Regulatory upheaval in China is reportedly prompting online education companies to shed staff as efforts by Beijing to rein in the rapidly expanding for-profit tuition sector pose significant risk to revenues.

GSX Techedu, which last week reported a loss for the first quarter of 2021, is reportedly laying off 30% of its entire workforce and is closing down its pre-school education unit for children aged three to eight after China moved to ban kindergarten and private tutoring providers from teaching the elementary-school curriculum from 1 June.

Meanwhile, according to news outlet 36Kr, ByteDance-backed Dali Education is reshuffling and cutting down its workforce, and online school Xueersi has suspended hiring in Zhenjiang and Nanjing.

Last month, VIPKid – which has been reported to be contemplating an IPO – closed its Dami Wangxiao business and joined together its services Qimeng English and Math Thinking – and in the process laid off half the combined workforce.

Shenzhen-based Zhangmen, which is plotting a US IPO, said in its filing on May 19 that legal risks may significantly affect the sector. The company highlighted further regulations that will become effective on September 1, requiring private online education services to obtain private school operating permits.

To read more about the recent regulatory upheaval affecting Chinese lucrative for-profit education sector, click here.

Date published: 1 June 2021

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