Beijing’s crackdown spells tough times for Tencent-backed Yuanfudao, other off-campus tutoring providers

Widespread speculation about lay-offs in the off-campus tutoring sector has become a trending topic on Chinese social media

Beijing’s scrutiny of the sector comes after President Xi Jinping described the domestic market for K-12 after-school training services as a ‘social problem’

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Published: 10:00am, 17 Jul 2021Updated: 10:00am, 17 Jul 2021

Four days before 22-year-old Emma Liu was expected to start her first full-time job as a private tutor for online classes at a Chinese start-up, the company called to notify her that work would be delayed for at least three months.

The call was made by Zebra AI Class, a unit under Tencent Holdings-backed Yuanfudao’s online education platform, which is part of the country’s vast off-campus tutoring market now under increased government scrutiny.

Besides disrupting her plans for the summer, Liu said the notice upended her life.

“I was ready to work and all of a sudden, I needed to look for a new job,” said Liu, a fresh graduate from a university in Xian, capital of northwest China’s Shaanxi province. “I can’t afford to wait [to start work at Zebra AI Class] and live in the city without any income.”

Liu’s predicament comes amid a regulatory crackdown on China’s once freewheeling off-campus tutoring market, casting a pall over the prospects for about 600,000 online institutions and tens of millions of people employed in the sector.

Tencent Holdings-backed Yuanfudao, the world’s most valuable education technology unicorn, operates a closed-loop online education platform. Photo: Handout

The stakes are high for China’s pre-college, off-campus education market. It is forecast to reach 730 billion yuan (US$112.6 billion) this year, up from 400 billion yuan in 2020, according to estimates by the National Institute for Education Sciences, consultancy Oliver Wyman and TAL Education Group.

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