Stressed students and parents . . .
In mid-July, Beijing issued new regulations aimed at curtailing China’s US$120-billion for-profit tutoring sector. The new rules focus on restricting both the services offered by tutoring companies and the profit they generate. The motive for the crackdown is twofold: stress and foreign influence. China’s education system is laser-focused on the gaokao, the make-or-break university entrance examination. While all students across the country sit the exam, spending on private tutoring for the test comes mainly from the urban upper-middle class. The new regulations aim to lessen the financial and psychological stress felt by both the parents and children of this urban elite. By forcing education service firms to convert to not-for-profit status, banning core-curriculum tutoring during weekends and vacations, and forbidding foreign curricula and remote-working foreign teachers, the government hopes to reverse the demographic decline and make having children more attractive to urban elites. The new measure also reflects growing concern about foreign influence in China’s education system. By banning foreign curricula and teachers, the Chinese Communist Party hopes to curtail foreign ideological influence and discourage Chinese students from preferring overseas universities to those at home.
Private education firms’ stock prices plummet . . .
The move has decimated the stock prices of private education firms operating in China. The stock price of New Oriental, a market-leading English-language learning firm, plummeted to a low of US$2.18 on Friday from a high of US$19.68 in February. Similarly, foreign firms in the business of providing Western teachers for online tutoring now face the choice of either exiting the market entirely or drastically changing their business model.
Impacts for Canada . . .
China is an important market for Canadian educational service providers. The new rules that education firms now face in China will significantly impact the profitability of Canadian service providers and may also affect the flow of Chinese students into Canadian tertiary educational institutions. However, this abrupt closure of the market may, in the long-term, serve Canada’s International Education Strategy. The strategy aims to diversify Canada away from high-volume markets such as China and India in anticipation of increasing competition from within China and of China’s own changing demographic composition.