Until recently, Evelyn Huang was an English tutor at a cram school in Shenzhen. When the Chinese government started to change the regulatory landscape for this sector, Huang quit her job and started preparing for the upcoming hiring season for positions in public schools. “I didn’t plan to work there long anyway,” she said. “I knew it wouldn’t last, and securing a stable position at a public school is a much better option.”
Just like Huang, thousands of private tutors in China are seeking new employment. The job used to carry an appeal for graduates of top universities, with high salaries and flexible work schedules. But as authorities abruptly adjust policies to “release excessive pressure” placed on students and parents, nearly every private tutoring company is reeling from the pain—many have suspended their summer programs, downsized, or even shut down in the past two weeks.
In late July, the central government said edtech operators must register as non-profit organizations, and ruled that the companies must not offer after-school training to K–12 students during public holidays, weekends, or winter and summer vacations.
The day after the policy was issued, Chen Xiangdong, founder and CEO of Gaotu Group, whose shares are traded on the New York Stock Exchange, decided to close 13 of his company’s cram schools before August 1, which has led to tens of thousands of tutors losing their jobs, LatePost reported. ByteDance’s education arm, Dali Education, also recently laid off thousands of people.
“This is obstructing every possible option for future business,” a tutor who works for New Oriental, whose market cap has been slashed by more than 67% since July 22, told KrASIA. “We’re coming to a dead end.”
With a highly exam-orientated education system and mounting competitive pressure, after-school tutoring used to be indispensable for China’s helicopter parents. The perception was that forgoing after-school education meant being left behind at the starting line.
“There are 45 students in my class, and almost everyone goes to after-school tutoring.” Xue Xue, a math teacher at a public primary school in central China’s Shanxi Province, told KrASIA.
The 115 million K–12 students in China and their families are the clients of a massive after-school tutoring market in China. Research shows that the industry was worth RMB 762.8 billion (USD 118 billion) in 2019, and the pandemic pushed its valuation to even greater heights in 2020. As students needed to keep up with their studies at home during lockdowns, companies that provided online tutoring services fed a new market frenzy. An industry report by digital commerce data provider 100EC says that in 2020, the online education sector had 111 fundraising deals, with the aggregate capital exceeding RMB 50 billion—a higher figure than the sum of the past four years’ investments in the edtech sector.
Internet giants like Tencent and Alibaba have heavily invested in the sector. Yuanfudao and Zuoyebang, two key players in the market, both raised over USD 1 billion in deals led by the two conglomerates.
China’s central government has slammed excessive capital influx, which leads to vicious competition in a space that impacts the quality of learning for students. Signs of the sweeping crackdown were visible in early May, when China’s market regulator fined Zuoyebang and Yuanfudao RMB 500,000 (USD 78,000), the maximum amount possible for misleading advertising and unclear pricing. The uncertainty around edtech’s future in China sent the sector into a depression in June, as KrASIA previously reported.
This then rippled through the job market. Data compiled by recruitment platform Liepin showed that the number of new job openings in the K–12 sector in Q2 2021 decreased by 39.89% compared with Q1. “Under the sweeping policy, companies have slowed down the pace of expansion… and job-seekers are also fleeing this field in search of opportunities,” the report commented.
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Sherry Meng, who worked as an after-school English instructor for primary school students in Shenzhen, also quit her job in July and decided to seek employment in a different line of work. “Many small companies are shutting down now. It’s harder to find a job. The salary is not as good because they don’t have much business now.”
Meng raked in as much as RMB 20,000 (USD 3,100) each month as an instructor, but her monthly earnings dropped to RMB 10,000 due to the business shrinkage after the policy rolled out. “It’s time for a change. I’ve always wanted to work at trendy companies; maybe I’ll try applying at HeyTea first,” Meng said, referring to a popular F&B chain.
The central government’s new education policies are being carried out by local authorities. A tutor at one of New Oriental’s centers in Sichuan Province told KrASIA that their summer training programs are in operation for now, but that may not last long. The classes are exam-focused and are designed to help students attain higher scores in their high school entrance exams, called Zhongkao. This type of after-school instruction is precisely what regulators are eliminating.
“I don’t think we’ll be able to provide classes during the fall semester,” said the tutor, who asked to remain anonymous, since New Oriental discourages staff from speaking to the media. “I’m planning to go back to school to get a master’s degree if they decide to shut down the business in September.”
While tutors and instructors across China prepare their backup plans, parents are scrambling to find replacements for what they perceive to be a necessary component of their children’s education. The tutor at New Oriental said parents frequently ask about the company’s fall season class schedule, and he can only reply that he has “no idea.”
“The more it changes, the more tired we are,” one parent complained to him on WeChat.
A black market for after-school tutoring is reportedly emerging, and the local authorities are intensifying the crackdown on this new underground economy. A short video circulating on Twitter shows plainclothes police breaching a door during a tutoring session and grabbing the teacher’s neck as they removed him from the room. Police in some cities in China are offering cash rewards for tips about for-profit tutoring classes that lead to arrests.
Some families with more financial resources are opting for one-on-one tutors for their kids. Evelyn Huang, the instructor in Shenzhen, has received such an offer from the parents of her students. However, she is still hoping to land a job at a public school, which would lead to professional stability and social recognition.
But Xue, the public school teacher, told KrASIA that jobs at public education institutions carry heavy workloads that may become even weightier after private tutoring businesses are banned. Teachers don’t have enough energy to look after every student in the class, Xue said, and private tutoring does help those who struggle to perform well in exams.
“I got a much better grade in the Gaokao [National College Entrance Examination] thanks to after-school tutoring,” Xue said. “Some students might lose the chance to keep up with their peers if the industry is gone.”
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