China has recently announced a ban on for-profit tutoring. The question is, why? And what does this mean for students and their families in China? In this blog post, we'll take a closer look at the reasons behind the ban and what it could mean for students and their families. Stay tuned!
China Bans Private Tutors From Giving Online Classes.
The guidelines include 30 measures on education sector reforms designed to improve education quality, ease homework burdens for students, and restrict private investment – both domestic and foreign – in the industry.
Later, on September 18, 2021, the Ministry of Education (MoE) released a notice clarifying the registration process for online education platforms. This notice is one of the first sets of regulations since the release of the guidelines sheds light on how the government intends to regulate this section of the industry and offers a path forward for institutions impacted by the crackdown.
The new reforms overhaul the structure of China's for-profit tutoring industry, where substantial consumer demand remains. To continue operating, tutoring centres in China will need to adapt to the new regulatory standards quickly.
Frequently Asked Questions
Concerned that skyrocketing educational costs exacerbated wealth disparities and discouraged families from having more children, Chinese leaders in July issued rules that banned for-profit after-school tutoring local tutoring companies from raising capital and forbid teaching during weekends and holidays.
The Chinese government has doubled down with its crackdown on private tutoring, ordering a complete ban on all online and offline advertising of off-campus education programmes that target kids in kindergarten, primary and middle schools.
The official reason for the crackdown is that the financial pressure on Chinese families and academic pressure on Chinese children has become untenable.
China has banned for-profit tutoring in core education to rein in the country's private education industry and improve school-life balance for families.
The government ban on Chinese companies making a profit from extracurricular tutoring has been widely covered by English-language media because it affects listed companies that foreign investors have backed.
What Are The Changes?
According to the guidelines, the reforms aim to promote the healthy development of students, improve education quality, alleviate financial burdens on parents, and institute law-based governance of the education sector. They concentrate on core subjects, or compulsory education, which refers to grades K-9, covering approximately 6-15 years.
Highlights of the guidelines are as below.
Regulating Off-Campus For-Profit Tutoring And Training Centres
The guidelines contain measures regarding the regulation of off-campus tutoring and training centres.
New rules for regional authorisation
According to the guidelines, regional governments are no longer permitted to approve new off-campus tutoring centres providing core/compulsory education. Instead, existing ones must become registered as non-profit institutions.
Local governments must distinguish between training centres in sports, culture and art, and science and technology and consult relevant departments to set standards for each category. Additionally, the guidelines prohibit tutoring on weekends, public holidays, and winter and summer vacations, which are popular times for off-campus education.
Impact on foreign stakeholders
Tutoring centres in core education cannot go public or be listed for financing. The guidelines call for the "excessive" capital in training centres to be controlled and ensure that financing is primarily used for operational costs.
The guidelines specifically ban foreign investment in such firms via mergers and acquisitions, franchise development, and variable interest entities (VIEs), which are investment vehicles frequently used by foreign investors to bypass restrictions in China's education sector.
The hiring of foreign teachers and other staff must be according to relevant regulations, and firms cannot hire staff based outside of the country to carry out tutoring activities.
Impact On Online Education Businesses
The guidelines further instruct regional governments to scrutinise existing online tutoring centres and re-approve them according to the new measures. Online lessons should be no more than 30 minutes, with intervals between lessons of at least 10 minutes, and end by 9 pm. If they do not meet the updated standards, their registration and Internet Information Service Business Licence will be revoked.
About two months after the release of the initial document, the MoE released a notice detailing how online education platforms can register to continue operations.
The notice states that all current online education platforms must suspend all new enrollments and payments until they have obtained the requisite permits and licenses. In addition, the registration assessment and approval process of online training institutions must be completed and a supervision and management system established by the end of 2021.
Upon obtaining a school license, online education platforms must register either as a non-profit or for-profit legal entity. Those offering classes in core education must register as non-profits.
To be eligible to register, institutions must meet several logistical requirements, including having a physical office and training centre at the registered address and either building or leasing a server based in China.
There are also qualification requirements for domestic and foreign staff, and the main person in charge of the institution must be a Chinese national living in China. In addition, institutions must comply with China's cybersecurity and data security laws and must create mechanisms for personal information protection and, in some cases, undergo personal information impact assessments.
Institutions teaching classes within the scope of core education are also not permitted to use any international courses or foreign textbooks. The taught materials must also be suitable for the student's grade level and must not be harder than the national curriculum. The notice also explicitly prohibits the publishing, printing, reproduction, or distribution of illegal publications, copyright infringement, and piracy.
The educational content must adhere to the party's educational policies. It means the educational content must ensure the separation of religion and must not contain obscenities, references to violence, terror, and gambling, and use any online games that are unrelated to education.
The notice also stipulates several management regulations that institutions must adhere to, including:
- We are formulating association articles that clarify the institution's training objectives, the scope of business, decision-making mechanisms, funding management, guarantee conditions, and service commitments.
- I clarified the management procedures for the collection and refund of tuition fees.
- Standardising contract formats and ensuring the stipulations are fair to all parties involved and don't infringe upon consumer rights or forget the institution's obligations toward the consumer. The draft standard contract must be submitted when setting up the institution.
- Standardising marketing and promotion and ensuring promotional materials don't violate the guidelines on easing homework burdens and off-campus tutoring on students.
Online institutions that pass the initial approval will be granted a school license from the relevant education administration departments, after which they can register as a legal entity. Institutions that fail the initial assessment and approval process will be given the opportunity to rectify errors or missing information and apply for re-approval within a given time frame.
Although many existing companies will have to re-register as non-profits, the new notice does provide a much-needed path forward for companies to continue operating. It also provides a clearer legal framework and scope of business that new institutions can work within.
In terms of content, the guidelines call for greater supervision and management of tutoring centres and promulgate teaching materials while banning foreign teaching materials.
Reducing The Homework And Study Burden On Students
The guidelines contain numerous measures for reducing students' homework burdens.
They instruct schools to set up management structures to coordinate homework assignments, ensure the difficulty conforms to national standards, and create evidence-based homework strategies according to age and learning goals.
Further, schools should not assign homework to students in grades one and two, aim for an average maximum of 60 minutes for grades 3-6, and an average maximum of 90 minutes for junior high school students.
Promoting Physical And Mental Health
The guidelines also encourage schools and parents to ensure students use their spare time responsibly. For example, they recommend students complete homework they were unable to finish at school, get physical activity, read, moderate their use of electronics, and go to bed on time.
They further encourage parents to communicate with their children and pay attention to their mental health, while boarding schools should take responsibility for students' after-school spare time.
Improving After-School Services
The guidelines put forward measures about improving schools' after-school services.
Schools should guarantee after-school services, encourage students to participate in them voluntarily, and create plans to improve their quality. After-school services should be run by teachers, retired teachers, social workers, or volunteers.
The guidelines also instruct schools to offer and improve free online learning services. In addition, local education departments should develop free-to-use online learning platforms and encourage students to use them.
Other Notable Measures
The guidelines contain various other measures, such as directives to improve and standardise the quality of education across regions, develop better evaluation techniques, and increase the quality of teaching.
Besides re-evaluating existing tutoring centres, the guidelines also call for decreasing them over time, particularly those with low operational standards. While they concentrate on ages 6-15, the guidelines state that governments should coordinate the management of students ages 3-6 and high school students.
On this note, tutoring centres cannot hold offline or online training for preschool students, including foreign language education.
The guidelines also heavily restrict tutoring centres from advertising, including banning media, new media, public spaces, and billboards from displaying advertisements. Further, advertisements cannot be "hidden" in the form of textbooks, stationery, uniforms, etc.
Off-campus tutoring centres should also strengthen their party-building work and welcome the participation of party committees. Finally, the guidelines call for greater inspection and supervision of schools and education departments required to implement these policies.
Why Has China Introduced These Reforms?
The guidelines mark the latest – and most relentless – Chinese effort to rein in the country's private education industry, reassert the role of government-run schooling, and improve school-life balance for families.
The move aims, in part, to alleviate costs for families, thereby encouraging them to have more children and reduce stress on students. In addition, the government released census results in May showing that the country is ageing even more rapidly than previously thought.
China's education system is exceptionally competitive, a problem exacerbated by the previous one- and two-child policies, which put undue pressure on children to support their families. According to the Chinese Society of Education, over 75 per cent of students aged 6-18 years attended after-school tutoring in 2016, the most recent year of available data. This percentage is said to have risen in recent years.
The new reforms come on the heels of a new education law released in March, limiting the private sector's role in core education and banning foreign education materials.
How Can Education Companies Adapt?
China's tutoring industry has grown rapidly for years and was on pace to continue to expand before the release of the new reforms. Consultancy firm Macquarie Research projected the industry to reach RMB 1.17 trillion (US$183 billion) by 2023, but the new restrictions jeopardise its prospects.
As a politically sensitive area, education in China has long been a lucrative but precarious industry for foreign participants. While the new regulations could devastate many private tutoring firms, foreign-run education firms were already prohibited from teaching core education.
However, many foreign companies operate through VIE vehicles and quickly adapt to new structures. Further, companies accustomed to hiring foreign teachers who do not meet professional visa requirements will need to recruit more professional talent that meets formal standards.
Abby Chen, the Senior Associate at Dezan Shira & Associates, advises, "Foreign-invested enterprises in core education have no choice but to stop engaging in such activities following the guidelines, and to change their registered business scope with the company registry."
Despite the new restrictions, foreign-run education firms still have opportunities in areas like vocational education – a sector explicitly encouraged for foreign investment – as well as language training and university partnerships.
Not long after you issued the guidelines, the government placed further restrictions on minors' video and computer game use, limiting minors to just three hours of gaming per week. In addition, ByteDance, the operator of the popular short video app Douyin, has also begun restricting the number of time users under the age of 14 can spend on the app to under 40 minutes per day in response to government pressure on the internet platforms to reduce the number of time children spend online.
Therefore, it is clear that both the government and parents are concerned with both undue pressures placed on children and overindulgence in entertainment. With caps placed on after-school tutoring, homework, and entertainment, recreational activities that are also educational and beneficial to a child's development may be the answer to filling free time in the evenings and on weekends.
Therefore, as training centres that teach subjects outside of the core education curriculum are still permitted to turn a profit – provided they comply with the guidelines and other regulations for running off-campus schools – companies can consider re-registering as a for-profit entity by pivoting to teaching non-core topics, such as IT, arts and drama, sports, music, and so on.
As new rules are released, and boundaries are set, spaces for development are likely to become niche increasingly and compartmentalised, making it difficult for the kinds of tutoring giants that have previously dominated the sector to grow. However, on the flip side, this offers intriguing new opportunities for smaller, innovative companies that offer specialised educational products.
The exact rules that you will impose on training centres in non-core education remain to be seen. However, it is likely new regulations clarifying you will release the permitted scopes of business in the coming months.
Chen recommends that foreign-invested enterprises outside of core education wait for further implementation regulations and act accordingly.
What Are The Reasons For The New Regulations?
The government has declared that the new regulations are aimed at:
- They are stopping education operations from putting profits ahead of the welfare of students. One-on-one private tutoring fees are often about US$200 an hour.
- Reducing financial pressure on middle- and upper-middle-class families contributes to low birth rates (i.e., having more children is more expensive). In May, China announced that parents can now have three children. Previously the cap had been two children.
- Alleviating the anxiety of parents and children who face incredible competition in school and the economy – there is even a term, Jiwa, which means "chicken baby" that, as Reuters notes, "refers to children pumped with extracurricular classes and energy-boosting 'chicken blood' by anxious parents."
- Private tutoring is often seen as the best way to help students pass tough gaokao exams.
The Ministry of Education alleges that the country's tutoring and private education industry have been "severely hijacked by capital" and that this development "broke the nature of education as welfare." As a result, the future intends to place more onus on and investment into the Chinese school system to educate China's children.
It might not surprise many, but for-profit tutoring has been banned in China. The government's reasoning for this ban is that the competition among private companies would lead to poor quality and high prices. However, if you're interested in teaching English or another subject privately, we recommend looking into doing so abroad where it may still be allowed!