State of the Industry: China Cracks Down on Online Education
(Last updated - June 7, 2022)
While rumours have been circulating about coming Chinese government regulations for a while, the official announcement finally came on July 26.
The Chinese Ministry of Education has outlined a new plan that will significantly impact the online English teaching industry. It has been presented as a way to reduce pressure on parents and students in China’s hyper-competitive education field.
There is also some discussion that the regulations hope to reduce the cost of raising children, therefore increasing the birth rate. The plunging birth rate is thought to be driven by the high cost of living, low wages, long hours and little upward mobility.
While Chinese companies aren’t the only ones employing teachers in the online English teaching industry, they do make up a significant portion of the industry, so we thought it prudent to address the news here.
What we know
While the exact details of the regulations are still not 100% clear, there were a number of points coming from the Ministry of Education’s news release. Here’s what we know to date:
Online lessons must be limited to 30 minutes.
No online lessons can be taken after 9:00 p.m. Beijing time.
No online classes can be taken during weekends, holidays and school breaks.
Off-campus tutoring (education not happening in the public school system) shall not include overseas education courses.
There will be a ban on hiring foreign teachers who live overseas.
Companies that offer private instruction will have to register as nonprofits. They will also no longer be able to advertise their programs.
This basically looks like a death sentence for the Chinese ESL industry. In fact, it caused a drop of as much as 60% in the share price of some companies listed on the New York and Hong Kong stock exchanges.
However, there is one hopeful bit of information. All sources indicate that these regulations are for schools providing additional tutoring in curriculum for core, Chinese public school subjects. As far as we know English is one of the core subjects, however the English curriculum that is being taught by the various online companies is not based on the core curriculum and focuses mostly on speaking.
This brings us to a number of questions:
The regulations seem to specify any for-profit institutions teaching the school curriculum. Since most of these companies have their own English education curriculum that focuses on speaking, will this be enough to get through unscathed?
The regulations say there will be a ban on hiring foreign teachers. Since online teachers are independent contractors, are they considered “hired”? Can this technicality skirt the regulations?
If the companies are not able to circumvent the regulations because they do not teach the national curriculum, can they re-classify as cultural enrichment classes? (i.e. “art” or “edutainment”)
As you can see, there are still many unanswered questions. Even the major companies are uncertain as to exactly how these regulations will affect them.
Official word from companies we work with
Given a major announcement like this, there’s going to be plenty of talk amongst teachers online. We wanted to give you the information we’ve learned—both official statements and what we’ve heard through other unofficial sources. Please take the unofficial sources as just that: rumours until proven otherwise.
Some companies seem hopeful and believe this should not impact their operations too much. Others have stopped hiring temporarily or have shut down completely.
Here are some statements from some of the bigger companies in the industry:
VIPKid
”First and foremost, let us be clear that we are confident that VIPKid’s business will remain operational. The business, however, will look different than it has to date. We want to take this opportunity to share our plan for moving forward as we navigate this new era of online education.
Short-Term Impact
On August 6, 2021, VIPKid was informed of the required changes to our business. Specifically:
Students in China who have already purchased class packages will be able to finish their courses with foreign VIPKid teachers on the platform. This is good news because many parents have purchased classes several months in advance. VIPKid teachers can still count on work for several months with students in China who have already purchased packages.
Starting August 7, 2021, students in China will be unable to purchase new class packages with foreign VIPKid teachers outside of China. To clarify, this means that students in China will only be able to take the remaining classes that they have already purchased. VIPKid will be unable to sell products offering lessons with foreign teachers outside of China to students in China.
Students outside of China can continue purchasing and/or renewing their classes with foreign teachers. In addition, international course offerings can continue as normal. VIPKid will be investing in the expansion of these offerings so that teachers can continue and grow their opportunities on the platform. Students in other countries will continue to be able to take classes with foreign teachers.
We are incredibly disappointed to have to share this news, as until today, we had been hopeful there would be minimal impact to teachers. We recognize that many of you may be feeling upset, confused and frustrated about these changes and wondering, what does the future look like for VIPKid and teachers on the VIPKid platform? We understand that this change will not only impact the special connections you’ve formed with your students, but also the livelihoods of you and your loved ones at home.
As we previously shared, VIPKid’s top priority is for all teachers to continue teaching on our platform, so that together, we can continue in our mission to inspire and empower every child for the future. While this new future will look different than the one-to-one English lessons you have been teaching to students in China, we are committed to seeing our mission through and offering opportunities for teachers to succeed on the VIPKid platform.
In the short term, we feel confident that the booking rate will remain similar over the next few months as students schedule classes for which they’ve already paid. Beyond that, we want to be clear about our long term plans for VIPKid.
Long-Term Vision
You may have noticed that VIPKid has been piloting several programs globally over the past year. These international product lines, such as BookNook (reading courses for US students) and Adult Courses are not impacted by the regulations. VIPKid also continues to invest in markets outside of China. We expect these teaching opportunities to grow in the coming months. With these programs and expansion into new markets, subjects and areas (for example, English Speaking for Adults, Math, Science, Art), it is our intention to minimize the impact to teachers.
With the above in mind, we want to ease your concerns and make the following points clear:
Bookings: Teachers will continue to be booked for classes that were already purchased. Booked trials on your schedule will also continue to take place.
Payments: As always, teachers will continue to be paid as scheduled.
Contracts: Contracts will continue to be renewed. In addition, we will continue to hire new teachers and our referral program will continue as we anticipate growth in new areas of the business.
Relationships With Your Students: We also recognize that teachers may not know how many classes they have left with their students in China. Your connections with students mean the world to VIPKid and we will create a solution and plan for teachers to be able to properly say goodbye to their parents and students in China when the time comes. Please stay tuned for more updates here.”
GOGOKID
“Dear Teachers,
This letter is to inform you that as of Aug 5th, 2021, GOGOKID will suspend the curriculum offered to all Chinese students.
This decision is in light of the recent educational policy revisions in China. All classes starting on Aug 5th will be cancelled from the system. Your remaining July classes will be paid no later than Aug 15th, and those of August will be paid no later than Aug 31st.
Your continued support and partnership mean more than you know. If there is anything more for which you may require our assistance, don’t hesitate to contact us.”
Zebra English
“We are really sorry to inform you that, being influenced by recent policies, our business will not be developed in the future. Currently, we are not able to recruit any new teachers, and your recruiting process has been terminated.”
Magic Ears
“They are allowing us to honor our contractual obligations with the parents who have already purchased classes. This is good news because #1) Most parents have purchased many months or even a year of classes in advance and they would prefer for their children to attend class rather than get a refund and #2) Our teachers can still count on steady work from our classes for months to come…We feel confident that the booking rate will be stable as usual and will not fluctuate much for the next 6 months.. So contrary to some rumours, Magic Ears will not close…we feel confident that we will be functioning well for approximately another year.”
QKids
“As of August 10, Qkids will no longer sell any new/renewed packages offering ESL instruction from teachers outside of China. Currently, Qkids has been granted time to fulfill existing family packages and subscriptions. For these subscriptions, we expect mostly regular scheduling trends for teachers in August and into the coming months. In other words, your booking options will continue in coordination with existing subscriptions. During this stage, you can expect weekly scheduling, coach/ CCT communications and pay to operate without changes…
As you may know, Qkids has long been innovating on and expanding its product lines. While we expect a major dip in demand for some time as subscriptions wrap up and we transition as a company, it is our goal to continue with preK-12 offerings for students outside of China. You may know of the pilot program Qkids Academy for North American children, as well as our efforts to provide classes to students and open bookings for ESL teachers in various other countries. We will put more energy and focus into new markets and also aim to launch a new product to serve the Chinese adult population for their English-speaking practices. We are certainly going to push to continue our educational mission and will continue to be committed to finding and extending opportunities for our teaching community as best as we can. We wish we could do this seamlessly, but can not at this time given how quickly the regulations have been rolled out.”
Palfish
“Different from some of them who are going to close their business, PalFish still holds confidence on our future development. Because PalFish is not a company who only provides services to students in Chinese mainland. PalFish has various types of services, and aims at providing services to students/customers all over the world.
In the future:
1. PalFish is an international company that provides services to students all over the world. In the future, we are going to do more efforts on our international business.
2. Enrolled students will be able to finish their package with their foreign teachers.
3. Starting the 8th August, students in Chinese mainland won’t be able to purchase new packages with foreign teachers outside of China. The trial classes with foreign teachers from now on will only be open to students outside of Chinese mainland.
4. Every month, teacher’s payment will arrive your Payoneer/bank account on time. You should not worry about not getting your money.
5. In the future, PalFish will also explore more types of services and provide teachers with different types of working opportunities.”
Whales english
Dear Whales English teachers,
An unfortunate thing happened yesterday. All classes were removed from teachers’ calendar and the WeClass app. We sincerely regret the swiftness with which this happened. This letter is to inform you, that considering the latest regulations issued by local authorities on Wednesday August 18th, Whales English has suspended the existing curriculum offered to all Chinese students effective August 19th, 2021. This suspension will remain in place until further notice from local officials. This is to say that all classes, beginning August 19th, 2021, will be cancelled from your schedule with immediate effect.
This is a heart-breaking moment for all of us here at Whales English, including staff, teachers, and students. As an integral part of the company, your continuous support means a lot and we cannot tell you enough how much we appreciate you.
We’ll keep you posted with any updates. Thank you all for your patience and understanding. This is indeed a difficult time for all of us.
Best regards,
Whales English Teacher Operations Team”
First Leap
We’ve received word from our rep at First Leap that they have paused hiring indefinitely.
DaDa
“Dear DaDa Teachers，
We are writing to update the teacher community some information about the latest education regulations in China. So far, we have been actively coping with regulatory policies and doing everything we can to minimize the negative impact on our teachers and students. Followings are important, please be kept informed:
l For the students who have purchased our courses, we will continue to comply with the contracts, and deliver the classes normally under the guidance of Chinese government.
l Starting from August 10, 2021, DaDa will no longer sign or renew any new contract for domestic students in China.
Here are also some clarifications to ease teachers' concerns：
l Bookings
Teachers will be booked for classes that were already purchased.
l Payment
As usual, teachers will certainly be paid as scheduled.
l Connections with staff:
Our staff will also be here to support and cordially listen to you via email or any other means of communication. Please feel free to contact us if you have any concern.
DaDa teachers and staff are working together to keep providing high-quality ESL classes for our students. In the past 7 years, we shared joys and sorrows, ups and downs together. We believe that we can unite to overcome the challenges along the way.
Sincerely，
DaDa”
landi english
“Dear all, As of August 11th, 2021, Landi English will suspend our recruitment activities including sourcing, screening, interviewing and appointing due to the risks related to the new rules and regulations issued by the Chinese State Council recently.”
Xueersi Online School 1 on 1
“So far, we have been actively coping with regulatory policies and doing everything we can to minimize the negative impact on both our teachers and students. Here are some important adjustments, please kindly check the following:
As from today, we will no longer hire foreign teachers.
We will continue to deliver the classes normally to students who have purchased courses under the guidance of Chinese government.
We would like to express our heartfelt thanks for your support…”
Non-confirmed information
The following has only been heard through various online forums and has not been confirmed with the companies themselves. Again, please treat these as rumours until proven otherwise. We just wanted to share these here because we understand that some people’s livelihoods depend on employment with some of these companies. It never hurts to have all the information so that people can make informed decisions.
EF has stopped its program for students ages six and under and is trying to adapt its curriculum to meet the requirements.
Our recommendations for those currently teaching with a Chinese company
The good news is that the industry isn’t made up entirely of Chinese companies. The bad news is that the Chinese companies do generally pay the best.
Keep in mind that the regulations haven’t come into effect yet. And they may take months, or even years, to be implemented and enforced.
That being said, here’s what we recommend:
Secure a second (or even third) source of teaching income with a company that does not teach Chinese students (more information below)
While we don’t normally recommend this type of thing if it goes against your company’s policy, perhaps getting in contact with parents privately might help you retain some students you can teach outside of your company’s platform. If your company is indeed closing, we don’t see this as a terrible thing to do.
The regulations do not apply to Chinese companies that have adult students. Before jumping ship, check to see if your current employer has an option to teach adults. Alternatively check out our list of schools below which includes companies that teach English to adults in China.
Companies that are not affected by the regulations
The following companies teach students from outside of China or have the option to teach adult Chinese students:
If you want more details on these companies, check out this blog article Non-Chinese Online ESL Companies Currently Hiring.
Don’t lose hope
There are still a lot of questions to be answered and the coming months will tell exactly how these changes will affect our industry.
We want to reiterate that these regulations may take months or even years to be enforced. However, it doesn’t hurt to have a back-up plan in place.
While some of the non-Chinese companies don’t pay as well, they are a great option as a backup plan in case things do not work out well.
And if the regulations are fully-enforced, Chinese parents will find a way to get their children English education. Perhaps this will be an opportunity for independent teachers to increase their private lesson bookings.
Do you have any thoughts, concerns, information, or wisdom to share? Please keep it respectful and share in the comments below.