New Oriental Education ($EDU), the largest Chinese 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.
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Investors are fleeing Chinese education stocks and pricing in risks across a range of industries as Beijing heats up a long-brewing regulatory storm.
New draft rules circulated today would force China’s private education companies to turn nonprofit. Share prices of tutoring companies plummeted, and some see the end of a highly lucrative industry.
Beijing regulators issued a long-anticipated guideline on tuition fees in the after-school tutoring sector. The message: “Stop blindly expanding.”
The penalty on companies including GSX Techedu, New Oriental Education, and TAL Education is the flashiest move to date following Beijing’s new resolve to crackdown on the private tutoring industry.