China’s education market reshuffles under the “Double Reduction” Policy

Within a month, three renowned education companies have announced or filed for bankruptcy, including the well-known local brand Juren Education, the Italian Wall Street English, and the British Holland Park Tuition & Education Consultants. The past year has been tough for most education companies after classes have been cancelled or moved online due to the pandemic, the “Double Reduction” Policy from the government seems to be the last straw to some of them. 

However, before this policy being released in July, there was already a signal from the government for a crackdown on the private education sector. In early May, fifteen tutoring firms were fined a total of 36.5 million RMB ($5.65 million) over alleged fraud by the State Administration for Market Supervision, including Tencent-backed Yuanfudao and Alibaba-backed Zuoyebang.  

Under the new policy, companies are expecting a transformation in their business, with “a new focus on non-subject-based tutoring and vocational training”, said the CEO of Koolearn Technology, a subsidiary of the well-known New Oriental Education & Technology Group.  

Physical training, for example, is not banned and has become the new business battleground. Being ahead of the game, New Oriental has started physical tutoring in July in Qingdao, aiming to help students pass their senior high school entrance exam. Another important reason behind this move is that physical training also goes in line with the government’s interest in developing mass sport, shown in its 2021-2025 Plan

The vocational tutoring sector market is valued at 245.2 billion RMB ($37.97 billion), and the number of Chinese graduates has caused a record high number of vocational tutors at 9.09 million in 2021. With stiff competition in China, more graduates are pursuing overseas study, contributing to this ever-growing market being valued at 49.4 billion RMB ($7.65 billion). 

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