfare is probably roughly comparable.

Which of course is not to say I don't think one system is vastly superior to the other. Because clearly, ours is. Our system still retains at least the illusion of being fixable.

 

[evil wasabi]

Yeah, I don't think a legitimate argument could be made that China's government has their people's interests in mind any less than the US government does theirs. And the level of delusion on the part of the people regarding their respective governments caring about their welfare is probably roughly comparable.

Which of course is not to say I don't think one system is vastly superior to the other. Because clearly, ours is. Our system still retains at least the illusion of being fixable.

When you talk about China’s people, you just mean the Han people, right?

 

[SouthtownKid]

When you talk about China’s people, you just mean the Han people, right?

Yeah okay, that's valid. And it would be a false equivalence for me to come back and say, "Yeah, like when I talk about the US government caring about its populace, I mean white people." Because we don't currently have large scale internment camps for an ethnic minority (although we have in the past), and we don't currently sell one minority group into servitude to ethnic majority families (although again, obviously we have). But we do still get up to some nefarious shit, not just abroad, but at home.

I mean, within relative recent memory, we had the CIA flooding inner cities with drugs to fund wars abroad. Then we had the War on Drugs to arrest the people doing the drugs the CIA ran into the inner cities, so they could overpopulate the burgeoning for-profit prison industry. And that's just one example. No, we're not as bad as China. But this is not hand-wave material, either.

 

[racecar]

shake down in the stock market , Bill Hwang got out early ....
https://finance.yahoo.com/news/china-bans-school-curriculum-tutoring-114147251.html

 

[hyper]

all stocks in this sector dropped 50% overnight

 

[racecar]

That happen years ago to for profit college in the us , remember a few names Devry , Apollo education All went down like a rock .

 

[SouthtownKid]

That happen years ago to for profit college in the us , remember a few names Devry , Apollo education All went down like a rock .

BREAKING NEWSFLASH: All colleges in the US are run for profit.

 

[theMot]

all stocks in this sector dropped 50% overnight

Like crypto!

 

[racecar]

Like crypto!

Still better then Venezuela...

 

[Lagduf]

BREAKING NEWSFLASH: All colleges in the US are run for profit.

At least those schools are accredited.

Not much you can do with your “degree” from Devry, ITT Tech, or Trump University.

 

[SouthtownKid]

At least those schools are accredited.

Not much you can do with your “degree” from Devry, ITT Tech, or Trump University.

Pretty sure at least some of that type of school are accredited. If they offer an AA, BA, whatever, they have to be accredited.

 

[Lagduf]

I’m not sure. One way or another It’s all a scam.

 

[SouthtownKid]

I’m not sure. One way or another It’s all a scam.

Which now applies to the regular university system as well.

 

[LoneSage]

If wasabi ever wants to ask me something directly, he is always welcome to.

Moonlighting is illegal here anyway. What the fuck they gonna do, send me back to the greatest country in the world. Oh no. Please don't.

 

[Lagduf]

Which now applies to the regular university system as well.

That's what I meant.

 

[SouthtownKid]

If wasabi ever wants to ask me something directly, he is always welcome to.

Moonlighting is illegal here anyway. What the fuck they gonna do, send me back to the greatest country in the world. Oh no. Please don't.

Maybe you don't get all the news there, but sending you back might not be what they do. You could tread a little more carefully. It's not like the State Department is going to say boo to get you back.

 

[LoneSage]

Maybe you don't get all the news there, but sending you back might not be what they do. You could tread a little more carefully. It's not like the State Department is going to say boo to get you back.

I am well aware. Recently heard of an American of Chinese descent get put in detention without trial for 10 months, then deported without being able to take any money back. Whatever, treading carefully. I'm careful enough. Google Two Michaels if you're inclined, very sad story there.

 

[racecar]

I am well aware. Recently heard of an American of Chinese descent get put in detention without trial for 10 months, then deported without being able to take any money back. Whatever, treading carefully. I'm careful enough. Google Two Michaels if you're inclined, very sad story there.

Yep just glad your not name Michael .... Canada will be arms wide open to welcome them back , they are not coming back until that huawei lady is set free... by the us .

 

[LoneSage]

Yep just glad your not name Michael .... Canada will be arms wide open to welcome them back , they are not coming back until that huawei lady is set free... by the us .

It's called Rule of Law, racecar.

 

[norton9478]

BREAKING NEWSFLASH: All colleges in the US are run for profit.

Most private schools are run to break even (with any extra money put into an endowment to fund future operations).
Most Public Schools are run at a loss.