BEIJING, Aug. 25 (Reuters) – Chinese tutoring companies must learn new ways to make money after a ban on teaching basic subjects left them promoting courses such as drama and even parenting training in a race to replace at least a fraction of a once-lucrative business.
Companies such as New Oriental Education & Technology Group Inc (9901.HK) and Gaotu Techedu Inc (GOTU.N), listed in the United States, have added an array of courses and even new companies after the government banned the last month for-profit tutoring in all school subjects. and offer classes on weekends or holidays.
The ban aims to ease the pressure on pupils aged 6 to 15 in compulsory education as well as to reduce the financial burden on parents. However, it threatens to decimate an industry that executives and local media say employs 10 million people.
“The education giants are at a stalemate, but they must move forward – like a big ship cannot park in the sea,” the operator of the private kindergarten-based chain said. in Beijing, Richard Zhang.
“But the demand for athletic or artistic training is much more elastic than for academic training, so the cost of sales is very high,” Zhang said.
The industry, aimed at young people aged 3 to 18, was worth 800 billion yuan ($ 123.24 billion) in 2019 and is expected to reach 1.4 trillion yuan by 2025, the firm said last year. advice Oliver Wyman.
Yet now, while many companies have worked quickly to adapt, thousands more have closed, local media reported.
New Oriental this month announced “quality education” to teach, for example, computer coding, calligraphy and chess. She also separately established a housekeeping service company.
The company has also stepped up promotion of its parenting training class, teaching skills such as time management and which it says aims to help parents better understand children.
Gaotu has upgraded its app to focus on adult education with classes such as foreign languages, and math tutor Gaosi Education has started “Traditional Chinese Culture” classes, run over three weekends for 19,800 yuan.
“We will take students to the outskirts of Beijing to learn skills related to intangible cultural heritage such as kite-making,” a teacher from Gaosi told Reuters.
It will be “absolutely impossible” for such classes to support the ladder of private tutoring giants, said Tong Diyi, managing director of Beijing-based private equity firm Longwin Asset Management.
Such classes fall into what analysts call “quality education and vocational education,” which was estimated to be worth a third of the private education sector before the ban.
“There are already many players in the quality education sector, and at the moment it is not clear how much this market can grow to accommodate more participants,” Tong said.
New Oriental and Gaotu declined to comment.
Parent Jiang Ye paid around 20,000 yuan a year for his 11-year-old daughter to take a weekly two-hour math class in Gaosi. These courses end with the start of the school year on September 1st.
“Her goal is a good university, and the university won’t care if she can dance the ballet,” Jiang said.
($ 1 = 6.4912 Chinese renminbi yuan)
Reporting by Brenda Goh, Sophie Yu; Editing by Christopher Cushing
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