What will happen to private tutoring? New Oriental’s 2022 game plan

The dual-alleviation policy is the Chinese government’s effort to reduce the burden of homework and after-school tutoring on students, and reduce inequality caused by parents’ differing abilities to pay for it. After it was implemented in July last year, China’s $100 billion tutoring industry was forced to go nonprofit. By year-end, the major tutoring companies had shed most of their staff and depleted most of their cash reserves, but they survived. What is their game plan?

New Oriental Education ($EDU), the largest tutor on the block, recently posted a year-end summary: Revenues in 2021 decreased by 80%; 60,000 employees were dismissed; and the company lost 20 billion yuan ($3 billion) through such expenses as tuition refunds and severance pay.

• The founder of New Oriental, Yú Mǐnhóng 俞敏洪, outlined his 2022 plans on his official WeChat account (in Chinese). He said the company had already ceased online K-9 training in test subjects in favor of programs that advance more qualitative growth factors such as general literacy and research skills.
• The company also increased its investment in university and study-abroad programs in an effort to tap into more of the postgraduate and overseas Chinese student market.

The context: Tutors have been moving in every which way to survive the crackdowns. Last fall, rumors swirled that New Oriental would begin educating parents instead of kids. That became the subject of ridicule on Chinese media, but Yu has been unfazed. The title of his year-end report: “Work Hard, Study Hard, and Search Hard for a New Path!”

• On December 28, Koolearn, New Oriental’s online education website arm, launched the “Oriental Selection” livestreaming ecommerce platform with a focus on agricultural products. Yu debuted as a livestreaming host to introduce the new venture.
• Yu also referred to successful collaborations with the New Oriental-backed film studio Xinwei Pictures. Having grown up as a farmer, Yu has indicated an interest in funding inspiring films that tell the rags-to-riches stories of peasant farmers.
• Yu participated in a livestreaming book sale event on January 6 selling the work of the writer Chen Lei 陈磊 and his popular history book Half-Hour Manga. He sold nearly 200,000 yuan ($30,000) worth of books in the one-hour broadcast.

The key question: As tutors try to reinvent themselves in the Common Prosperity era, they are following a simple motto: Do the right thing — “right” being whatever the Party wants. “We must do things that benefit others, help others, and help society progress,” Yu wrote.

But can they make a profitable business by simply following what the Party demands?