After finance, online commerce or meal delivery, Beijing is attacking education start-ups: fifteen tutoring companies were fined tens of millions of yuan for fraud, Tuesday 1is June. For more than six months, China has embarked on a takeover of the online services sector, issuing record fines for anti-competitive practices. Education seems to be receiving special attention: in March, Chinese President Xi Jinping chaired several meetings on the subject, including warning against excessive workloads for children and recalling that the education had to be primarily non-profit.
The companies targeted by the fines bring together industry leaders, such as Wall Street English, but also New Oriental Education, TAL Education – two Chinese groups listed on Wall Street – and newcomers like Zuoyebang, which counts Alibaba among its investors, and Yuanfudao , supported by its rival Tencent.
False advertising and price manipulation
The State Administration for Market Regulation accuses them of having “Violated the legitimate rights and interests of students” by various offenses, ranging from false advertising to price manipulation. The institution also announced the establishment of a specific supervisory body for the sector.
The sanctions had been anticipated by investors after several warnings: several start-ups had seen their prices fall by up to 20% following the publication of new regulations for private education on May 14. Start-ups like VIPKid, Huohua Siwei ou Zuoyebang would also have postponed their IPO project because of this regulatory campaign, reports Bloomberg.
The sector experienced exceptional growth in 2020, due to the Covid-19 epidemic which forced many children to take distance education. The question of the quality and the price of education is central to the Chinese authorities, with many young parents citing the cost of education and the intense competition that reigns at school as one of the major obstacles to choosing a school. ‘have a second child. Faced with the accelerated aging of its population, China announced, Monday, May 31, the authorization to have a third child.
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