[Epoch Times, July 30, 2021](Epoch Times reporter Zhang Yujie comprehensive report) The education and training industry in mainland China has been subject to the strictest control order in history, triggering investors to sell off, and the stock price of listed companies has plunged. When companies have publicly announced large-scale layoffs, New Oriental insiders described the current situation with a sentence “cold.”
The Chinese Communist Party officially announced various bans in the education and training industry on July 24. Mainland education stocks plummeted for three consecutive trading days (23, 26, and 27) in the A-share, Hong Kong and U.S. stock markets.
Xinhua News Agency issued a document at 11 o’clock in the evening on the 28th, saying that “These regulatory policies are not for restrictions and suppression of related industries, but are conducive to the long-term economic and social development.” However, it fell sharply again on the 30th.
In the Hong Kong stock market on the 30th, New Oriental fell 10%, Sigle Education fell 15%, and Tianli Education fell more than 6%; A-share listed Xueda Education, Doushen Education, Megim and Ongli Education also fell again, with a drop of 1.6% to 5.5% range.
Mainland training institutions began to lay off
The “Opinions on Further Reducing the Burden of Compulsory Education Students’ Work and Off-campus Training” (hereinafter referred to as the “Opinions”) issued by the Communist Party of China on the 24th requires that off-campus training institutions “not be listed for financing” and listed companies “not allowed to issue shares Or pay cash to purchase the assets of discipline training institutions”, foreign capitals are not allowed to “hold or participate in discipline training institutions”.
On the second day, Gaotu Group founder and CEO Chen Xiangdong convened a management meeting and announced the layoff targets-13 local centers across the country will be closed before August 1, leaving only three tutor centers in Zhengzhou, Wuhan, and Chengdu; Some departments of vocational education will be merged with primary and secondary schools.
It is reported that each center of Gaotu has an average of thousands of people, and the layoffs involve tens of thousands of people, which is equivalent to one-third of the people will leave.
The British “Financial Times” reported on the 30th that Gaotu Education’s employees have prepared for the worst-in just a few months, the company’s market value has evaporated by more than 90%.
When a laid-off employee left the Gaotu headquarters this week, he said, “We have been laying off staff these days,” and “Everyone is very anxious.” Another employee said: “It’s not our turn yet, but I feel it’s just a matter of time.”
On the same day, “Spark Thinking” determined the list of layoffs-the first batch of layoffs were employees from functional departments, followed by the teaching and research department. The rate of layoffs for teaching and research was about 20%. At the same time, Spark Thinking terminated its plan to go public in the United States.
On the 27th, Zhang Bangxin, the founder and CEO of Good Future, also confirmed the news of the layoffs. He said in the live broadcast of the mid-to-high level bimonthly meeting that businesses that have no demand will definitely be shut down.
How miserable is the CCP’s report on mainland education stocks?
The 27th was the third trading day in which education stocks plunged. The total market value of listed off-campus training companies shrank by more than 730 billion yuan from a high point.
On the day before the CCP officially released the “Opinions” (23rd), the media exposed relevant news. Gaotu fell 63.26% on that day; Good Future fell by more than 70%; New Oriental fell 54.22% at the close of the US stock market, and it was a hit in Hong Kong stocks. The largest single-day drop in history, evaporating nearly 40 billion Hong Kong dollars in a single day.
In addition to requiring the reduction of primary and secondary school business, the above-mentioned “Opinions” also stipulated that “the provision of overseas education courses is strictly prohibited”, which means that the study abroad business is at risk.
The Wall Street Journal published an article on the 27th that it seems that Western investors are gradually understanding the reasons for the situation. ; In fact, this is the political control of the Communist Party”, “The Party must control what Chinese students learn and who will teach the students. The Party cannot tolerate foreigners writing curriculum plans for Chinese students through private companies in China.”
Several months before the official release of the “Opinions” on the 24th, various localities had already taken action. Beijing training institutions have basically been in a state of suspension since March, and spread to some cities in Guangdong, Anhui, Yunnan, Henan, Shanxi and other provinces in July.
Xu Shen, an insider of the New Oriental Education Group, revealed to Ran Caijing that the management of New Oriental had begun to discuss the issue of transformation not long ago. Some people suggested that it should be transformed into a nursery school. At that time, Yu Minhong was in tears.
On the 27th, when the middle managers of Gaotu Vocational Education announced the layoffs, they cried twice.
The mainland media “Caijing” quoted an insider from New Oriental as saying: “It’s cold.” He believes this is a reality that the education and training industry must face.
The above-mentioned “Opinions” also stipulate that all discipline training institutions must be converted into non-profit institutions. Mainland media quoted a US dollar fund partner as saying: “This is to uproot the roots and not give anyone a chance. This is something I didn’t expect at all.”
Editor in charge: Sun Yun#
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