China Freezes Tutoring Firms’ Fees, Enrollment Pending Approvals
(Bloomberg) -- China has banned firms that teach school subjects from enrolling new students or collecting fees until they’re officially registered as non-profits by the end of 2021.
The education ministry now requires those companies to complete their registrations before the end of the year, it said in a notice posted Tuesday. The edict was the latest in a stream of incremental regulations directed toward a once-thriving online education industry since July, when Beijing forbade after-school tutoring outfits from making money off teaching the compulsory curriculum. On Monday, China said local governments should set fees for such institutions.
Once popular among aspiring children and their parents as a proven way to get ahead, after-school tutoring is now viewed as an impediment to some of Xi Jinping’s top priorities: boosting a declining birth rate and ensuring common prosperity.
The regulations unveiled in July were the culmination of a months-long campaign to rein in the ad spending wars, rising price tags and cut-throat competition that plagued an industry estimated to be worth $100 billion. The growing cost of tuition, along with a relentless stream of ads that play on parents’ paranoia, fomented outrage over how the industry was enriching entrepreneurs and financiers while exacerbating social inequality.
It’s a stunning reversal of fortune for an industry that once boasted some of the fastest growth rates in the country. Shares of companies such as TAL Education Group, New Oriental Education & Technology Group and Gaotu Techedu Inc., once stock market darlings, have all tumbled over the past months.
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