Business

New Oriental Education laid off 60,000 people after Beijing’s crackdown last year

Yu Minhong – The billionaire founder of New Oriental Education – confirmed the massive change in a post on his WeChat account over the weekend, adding that the company faced “too many changes in 2021”. He blamed the layoffs on “politics, the epidemic and international relations”.

Yu’s post starkly illustrates the consequences for private companies in China as Beijing has taken major steps to curb what it saw as unruly trade practices.

Listed in New York Oriental – China’s largest private education company by market capitalization – has been one of the most notable victims of widespread restrictions on the country’s $120 billion private tutoring sector, rolling back rules announced in July that banned profit, post-services School teaching these companies are banned from making profits or raising capital.

The organizers said At a time when excessive private tutoring had exhausted children and placed a huge financial burden on parents, all of which exacerbated social inequality.

Since the announcement of these restrictions, the authorities have ordered these educational companies to suspend both online and offline tutoring classes.

New Oriental, best known for its after-school education services, had more than 88,000 full-time employees and nearly 17,000 teachers and contract employees as of May, according to its latest annual report.

It wasn’t clear if contract workers were among the 60,000 laid off, but the number represented nearly two-thirds of New Oriental’s full-time employees last year.

In another post late Monday, Yu explained that the company still had about 50,000 teachers and employees after the layoffs.
After Yu’s post attracted widespread attention, New Oriental said the post “does not represent the company’s views.” In a filing to the Hong Kong Stock Exchange late Monday, the company said it was reviewing its recent financial results and would update the market at a later time.

The company also spent nearly 20 billion yuan ($3.1 billion) last year in refunding prepaid tuition to customers, compensating laid-off employees, and handing out leases to learning sites across the country, according to Yu.

He added that revenue has fallen by 80% while its market value has shrunk by 90%. New Oriental lost about $28 billion in market value in 2021.

China's & # 39;  s & # 39;  unprecedented & # 39;  The crackdown stunned private institutions.  After a year, you may have to cut some slack work

The tutoring ban shocked parents and left many companies struggling. It also caused a sharp sell-off of Chinese education firms in New York and Hong Kong: In late July, Goldman Sachs estimated that regulations wiped out $77 billion from the market value of Chinese overseas-listed teaching firms within a week.

This was a surprising reversal of the wealth of those companies, which have been darlings in the stock market in recent years and have attracted billions of dollars in funding from investors such as Tiger Global Management and SoftBank Group.

It is not yet clear how many total jobs have been eliminated due to the crackdown. Despite this, there are nearly one million institutions in the country that focus on after-school tutoring, and employ about 10 million people, former education official Wang Wenzhan said last July. In December, the Ministry of Education announced that authorities had closed 84% of online and offline private lessons in the country institutions.

But policy makers are clearly concerned about rising unemployment, as this could lead to widespread job losses turbulence and induce instability.

Chinese Vice Premier Hu Chunhua on Monday called for stronger efforts to maintain employment stability, according to the state-owned Xinhua News Agency.

“[We need] Be more active in doing a good job to ensure the overall stability of employment,” he told a group of senior recruiters Officials at the State Council meeting.

Xi Jinping was facing up to the Chinese capitalists.  Here's why that will change in 2022

For the few survivors, life can still be difficult. Yu admitted in his post that New Oriental exited the past six months with “great difficulty”.

The businessman, who founded New Oriental in 1993, said the company has completely shut down its teaching operations for core subjects. Next, he will focus on teaching other subjects – usually music or sports, which are not part of the core curriculum in China – providing teaching services to university students, and offering Chinese language courses in overseas markets.

Yu said New Oriental has also set up an e-commerce live-streaming platform focused on selling agricultural products.

“Work hard, study hard, and try to find new directions,” he added. These should be my three main themes for 2022.”

next education (TAL)Another Chinese tutoring giant announced in November that it would shift its focus from teaching the school curriculum Kindergarten to ninth grade, and instead teach other subjects, such as music and sports. It also wants to expand its operations abroad.

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