BEIJING, February 22 (TMTPOST)— China’s leading educational service provider New Oriental lost about US$900 million for half a year under Beijing’s increasing tutoring crackdown.
Source: Visual China
During the six months ended November 30, 2021, the net loss attributable to New Oriental was US$875,980, compared with the net income of US$228,554 a year earlier, for the first time for the online tutoring giant to post losses in a financial report since it listed in 2014, according to an interim report released on Tuesday. The huge loss resulted from cessation of K-9 Academic AST Services, the tutoring services related to academic subjects to students from kindergarten through grade nine, as the report said it had a substantial adverse impact on the company’s revenues.
The report suggested further loss may come as it said New Oriental will continue to shift its focus towards educational products and services that are not related to K-9 Academic AST Services, such as its test preparation courses, language training courses for adults and educational materials, continue to cooperate with the authorities in China to comply with the relevant policies, and further adjust its business operations as required.
Chinese government launched new rules in last July 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. In September, New Oriental announced to stop offline enrollment for tutoring services on subjects in China’s compulsory education system in primary and secondary schools, suggesting an exit of its most important business as financial results showed after-school tutoring for students in the K12 group contributes nearly 86% of the company’s revenue in the fiscal year of 2021. Earlier this month, regulators of the Beijing municipal government expanded the crackdown as it proposed a new rule draft to introduce so-called "double reduction" policy that aims to reduce burdens of both homework and after-school tutoring on students in the registration system for education app. The move was said to lead to online tutoring firms offering high-school curriculum classes’ possible registration as non-profits.
New Oriental and its peers have adapted to survive and explored new business opportunities. In December, New Oriental’s founder and chairman Yu Minhong started his first e-commerce livestream show to sell agricultural products from farmers to consumers on the company’s new platform Eastern Selection. There were more than 80,000 items in total sold on the platform in the past two months, with the sales of RMB4.55 million (nearly US$720,000).
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