We've got news for you.

Register on BusinessLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now
Chinese education group New Oriental Education & Technology says it has fired 60,000 workers since China embarked on a crackdown on private enterprises more than a year ago. Picture: BLOOMBERG
Chinese education group New Oriental Education & Technology says it has fired 60,000 workers since China embarked on a crackdown on private enterprises more than a year ago. Picture: BLOOMBERG

Chinese education group New Oriental Education & Technology fired tens of thousands of employees, among  the biggest layoffs disclosed, since China embarked on a wide-ranging crackdown on private enterprises more than a year ago. 

Yu Minhong, founder and chair of the Chinese tutoring giant, revealed in a WeChat post at the weekend that the company dismissed 60,000 workers in 2021 and saw revenue fall 80% after ending all K-9 tutoring services after Beijing’s overhaul of the huge after-school education sector last July. That’s nearly three-quarters of its more than 81,000 employees as of May.

The revelation underscores the widespread disruption wrought by Beijing’s unprecedented decision in 2021 to outlaw profits in swathes of the after-school education industry — upending a market estimated at $100bn at its peak. The three biggest operators in the space — including New Oriental and TAL Education Group — together once employed more than 170,000 but total numbers are estimated in the millions given the hundreds of private firms that vied for students in a fragmented and under-regulated arena.

“In 2021, New Oriental encountered too many unforeseen events from factors such as policy, the pandemic and international relations,” Yu wrote. “Much of our business remains in a state of uncertainty.”

Once one of China’s  oldest and largest private tutoring companies, New Oriental had 90% of its market value wiped out in 2021 after Beijing banned tutoring companies from making profits and raising capital. A combination of severance payments, tuition refunds and terminated leases for teaching sites cost the firm nearly 20-billion yuan ($3.1bn), Yu said in the post. 

Operating losses may be wider than expected at $500m in the fiscal year ending in May, said Catherine Lim, a senior industry analyst for Bloomberg Intelligence.

New Oriental and rival TAL could see losses extend to 2024 as government-imposed price controls on classes and bans on weekend and holiday lessons handicap revenues, she wrote in a research note.

New Oriental has sought to increase investments into businesses targeting college students and overseas Chinese markets, while exploring new areas such as livestreaming and the sale of agricultural products. Finding a new direction will be a focus in 2022, Yu said, adding that he took part in a one-hour live broadcast last week that sold nearly 200,000 books.

“New Oriental encountered too many changes in 2021,” he said in his WeChat post.

The regulatory shifts in the edtech space, mirroring a broader sweeping crackdown on Chinese internet companies, have forced major players to adapt to survive, including by expanding nonacademic curricula and providing some after-school classes for free. Rivals have also trimmed their workforces, with ByteDance firing at least hundreds in 2021. Beijing-based TAL cut 90,000 jobs, local media outlet Late Post reported without saying where it obtained the information. 

On December 31, local regulators in big cities such as Beijing and Shanghai unveiled their pricing standards for non-profit K-9 tutoring, signalling that a relaunch of online classes could be imminent. Fees for online classes are guided at 20 yuan per session, with companies allowed to charge a premium of no more than 10%. 

New Oriental is among at least 10 firms, including ByteDance and Tencent-backed Yuanfudao, that have obtained permits to offer online classes, according to a Caixin report. New Oriental’s Hong Kong-listed stock tumbled as much as 3.7% in early trading on Monday before reversing losses. 

Other tutoring giants such as Xueersi in Shanghai have registered separate non-profit entities, according to reports. The company announced its new non-profit Ledu in December to provide online-only classes. Ledu returned online after adjusting its fees according to local government policy.

Bloomberg News. More stories like this are available on bloomberg.com


Would you like to comment on this article?
Register (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.

Commenting is subject to our house rules.