China’s largest private education provider laid off 60,000 employees last year as it grappled with fallout from Beijing’s sweeping overhaul of the industry.
Yu Minhong, the billionaire founder of New Oriental Education confirmed the massive shakeup in a post on his WeChat account over the weekend, adding the company encountered “too many changes in 2021.”
He blamed the layoffs on “policies, the pandemic and international relations.”
Yu’s post lays out starkly the consequences for private enterprise in China as Beijing took major steps to curb what it saw as unruly business practices.
New York-listed Oriental is China’s largest private education company by market capitalization and was one of the most high-profile casualties of the widespread restrictions imposed on the country’s $120 billion private tutoring sector, as it reeled from rules announced in July that banned for-profit, after-school tutoring services and restricted such companies from making profits or raising capital.
Regulators said at the time that excessive tutoring had overwhelmed children and placed too much of a financial burden on parents, all while exacerbating social inequality.
Since those restrictions were announced, authorities have ordered those education businesses to suspend online and offline tutoring classes.
New Oriental, famous for its after-school tutoring services, had more than 88,000 full-time employees and about 17,000 contract teachers and staff as of May, according to its latest annual report.
It was not clear whether contract workers were among the 60,000 let go, but the figure accounts for roughly two-thirds of New Oriental’s full-time staff last year.
The firm also spent nearly 20 billion yuan ($3.1 billion) last year in refunding prepaid tuition to customers, compensating employees that were laid off, and surrendering leases for learning sites across the country, according to Yu.
He added that revenue fell 80% while its market capitalization shrank 90%. New Oriental lost some $28 billion in market value in 2021.
TAL Education, another Chinese tutoring giant, announced in November it would shift its focus from teaching school curricula from kindergarten to ninth grade, and instead tutor other subjects, such as music and sports. It also wants to expand operations overseas.