China tech crackdown: New Oriental’s Yu Minhong counts his losses in 2021, points to frugal future
- New Oriental’s market value plunged by 90 per cent, revenue fell 80 per cent, and 60,000 employees were dismissed, founder Yu wrote on WeChat
- Separately, the company launched a live-streaming e-commerce platform, focusing on farm products, with the goal of connecting farmers and consumers
New Oriental Education & Technology Group founder, chairman and chief executive Michael Yu Minhong has shared details of the personal and financial pain felt after Beijing's crackdown on the country’s off-campus tutoring services sector last year.
“In 2021 … the market value of New Oriental dropped by 90 per cent, revenue declined by 80 per cent and 60,000 people were dismissed,” Yu wrote on his personal WeChat account over the weekend. “We paid nearly 20 billion yuan (US$3.1 billion) for tuition refunds, employee dismissals, as well as teaching site lease cancellations.”
New Oriental was one of the largest education groups to bear the brunt of Beijing’s crackdown on private tutoring, which was considered the most ruthless of the government’s policies targeting a specific industry.
Last July, China’s State Council issued a regulation that banned for-profit, off-campus tutoring for primary and middle school students, essentially killing the core business of companies like Yu’s.
Shares of New Oriental, which are listed in both New York and Hong Kong, were trading at HK$14.6 (US$1.87) at Monday noon, less than a tenth of its peak in February 2021.
Yu, a former English teacher at Peking University who started his private school business in 1993, said New Oriental has suspended all its offline and online education classes for kindergarten to the 9th grade, while expanding investments in tuition for college students and the overseas Chinese language market.
“It’s like cutting off your arm to survive [a bite from a poisonous snake],” he wrote, using an old Chinese idiom.