China's Private Tutoring Firms Emerge from the Shadows After Crackdown
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Loading... - Arif Siregar
- 28 Oct 2024
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China is quietly easing regulatory pressure on private tutoring firms, which have been significantly impacted by a government crackdown initiated in 2021. This change comes as the country seeks to revitalize its struggling economy, leading to a resurgence in the tutoring sector that had previously been curtailed under strict regulations.
The "double reduction" policy implemented in 2021 aimed to alleviate the educational and financial burdens on families by prohibiting for-profit tutoring in core school subjects. This crackdown resulted in a dramatic decline in the market value of major tutoring companies, such as New Oriental Education & Technology Group and TAL Education Group, and led to tens of thousands of job losses. Before the crackdown, the for-profit tutoring industry was valued at approximately $100 billion, employing over 170,000 people.
Despite the initial devastation, the tutoring industry has shown resilience. Parents, like Michelle Lee from southern China, continue to seek tutoring services to help their children navigate the competitive educational landscape. Lee reports that tutoring schools are now operating more openly than they did during the height of the crackdown, indicating a gradual liberalization of the sector.
While the Chinese education ministry has not formally acknowledged any policy changes, industry insiders report a tacit acceptance from policymakers to allow the tutoring industry to grow. This shift is seen as part of a broader strategy to support job creation and economic stability.
Recent developments suggest a relaxation of the stringent regulations that previously governed the tutoring industry. In August, the State Council included education services in a 20-point plan aimed at boosting consumption, which positively impacted the stock prices of listed education companies. Additionally, draft guidelines released by the education ministry clarified permissible forms of off-campus tutoring, and inspections of tutoring schools have decreased significantly.
Executives from large tutoring companies have noted that while the industry will remain regulated, there is now a clearer pathway for operators to function successfully, provided they adhere to restrictions on teaching core academic subjects.
The revival of the tutoring sector is reflected in hiring trends and the expansion of educational services. Active licenses for extracurricular for-profit tutoring centers increased by 11.4% in the first half of the year. Major players like TAL and New Oriental have been actively hiring, with thousands of positions added in response to the changing regulatory landscape.
Despite the ongoing challenges, the companies' shares have seen a rise, trading at their highest average levels since 2021, although still below pre-crackdown values. New Oriental and TAL have reported a rebound in the number of schools and learning centers they operate.
In response to the crackdown, many tutoring firms have creatively adapted their offerings to comply with regulations. For instance, some have shifted their focus to non-core subjects or rebranded their courses to avoid direct association with prohibited content. One English tutoring school in Zhejiang pivoted to teaching science-related courses in English, effectively circumventing restrictions.
However, the high costs associated with private tutoring have raised concerns about increasing educational inequality. Parents like Yang Zengdong express worries that the ongoing policies may exacerbate the academic gap between wealthier families who can afford private tutors and those who cannot.
China's private tutoring industry is experiencing a cautious revival as regulatory pressures ease and the government seeks to stimulate economic growth. While the sector is still navigating a complex regulatory environment, the signs of recovery are evident in hiring trends and the increasing openness of tutoring operations. As the landscape evolves, the challenge remains to balance educational support with equitable access for all families, ensuring that the original intent of the "double reduction" policy is not lost in the process.
