Yu’s post makes clear the consequences for private enterprise in China as Beijing took significant steps to curb what it saw as unruly business practices.
Listed in New York Oriental – China’s largest private education company by market capitalization – has been one of the most high-profile victims of widespread restrictions on the country’s $ 120 billion private tutoring sector, while it was under control. shock to rules announced in July that banned for-profit courses, after-school tutoring services and prevented those companies from making a profit or raising capital.
Regulators said at a time when excessive tutoring overwhelmed children and imposed too heavy a financial burden on parents, while exacerbating social inequalities.
Since these restrictions were announced, authorities have ordered these educational companies to suspend online and offline tutoring classes.
It was not clear whether contract workers were among the 60,000 made redundant, but that figure represents about two-thirds of New Oriental’s full-time staff last year.
The company also spent nearly 20 billion yuan ($ 3.1 billion) last year to reimburse prepaid tuition fees to customers, compensate laid-off employees, and waive leases for learning sites through the country, according to Yu.
He added that earnings fell 80% while its market capitalization fell 90%. New Oriental lost some $ 28 billion in market value in 2021.
The ban on private tutoring shocked parents and left many businesses struggling. It also sparked a sharp liquidation of Chinese education companies in New York and Hong Kong: in late July, Goldman Sachs estimated that regulations had wiped out $ 77 billion in the market value of Chinese tutoring companies listed on the market. foreigner in a week.
It was a sudden turnaround in fortunes for those companies, which had been stock market darlings in recent years and attracted billions of dollars in funding from investors like Tiger Global Management and SoftBank Group.
It is not yet known how many jobs in total have been cut due to the crackdown. However, former education official Wang Wenzhan said last July that there were nearly a million institutions across the country focused on after-school tutoring, employing around 10 million people. In December, the Education Ministry announced that authorities had closed 84% of online and offline after-school classes in the country. establishments.
For the few survivors, life could still be difficult. Yu acknowledged in his post that New Oriental has emerged over the past six months “with great difficulty”.
The entrepreneur, who founded New Oriental in 1993, said the company had completely shut down its tutoring operations for basic school subjects. Then, it will focus on teaching other subjects – usually music or sports, which are not part of the core curriculum in China – by providing tutoring services to students and offering Chinese language lessons on them. foreign markets.
New Oriental has also set up an e-commerce live broadcast platform focused on selling agricultural products, Yu said.
“Work hard, study hard and try to find new directions,” he added. “These should be my top three themes for 2022.”