New Oriental Said to Cut 40,000 Jobs and Shut Down Core Business after China's Tutoring Crackdown

BEIJING, September 24 (TMTPOST)—When the courses in this fall complete teaching tasks as schedule, New Oriental would stop offline enrollment for tutoring services on subjects in China’s compulsory education system in primary and secondary schools, and cities across the country will gradually shut down offline learning centers for these offerings accordingly, the founder and chairman Yu Minhong announced during an executives’ meeting on September 17, Tencent’s media outlet LatePost learned on Friday.

Since the business scales down, New Oriental is stepping up layoffs. Yu said in the abovementioned meeting that the company’s original plan is to lay off 40,000 employees but it just shed no more than 10,000 by the mid September. An executive expected the redundancies would exceed 40,000 by the end of the year, more than 40% of the work foce the company had in the start of the year.

The move suggests the major private educational service provider decided to exit its most important business amid China’s recent crackdown on tutoring sector. After-school tutoring for students in elementary and secondary schools contribute about 80% of the company’s revenue in the fiscal year of 2021, and 90.7% of its total enrollment in the previous fiscal year were students in the K12 group, according to UBS’s report in late July.

China introduced "double reduction" policy in May to reduce burdens of both homework and after-school tutoring on students. Two months later, it issued new rules to ban on tutoring services during weekends and vacations and after school tutoring classes that teach school curriculum, forbid education firms teaching school subjects to go public and order all the existing firms in the sector to go non-profit. Earlier this month, the government made further crackdown to prohibit unlicensed private tutors from giving compulsory education classes in the name of housekeeping or personal training, ban any online class on compulsory education through instant messages or live streaming offered by offline tutoring businesses.

The Ministry of Education recently stressed authorities will work to monitor one-on-one tutoring services and relevant departments shall coordinate better and use various methodologies to supervise private tutoring services to crack down on violations of the "double reduction" policy.

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