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Translated by: Ermat

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On July 24, 2021, the “Opinions on Further Reducing the Burden of Homework and Off-Campus Training for Students in Compulsory Education” was introduced. The “double reduction” policy has officially landed. In the past six months, the effect of this policy has not yet been seen, but it has hit millions of education institutions and millions of practitioners. 

The new company’s market value fell by 90% in 2021, and its operating income decreased by 80%. The policy of “double reduction” seeks to “improve the level of school education, continue to regulate off-campus training, and effectively reduce the burden of homework and off-campus training on students in compulsory education. The document is a detailed specification of everything from macro to micro, which is a change in education.

The real target of the “double reduction” policy is not the education and training itself, but the capital that is invisible in it. The document on the content of capital stressed: strict control of excessive capital influx into training institutions. Training institutions financing and fees should be used mainly for training business operations. No academic training institutions shall be listed for financing, and capitalization is strictly prohibited. Listed companies may not invest in subject-based training institutions through stock market financing, and may not purchase the assets of subject-based training institutions by issuing shares or paying cash. Foreign investors are not allowed to hold or participate in discipline-based training institutions through mergers and acquisitions, entrusted operations, franchise chains, the use of variable interest entities and other ways. Those that have violated the law are subject to cleanup and remediation.

Since the listing of New Oriental on the New York Stock Exchange in 2006, education training institutions have become increasingly interested in the capital market, setting off a boom in listings, from A-shares and H-shares to U.S. stocks. The emergence of the education and training industry has attracted an influx of various capitals. Since 2010, the scale of investment has been rising year by year. In 2018 there were 486 investments and financing in the field of education and training, amounting to 40.9 billion yuan. In 2020, there were 238 investments and financing, amounting to more than 68 billion yuan. 

More and more investors are looking at the education and training industry, such as SoftBank Group, Temasek, HNA Holdings, Tencent, Alibaba, Lenovo, Capital Group, CITIC Industrial Fund, Yunfeng Fund, Sequoia China, High Tall Capital, CMC Capital, IDG Capital, Warburg Pincus, Tiger Fund, etc. These capital predators are not to support the development of the industry, but to “strike gold”. Driven by capital, the education and training industry has fallen into a quagmire of disorderly expansion, vicious competition, and heavy fees over quality, becoming a cancer in society.

The victims are not only those educational institutions and practitioners, but also every parent who pays hard-earned money for the future of their children and every student who sacrifices their physical and mental health. In addition, the education reform is anti-international and not conducive to China’s development. “The new “double reduction” rule not only strictly prohibits the provision of foreign education courses, but also strictly regulates foreign teachers, especially “prohibit the employment of foreign personnel outside the country. This is tantamount to directly cutting off access to foreign language teachers to teach online.




Disclaimer: This article only represents the author’s view. Gnews is not responsible for any legal risks.

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