Private tutoring companies in China are already laying off thousands of staff following a ban on out-of-school tutoring by the ruling Chinese Communist Party (CCP).
VIPKID, an English tutoring agency backed by Tencent, announced last weekend it would end online classes taught by overseas-based teachers, some 70,000 of whom are based in the United States.
Ed tech firms Gaotu, TAL and New Oriental have all said they will make "adjustments" in the wake of the policy change, with Gaotu announcing around 10,000 layoffs this week.
Meanwhile, Italy-based Wall Street English will file for the bankruptcy of its Chinese business next week, Chinese state media reported.
The company had already slashed the number of its schools in the wake of the pandemic from 71 to less than 30, with around 1,000 employees still on the payroll, the Global Times newspaper said.
"Some consumers have been complaining on social media platforms about problems on the company’s refund of tuition fees and most of them now are unable to contact customer service or sales representatives," the paper said.
The Beijing News confirmed the report on Thursday, citing an employee as saying: "It's true. There has been no official notification yet, and we are expecting one tomorrow or the day after."
An industry insider surnamed Gu said the company had already been in trouble.
"Wall Street English was already in financial trouble, not just because of [this] policy from the central government," Gu said. "The rectification campaign to reduce the burden [on schoolchildren] has made them give up hope," she said.
"The impact of this [policy] will be the end of the market and bankruptcies. I have never encountered anything like this before, so I have no idea what a listed company is supposed to do," Gu said.
Non-profit organizations
She told RFA that education and tutoring companies in Beijing now have to register as non-government and non-profit organizations by the end of the year.
Estimates in state media suggest that some 10 million people are currently employed in China's once-lucrative tutoring industry.
But the CCP banned after-school and vacation tutoring last month in some major cities, in a bid to reduce the financial burden on households of having a child, hoping to persuade more couples to have up to three children to boost flagging birth rates.
U.S.-based political commentator Guo Baosheng said the "reform" of the tutoring sector was based on ideology, rather than any genuine desire to reform part of the private sector.
"The current policy is aiming for a comprehensive crackdown on the education and tutoring industry, mostly to boost birth rates," Guo said. "But there is another aim, which is to lock out Western culture.
"When you teach English, you also have to come into contact with Western literature, business practices and even politics," he said. "Also, a lot of foreign teachers work as English teachers, and the CCP wants to get rid of them all."
"It's all in the service of political stability for the regime," Guo said.
Tutoring organizations are now banned from offering subject-based tutoring on national statutory holidays, rest days, or winter and summer vacations, in a pilot scheme affecting Beijing, Shanghai and seven other regions that will likely be rolled out nationwide.
No new subject-based off-campus training institutions are being approved for students in compulsory education, while existing subject-based training institutions will be registered as non-profit institutions.
'Chicken baby" syndrome
Subject-based tutoring institutions are banned from listing on stock markets or raising funds.
Instead, schools are to strengthen after-school services, and funding for such operations must be plowed back into meeting costs, the CCP central committee said in a July 30 directive.
The move comes amid growing concern in China over a phenomenon dubbed the "chicken baby" syndrome, referring to parents dosing their children up with chicken-based food supplements to boost stamina for all of the extra hours of study they expect of them.
More than 75 percent of students in primary and secondary education attended after-school tutoring in 2016, the most recent industry figures showed, and the need to hothouse children privately to get them into the best schools was criticized by CCP leader Xi Jinping in March as a barrier to boosting birth rates.
China's fertility rate stood at around 1.3 children per woman in 2020, compared with the 2.1 children per woman needed for the population to replace itself.
But raising children in China is a costly business, with parents stretched to find money for even one child's education. While state-run schools don't charge tuition until the 10th year of compulsory education, they increasingly demand additional payments of various kinds, as well as parental contributions for food and extracurricular activities.
On June 15, the Ministry of Education set up a new department to monitor off-campus education and training provision, to implement "reforms to the off-campus education and training sector."
Translated and edited by Luisetta Mudie.