Education and training industry
Our reporter/Li Mingzi Du Wei
Issued in the 1011th issue of China News Weekly on June 9, 2021
The two major “chicken baby centers” in Beijing’s Haidian District, which used to be traffic jams on weekends, have now become very deserted: Zhongding Building near Dazhongsi Metro Station has gathered many training institutions such as Xueersi and New Oriental. Now the classrooms are empty. No one, and only half a month ago, it was still bustling with students in class and waiting parents.
At the Huangzhuang intersection on Zhongguancun Street, in the "Universal Supplementary Center" composed of the Haidian Culture and Art Building, Yinwang Center and Ideal Building, three office buildings, subject training institutions have been closed for rectification.
A staff member of an organization specializing in youth English training stated that the withdrawal of classes was not as serious as expected. Only more than 100 of the more than 800 students refunded the fees. However, because the company could not obtain the approval to continue running the school in the Haidian Culture and Art Building, it could only be in September. Then moved to a new business location one stop away from the subway to start classes.
All the great changes stemmed from a document.
On May 21, the 19th meeting of the Central Committee for Comprehensive Deepening Reform deliberated and approved the "Opinions on Further Reducing the Burden of Students' Work and Off-campus Training in Compulsory Education" (referred to as the "Opinions").
Before July 24, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued this document to various places.
The "Opinions" regulates all aspects of off-campus training, and there are 5 "prohibitions" in the three relevant "Opinions".
In the view of Yang Xiaoqin, chief analyst of Guosen Securities (Hong Kong) education industry, the two most lethal points for the education and training industry are "no capitalization operation" and "no use of national statutory holidays, rest days, and winter and summer vacations to organize discipline training."
"Unlisted education and training institutions are basically impossible to go public, and the financing of listed companies in the primary and secondary markets will also be restricted." Yang Xiaoqin told China News Weekly.
Winter and summer vacations have always been the most important business hours in the education and training industry, especially the summer vacation enrollment, which often determines the number of students in the organization in the next year.
After the "Opinions" landed, Yang Xiaoqin estimated that the income of the education and training industry is expected to shrink by 60% to 70%, or even more.
After the education and training giant Hao Future went public on the New York Stock Exchange in 2010, its market value once exceeded $55 billion, and its full-time employees exceeded 70,000 at most.
According to its latest quarterly financial report, this company, which started as Mathematical Training, has more than 90% of its revenue from the education and training business of primary and secondary schools, which are basically within the limits of the "Opinions".
At around 4 pm on July 27th, Hao Future held a meeting, and all employees of the company above level 2 participated.
Zhang Bangxin, the founder and CEO of Good Future, said at the meeting that "layoffs are definitely going to be laid off."
"Our institutions are no longer worthy of our customers, and our company is no longer worthy of our executives and cadres." Zhang Bangxin said that businesses that are not in demand will definitely be shut down, and the employees in the corresponding business will be transferred internally. If the job transfer is not possible, the company will also pay compensation in accordance with national laws.
Industry avalanche
A good future employee told China News Weekly that the layoffs were either from a business department restricted by the "double reduction" "Opinion", or from a department that had previously mismanaged.
He described the layoffs as "werewolf killings", and employees all hope to have a "Christmas Eve" after get off work. However, after dawn, some people have been "knocked away" and they were notified that day and resigned on the same day.
Many organizations are laying off employees in an institutional way.
It is reported that on the second day of the "Opinions", the management of Gaotu Group held a meeting and set a target for layoffs, involving tens of thousands of people, equivalent to 1/3 of Gaotu's people will leave.
Gaotu Group founder Chen Xiangdong did not respond to the specific number of layoffs in an interview with the media on August 4, only saying "Slow down and pay attention to the inside."
The newly revised "Minor Protection Law" officially implemented on June 1 this year stipulates that kindergartens and off-campus training institutions shall not conduct primary school curriculum education for preschool-age minors.
The "Opinions" set out more detailed specifications. Online training for preschoolers should not be carried out. It is strictly forbidden to carry out offline training (including foreign languages) for preschoolers in the name of preschool classes, preschool transition classes, and thinking training classes.
In addition, new off-campus training institutions for preschool children and subject-based off-campus training institutions for ordinary high school students will no longer be approved.
Last year, the pre-school education market, which was predicted to break the trillions of dollars, returned to zero almost overnight.
At noon on August 5, Ke Yu, who had just joined Gugualong Enlightenment for 8 months, received a layoff notice.
Guagualong is an AI interactive learning platform for children aged 3-8. It is part of ByteDance's Vigorous Education. Its products cover English, thinking, language and other fields.
Only one year after the launch, the number of paying students exceeded 200,000, and Guagualong was placed high hopes by the company.
Ke Yu is engaged in online English teaching in a central city. Six months ago, the company claimed that the slogan of "social recruitment of 10,000 people" was still in my ears. Right now, almost all of his team have been laid off.
However, fortunately, the compensation "N+2" that Ke Yu received was quite generous.
At the same time, the other two products under Dali Education, which contain courses for preschoolers, "You Pai Yi" and "GOGOKID" have also suspended trial lessons.
These two apps have been removed from app stores such as Android and Apple, and the customer service responded: "During the course upgrade, there was an abnormality in the system."
What is confusing is that the major training institutions lay off staff while hiring on the line of fire on the other.
Cheng Hao, who works in a leading education and training organization, has recently received headhunting calls to find lecturers with teaching experience.
Another English teacher who has worked in the head organization for more than four years told China News Weekly that most of the layoffs in the teaching department were assistant teachers and the main lecturers were recruited.
"The layoffs are not because the company has no money, but because it saves its strength, reserves the speakers, and finds new business growth points." said the English teacher.
"In the last year alone, the total financing of several leading institutions such as New Oriental, Jiaobang, and Yuantiku totaled more than 40 billion yuan. There is a saying that if historical financing is included, the total investment in the education and training industry is about There are 200 billion yuan." Zhongguancun Education Investment Management Partner Yu Jinyong evaluated.
Chen Xiangdong wrote in an internal letter to Gaotu employees, “We still have enough cash for three to five years to explore and change in our account.” Zhang Yi, the CEO of Education Education, also personally dismissed the rumor that the “company failed”. , He wrote in the circle of friends: "The financial report is public, and the funds are abundant and healthy." In June this year, the head of education was listed on the New York Stock Exchange, becoming the first online 1-to-1 subject training.
According to Xueqiu public data, the cash flow of the head of education in the first quarter of 2021 will be 3.811 billion yuan.
A group of institutions are dying.
On August 13, the topic of Wall Street English’s bankruptcy will be listed on Weibo’s hot search list.
According to media reports, the head of sales in the North District of Wall Street English notified the principals of the central branch schools that the company would declare bankruptcy and required the principals to notify the branch staff to complete the resignation procedures as soon as possible.
The reporter called the Wall Street English customer service, but no one answered.
At a time when youth education and training institutions are planning to turn to the adult training market, Wall Street English, an adult English training institution that has been in business for almost 20 years, is about to go bankrupt, which is inexplicable.
"Today, with abundant Internet resources and popularization of English education, Wall Street is still engaged in workplace English training with a very high unit price, which no longer meets the current market needs." Yu Jinyong analyzed that the adult English market has shrunk and the epidemic is on line. Under the impact of institutional cash flow, Wall Street English chose to declare bankruptcy at this point in time when the “double reduction” policy was implemented. Perhaps it was just smooth sailing.
However, Yu Jinyong also mentioned that this may be related to Wall Street English's foreign status.
The "Opinions" stated that foreign capital may not control or participate in academic training institutions through mergers and acquisitions, entrusted operations, franchise chains, and the use of variable interest entities.
On August 6, Duolingou, another language education app with a foreign background, was removed from the domestic app store.
Duolingo stated that it is currently actively cooperating to improve product self-inspection and update.
Elite education, which has not yet escaped the impact of the epidemic, has once again been hit hard by the "double reduction".
Since July, the share price of Elite Education, which is dedicated to the education and training of primary and middle school students, has continued to fall.
On August 4, Elite Education announced that it had received a warning letter from the NYSE: For 30 consecutive trading days, the minimum trading price of the company’s common stock was less than $1 per share.
According to the requirements of the New York Stock Exchange, if the company does not reach $1 on the last trading day and the average closing price of the last month after receiving the notification, stock trading will be suspended and the delisting procedure will be initiated.
The indirect consequence that elite education cannot guarantee is that it no longer injects capital into the giant education that it holds.
Giant Education, a veteran education and training institution in the field of subject training, has gone through 27 years and is now facing a "closed" ending.
On August 31, Giant Education issued a document: Due to business difficulties, it will no longer be able to provide teaching services to students in the fall.
Giant Education has not been able to complete the refund of all students, and the remaining class hours may be undertaken by institutions such as Gaosi Education, Tongcheng Tongmei, Walnut Programming, and Yimi Guidance.
Twenty days before the announcement, hundreds of teachers from Giant Education went to the Labor Arbitration Commission of Beijing Haidian District to apply for arbitration to ask for their wages in arrears.
"Capital is very sensitive, and as soon as it smells of danger, it ran cleanly." Yu Jinyong said.
On July 23, after the disclosure of the "Opinions", the share prices of the three education giants, Good Future, Gaotu, and New Oriental, all fell by more than 50% that day.
Subsequently, New Oriental and Good Future both issued announcements to postpone the second quarter financial report. The share prices of these two institutions fell by more than 90% compared with the beginning of the year.
Redefine extracurricular training
Institutions have long heard the rumors of "double reduction".
After school started in March this year, some parents of students inadvertently mentioned that public schools were investigating the arrangements for students after school, and they also consulted their parents on school weekend care.
Cheng Hao's organization immediately sensed the risks-the rectification of education and training should begin.
The organization asked teachers to ask parents about their views on the transfer of weekend tutoring to mid-week. Although the classes were still on the weekend, the Monday to Friday class schedule has been arranged side by side. Once the "double reduction" is implemented, the emergency plan will be switched.
According to the "Opinions", the time for extracurricular tutoring is compressed to between Monday and Friday after school and 21:00 in each semester. At the same time, the document also pointed out that it is necessary to "actively explore the use of artificial intelligence technology to reasonably control the continuous online training time of students."
However, the "Opinions" have not clearly defined the recording and broadcasting and AI content for the time being.
"The online large class was originally a two-hour session. If you only adjust the time as required, 10 minutes will be spare in the end. Therefore, in order to meet the new time requirements, the course content must also be re-adjusted." A head organization practitioner said.
On August 21st, Beijing Xueer Si Peiyou WeChat official account announced the autumn course schedule. "Online small classes" opened for appointments. The class size is 8-12 people. The course content is elementary school mathematics for grades 1 to 5, Monday to Friday nights every week. Two classes after 17:30, each class is one and a half hours.
The practitioner said that the company had predicted that AI courses and recorded courses would be classified as "teaching materials" or "publications", and were not restricted by the class time. Therefore, they tried to play the sideball and converted the original K12 live courses to recorded courses. Broadcast class or AI class.
Therefore, before the launch of "Double Reduction", his company has tried to replace the main lecturer in "Double Teacher" with recorded content, and the assistant teacher (or class teacher) in "Double Teacher" can continue to live tutoring or offline tutoring. .
“Originally, I thought that the double reduction would only land during the winter vacation as soon as possible. No one thought it would be so fast. However, this product was temporarily suspended for rectification because it partially retained the live broadcast attributes.” He said.
As for AI products, many institutions have already deployed them.
Ape Coaching launched the children's English enlightenment brand "Zebra English" in 2017, and "Zebra Thinking" two years later.
In February last year, Zebra English announced that it was renamed "Zebra AI Class" and redefined the product direction: a "multi-disciplinary online learning functional education platform" specifically for children aged 2-8, covering English, mathematical thinking, Chinese and other subjects Later, it was also included in the quality education category "art".
A person close to Yuanjiao told China News Weekly that because preschool training has been banned, the Zebra AI team is facing reorganization, including a production team with a size of 200 to 600 people. The team has participated in the development of another model targeted at high schools. The student’s online education and learning product "Little Monkey AI Class App" was also affected.
At present, "Little Ape AI Lesson" can still be downloaded from the Apple Store, but when entering the course homepage, all grades show "No courses yet".
Vigorous Education has long laid out AI classes in a low-key manner. In May this year, it launched two products, "Doudohu AI Class" and "Little Horse AI Class".
The introduction shows that the Xiaoma AI course provides a full-disciplinary tutoring course for the high school stage, the main form is intelligent push + recording and broadcasting of famous teacher course slices.
Doudouhu AI course provides general science tutoring courses for the elementary school.
However, according to reports, the staff of the Beijing Municipal Education Commission revealed that they have reminded companies to guard against the risk of “skimming the ball”: AI interactive courses will be used as online teaching forums; recording and broadcasting courses may be defined as publications in the future, with additional license requirements.
A staff member of a youth English education and training institution said that as early as one or two years ago, a camera was installed in the front and back of the classroom, and the backstage was connected to the education supervision department. arrive.
After the "double reduction" policy is introduced, the original English subject training may be shifted to the quality of English reading, speech, etc., or short-term training may be conducted through methods such as increasing outdoor practice and organizing summer camps.
The future of one-on-one home tutoring is unclear, and various localities have issued detailed rules to regulate the content of tutoring.
On July 28, Yichang, Hubei Province issued the "Notice on Further Regulating the Management of Off-campus Training Institutions." Without the approval of the education department, any organization or individual is strictly prohibited from conducting training services for primary and middle school students in the name of tutoring, consulting, and cultural communication.
On August 18, the Education Bureau of Anshan City in Liaoning stated that it is strictly forbidden for training institutions to take advantage of loopholes and play word games, even subject training for parents.
The "Opinions" also made clear specifications for "photographic search for questions": Online training institutions must not provide and disseminate "photographic search for questions" and other bad learning methods that inert students' thinking ability, affect students' independent thinking, and violate the laws of education and teaching.
The above-mentioned people who are close to a good future said that the company's Paisou software "Ti Paipai" will become an internal product in the future for institutional teachers.
Another Pai search product of Good Future, "Xuepaipai", was launched a month ago, and its product introduction states that "Xuepaipai is a tool for parental counseling and Q&A, not open to primary and middle school students."
Searching the mobile App mall will find that many tool products with the pat search function have changed users from "students" to "parents or teachers".
At present, another key direction of K12 business is high school.
The "Opinions" only mentioned that the management of subject training institutions for ordinary high school students shall be implemented in accordance with the relevant provisions of this opinion.
An education industry analyst believes that the policy for high school education and training is still unclear. After all, high school is not in the compulsory education stage. The actual implementation of details, enforcement and supervision in various places still needs to be observed, but the overall direction of the "Opinions" is "double reduction". , The training time and price may be restricted in the future.
However, a member of the head institution curriculum development team expressed concern about the transformation of high school live classes.
He said that due to high learning consciousness and less time at the disposal of high school students, the demand for live classes is likely to be lower than that of elementary and junior high school. From the data point of view, the click rate of the replays of live classes for junior high school students is 3~ that of elementary school students. 4 times, high school students will be higher.
"Transforming high school live classes will be a direction, but the scale is hard to say." The researcher said.
Xueersi’s K12 course training may be moving overseas.
An introduction is the official tweet of "Learning and Thinking about the Future of Silicon Valley Campus" to promote the start of autumn courses. "Teacher Class" has moved to overseas markets.
The main body of the account is Beijing Nuvoton Sichuang Education Technology Co., Ltd., which is a wholly-owned subsidiary of Future Future.
The "Opinions" also require existing discipline training institutions to be uniformly registered as non-profit institutions.
"The specific details of the transition from business to non-business are still unclear. However, for the education and training companies that have been listed, there may be two trends in the future. Departments that are not profitable are retained and no longer expect to profit from them." Yu Jinyong analyzed.
As the first batch of pilot cities, the Beijing Municipal Education Commission has issued a "double reduction" work instruction.
According to media reports, Beijing intends to require enterprises to complete the conversion of academic education and training institutions before the end of the year, which is one to three years earlier than the central policy's landing plan.
After Dong Jun resigned from a leading education and training company, he started as a tutor, and occasionally brought small classes to a friend's training institution.
After the "Opinions" was released, Dong Jun’s time for students to make up lessons was strictly limited. To avoid reporting, he only runs acquaintance business, but his income is not stable.
After this group of students graduated, he may face the dilemma of being indifferent.
"The policy has not changed the demand. What has changed is the way in which demand is met." An education investor told China News Weekly that part of the tuition will be transferred to the underground, and the average class time for small classes in first-tier cities is about 300 yuan. Secretly join the class to make up lessons, recruit a few more students, and then increase the teacher's class hour fee to 700 yuan or even higher.
The investor pointed out that the transfer of tutoring to the underground will inevitably increase the difficulty of supervision, and the worse result is that education becomes the privilege of a small number of wealthy and resourceful people.
However, he also pointed out that what everyone expects is that policies can guide education and training institutions to provide education services for more people at lower prices and achieve education equity.
Private tutoring has obviously been paid attention to by the regulatory authorities.
At 3 pm on August 5th, a teacher in Hanshan County, Anhui Province was teaching English to first-year students when he was suddenly kicked in and taken away by his neck.
The related video was spread online on the same day, causing controversy.
After the event, the official informed that after receiving reports from the masses that someone had violated the epidemic prevention regulations, a number of students were organized to gather to make up classes. After investigation, the place did not have a school permit.
Where is the transformation?
Quality education and vocational education have become two hot areas in the transformation of education and training institutions.
But Yu Jinyong calmly pointed out, “Education and training companies, especially listed companies, if they want to retrieve the reduced sales in the K12 business from other places, it is quite difficult.”
On July 28, Yuandaodao launched the first product "Pumpkin Science" to transform quality education.
It is reported that this "AI interactive content + hands-on exploration" STEAM science education product is trial operation from May 2020.
Good Future also announced a quality education course in early August.
The company's children's quality education brand Libu launched five quality education products: drama, aesthetic education, puzzle, eloquence, and reading materials.
NetEase Youdao even launched a matrix of quality education products, including six products including children's programming, Go, science, art, and robotics.
At its press conference held on August 5, NetEase Youdao also introduced the teaching solution course platform "Youdao Excellent Courses" to provide quality transformation programs for offline institutions.
The main transformation direction of offline institutions is also quality education.
Elite Education has launched quality education brands such as "Zhihui Children", "Little Earth", and "Genius Baby". Offline English training organization "Rise Education" has transformed a comprehensive quality education platform and launched Randian Science Museum and Rui Si Haiya. New brands such as growth space and Ruisi Xueyanxue.
Xueda Education, which is mainly engaged in one-to-one tutoring, has made various transformation attempts and even entered the coffee industry.
Since May this year, Xueda Education has established 5 new companies.
According to the information from Tianyan Check, two of them are training schools, and one has new family education consulting services for parents and off-campus custody services for primary and middle school students.
The other three business areas are far away from the education and training business, namely Beijing Xinliu Shuyue Culture Co., Ltd., Beijing Xinliu Shuhai Culture Co., Ltd. and Beijing Zhuoqi Coffee Co., Ltd.
Capital Xun is also turning to the subdivision track of quality education.
A yardage education service provider named "Riding Le Equestrian" received a Pre-A round of financing of 10 million yuan, and the investor was Shanghai Santong Enterprise Management Partnership (Limited Partnership).
On August 4, Codejoy, a service provider for children's programming education, completed an angel round of financing of nearly 10 million yuan. The investor was Xiyun Capital.
"Quality education" is not a new concept, it has already appeared in the big discussions on education reform in the 1980s.
In 2006, for the first time, the new "Compulsory Education Law" stipulated "implementing quality education" as a national education policy that must be implemented in compulsory education at the legal level.
In fact, the leading institutions have long seen the strategic significance of the deployment of quality education.
According to Tianyancha, Good Future Strategic Investment has been investing in quality education products from 2017 at the latest, including art, programming, dance and other subdivisions.
In August 2017, Good Future led the A round of financing of the online children's art education platform "Drawing Lala", and the Zhene Education Fund followed up with the investment, with a financing amount of 10 million yuan.
A year later, Hao Future led the investment in the "Drawing Lala" A+ round of financing again, and the amount was shown to be tens of millions of yuan.
In December 2018, Good Future also invested in CodeMonkey, a programming education tool.
The most recent investment in quality education was in January this year, and Good Future invested in Beijing Happy Ballet Education Technology Co., Ltd.
According to the "Opinions on Comprehensively Strengthening and Improving School Sports Work in the New Era" and the "Opinions on Comprehensively Strengthening and Improving School Aesthetic Education Work in the New Era" issued in 2020, the scores of the high school entrance examination for physical education have increased, and art subjects are included in the pilot reform of the high school entrance examination.
Despite favorable policies, the market size of quality education is far smaller than the K12 market.
According to data from Zhiyan Consulting and iResearch, the market size of K12 in 2020 is about 3 trillion yuan, while the market size of quality education is only 324.1 billion yuan, about 1/10 of the former.
"Whether it is supplementary mathematics, mathematics, or beauty, the same group of people will always make up lessons. If quality education is not a compulsory subject, no one will turn to training in this direction. And how many of those parents who do not make up lessons can go? Report quality courses to children?" Cheng Hao said.
Vocational education is another hot spot for transformation.
English online training institutions 51talk and VIPKID both stated in the announcement letter that they would also launch "adult classes".
On July 8, Good Future Qingzhou announced its official entry into the field of vocational education; on July 19, the Gaotu App was launched, mainly covering language, college student examinations, finance, public examinations, teaching resources, study abroad, management, medical and other types of vocational education business.
The big brother of the industry, New Oriental, took action significantly earlier, investing in public examination counseling in March this year.
"However, for these K12 giants, there are not many directions to choose from after turning to the vocational education track. It may be easier to enter sub-fields such as grade examination, examination, and postgraduate entrance examination. The market competition may be very fierce." Jin Yong prompt.
The number one player in the field of civil service examinations, Zhong Gong Education has been in the industry for 22 years. The online vocational education company "Start Class" has integrated first-line teachers from well-known universities, IT and Internet companies, and Gordon Online School is dedicated to financial courses.
There are established enterprises in the field of vocational education, and the competitiveness of new entrants remains to be seen.
The custody business has also been gradually opened.
In early July, before the "double reduction" policy was introduced, many companies established by New Oriental and Future in Suzhou collectively changed their business scope and added art, sports, science and technology training, and off-campus custody services for primary and secondary students. .
Recently, Good Future also launched the after-school care class "Bixin".
Lu Ming, a professor at the Antai School of Economics and Management of Shanghai Jiaotong University, pointed out in an interview with "Cultural Zongheng" recently that a series of recent new policies hope to reduce the burden on residents' lives in the fields of education and housing. This original intention is undoubtedly good.
The fundamental way to solve these problems is to work from the supply side: on the one hand, the government should increase investment in public services, improve quality, and optimize the layout and structure; on the other hand, it should also increase market-side supply and allow The market mechanism meets the individualized needs that cannot be covered by some government public services.
"The policy does not encourage or restrict the introduction of off-campus institutions." A person from the education administration department in a southern province who did not want to be named admitted to China News Weekly that the school's own trusteeship is indeed inadequate and the teaching staff is insufficient. However, the introduction of third-party educational institutions will involve issues such as costs, safety, and the number of participants. If they are introduced, the principle of public welfare must be adhered to.
In July this year, the "Notice on Further Doing a Good Job in Compulsory Education After School Services" issued by the Guangdong Provincial Department of Education had related requirements: schools must not fully hand over after-school services to third-party organizations.
"The theater effect is particularly suitable for explaining the phenomenon of inward scrolling in education." Qin Chunhua, Dean of the Peking University Examinations Research Institute, analyzed that the current row of audiences stand up, and the back row of audiences must also stand up in order to see the stage.
Row after row like this, everyone stood and watched the show at the end.
He believes that to solve the phenomenon of education involution, we can start with government supervision methods, which have already begun to do so.
(At the request of the interviewee, Cheng Hao, Ke Yu, and Dong are all pseudonyms in the article. Intern Tian Ran also contributed to this article.)
China News Weekly, Issue 33, 2021
Statement: The publication of the "China News Weekly" manuscript is authorized in writing