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Is the excitement over for EdTech in China?

In a national effort to curb the rampant exploitation of parental paranoia and China’s brutal study culture by the unchecked players of China’s EdTech market, the government in June unveiled a new department under the Ministry of Education — the Department of Supervision Off-Campus Education.

With slogans like “You can train your kid with us here, or we train his competitors,” it is no wonder parents are more than willing to spend money, they may or may not have, to make sure their children outperform their peers in the notoriously difficult Gaokao, China’s national college entrance exam.

The after-school tutoring business is worth $120 billion in China alone. However, since the announcement in mid-July 2021, China’s darlings of the EdTech industry — New Oriental Education & Technology Group, Koolearn Technology Holding Ltd., TAL Education, and Gaotu Techedu — have reported a sharp drop in their stocks and shares.

In line with President Xi Jinping’s statement that the learning journey of China’s young is the school’s responsibility, not tutoring firms, the newly minted Department is expected to introduce tougher-than-ever crackdowns on the private and public tutoring services.

According to Bloomberg News, Chinese regulators on July 24 published reforms that will fundamentally change the business model of private companies teaching the school curriculum, as the government aims to overhaul the education sector it says has been “hijacked by capital.”

The new regulations ban firms that teach school curriculums from making profits, raising capital, or going public.

Edtech stocks brought down the Hang Seng Tech index on Monday, July 26, 2021. Source: Bloomberg

After all, “competition has been deeply rooted in Chinese traditional culture for thousands of years. There was only one way to earn social recognition, which is through further education,” said Associate Professor Ji Fengyuan at the Australian National University’s College of Asia and the Pacific.

With the tightening of the curriculum-based tutoring business, “We expect a material impact on future business and capital market activities of listed (education) companies,” said China International Capital Corp in a statement.

LEARNTech Asia
LEARNTech Asia
LEARNTech Asia showcases innovation in learning in Asia. We feature stories and resources in online learning, workplace learning, adult education, EdTech, and creative solutions by teachers and trainers in learning institutions, non-profits, and enterprises that enhance human capacity and inspire communities of lifelong learners.