Can Chinese Edtech Regulations Stifle a Culture of Striving?

Edtech Business

Can Chinese Edtech Regulations Stifle a Culture of Striving?

By Rebecca Koenig     Aug 4, 2021

Chinese classroom
A school in Baixiang County, China. Photo by jianbing Lee / Shutterstock.

Mini Hu is weeks away from delivering a daughter. The new mother has a lot on her mind.

The 29-year-old lives in Beijing, where she leads a team at an education company that develops English curriculum for kindergartens and schools across China. Hu wonders: Will her upcoming maternity leave disrupt her career?

It’s been barely more than a year since Hu met the man who is now her husband. Will he continue to be as supportive of her as their family grows?

And in China’s pressure cooker capital city, can Hu be the kind of parent she aspires to be: One who does not succumb to social pressure to set expectations unreasonably high for her first child?

“On one hand, I really want to respect cognitive development, and on the other hand, I also dream to be a proud mom,” Hu says. “I think that will be a huge problem going forward.”

That tension between wellbeing and prestige may shape the future for Hu’s daughter in ways more powerful than Hu can foresee. Because as her due date approaches, her country is also feeling labor pains. Policies issued in July by China’s government restricting the country’s massive tutoring industry may aim to give birth to a new era of education in China, one that eases pressure on kids to excel at all costs and diminishes the power of edtech companies.

For some people, the policy shift had immediate consequences, as fortunes fell when stock prices for China’s giant edtech companies crashed. Joey Jiao, investment vice president of Blue Elephant Capital, has been sharing sweets with entrepreneurs and investors to calm their nerves.

“We do a lot of boba tea, stuff like that, to boost our emotions,” he says.

For others, the new restrictions have so far mostly raised questions. Kali Yan, a tutor who works independently, wonders whether the rules might even benefit small-scale operations like hers, by driving the tutoring market underground.

“You just do it secretly,” she says.

Yan, Jiao and Hu are Chinese young adults whom EdSurge interviewed in the week following the edtech crackdown. With their advanced degrees and English-language skills, they represent a selective set of perspectives. All three of them are 29 years old, on the cusp of a new decade of life—and at a stage when the government seems to hope they’ll start families.

They have differing theories about what the news might mean for China. But with their careers and personal lives intertwined with the education sector, each of them stands to benefit or lose from the changes sweeping their country.

As Jiao puts it: “The entire private sector of the China education industry has witnessed some sort of very destructive forces.”

The Rise of Private Tutoring

In China, millions of families participate in “shadow education,” or private tutoring that supplements the teaching students receive in schools. More than 75 percent of students, according to a Chinese study from 2016, spend their evenings or Saturdays with tutors, studying core subjects, or English, or learning sports, coding, or music, either in person or online, one-to-one or in groups. Some parents pay the equivalent of tens of thousands of U.S. dollars a year for this instruction.

billboard for tutoring
A Tutor ABC billboard ad in Shanghai, China. Photo by Andy Feng / Shutterstock.

The practice has grown popular for several reasons. One is cultural, says Yong Zhao, author of the book “Who's Afraid of the Big Bad Dragon?: Why China Has the Best (and Worst) Education System in the World.”

“In China, you have a hierarchy where people are always trying to compete to be better than you,” says Zhao, a professor of education at the University of Kansas and the Melbourne Graduate School of Education. “This competition has existed for thousands of years.”

Another may be the way China’s past four decades of economic growth have lifted many families from poverty to comfort—and perhaps changed their aspirations and personal narratives.

“My generation's parents, they didn’t have enough food when they grew up, all of them. And now they live a rather extravagant life, some of them,” Hu says. “Mostly it’s because China is a very fast train, and you are on it. You live a very good life, a much better life than yours used to be. Most of them, they didn’t think through that. They thought it was because they tried really hard, they worked really hard. They want that for their kids, too.”

The popularity of the private tutoring industry may also be a response to how educational—and therefore economic—opportunity is awarded in China. High-stakes entrance exams determine which students are admitted to the top high schools, then the top colleges, then the top jobs in cities that citizens view as “first-tier.”

Parents push for intense studying out of the belief that even a single point on these exams can make a difference in their child’s fortures, Hu says.

“One point,” she notes, “can probably cut 10,000 people behind you.”

Parent Pressure

Hu’s life has been shaped by this competition. Growing up, she participated in seven extracurricular programs each week, she estimates, “just to keep my leading positions in school.”

And Hu’s credentials influenced even more than her academic and professional trajectories. When, to her chagrin, her family and coworkers started nudging her about her “relationship status,” she signed up for an elite dating website, where the fact that she has a master’s degree from an Ivy League university made her a compelling suitor.

“Most of the candidates have very prestigious education backgrounds and are living and working in first-tier cities,” Hu says. “I found my husband there.”

So a directive from Beijing to decrease academic competition could change a lot about life in China. That’s the official rationale the government offered for its new policies, the latest in a series of efforts to rein in private tutoring. State-sponsored news sources say the new rules should “ease the burden of excessive homework and off-campus tutoring” by imposing time limits and curfews on tutoring sessions, prohibiting tutoring during certain times of the year and restricting extra paid instruction about core curricular topics.

Additional mandates call for schools to add after-hours, on-campus programs for families. Zhao sees these moves to shore up public institutions and check private providers as consumer protections, similar to efforts to regulate for-profit colleges in the U.S.

“These companies are running a business, they are not doing real education,” he says. “In many ways, they are distorting education.”

kids playing
Children playing sports in school in Xingtai City, China. Photo by jianbing Lee / Shutterstock.

Other observers read between the lines and discern another motivation. Perhaps the government, worried about population trends, wants to make it more appealing for more people to have more kids.

“In Chinese culture, parents provide as best they can for their children,” says Nicolas Huang, co-founder of Lonely Reader, a digital platform that teaches liberal arts. “Young people think the burden is too heavy for them to have a child, so the birth rate is declining very, very fast.”

With a child on the way, Hu feels that squeeze. In China’s capital, she says, people regularly work 10- to 12-hour days. They pay large sums to live in housing zones that guarantee their kids entry into strong primary schools. They hope to replicate their successes through their children.

“Being able to provide for your own family and being able to have a child in a city like Beijing, I think takes a lot of courage,” Hu says. “Many people, they work their asses off to get into universities in Beijing.”

Hu and her husband agree: They won’t set standards too high for their daughter. They won’t treat her differently based on her performance.

Yet the pressure is already hard to resist.

“Recently, I noticed that I was very anxious when [seeing] my kid’s results: how big is her head, how much she weighs. I think that’s a natural peer pressure that really puts you in an anxious state,” Hu says. “You care about your kids, and as a result, you of course will want the best for them when they grow up.”

Investor Angst

Learning is big business in China. The country’s tutoring companies are worth about $120 billion, according to analysis from Reuters. Several of them are “unicorns”—private companies with a valuation over $1 billion—per a HolonIQ report from July.

Jiao’s job helps fuel that fire. The company in Beijing where he works as a vice president has made early-stage investments in about 90 edtech startups over the last six years. Jiao’s experience and research have led him to believe that China is “probably the best market in the world for education.”

The largest Chinese tutoring companies are “household names to all Beijingers,” Jiao explains. “You can see the commercials everywhere. Subway stations, TV channels, talk shows—everywhere, you name it.”

So naturally, it seems like everyone Jiao encounters is talking about the new government rules, he says—“even the taxi drivers.”

This edtech omnipresence points to another possible reason why the government is targeting the sector as it scrutinizes internet companies more broadly. Officials may view private education companies as too influential, experts say, or worry that their instruction deviates from the government-approved public-school curriculum.

In tutoring classes, “lots of things being told are not controlled directly by the government, and it is a very dangerous trend,” Huang says.

Because the new guidelines ban overseas education courses and limit foreign investment in Chinese edtech, Zhao says nationalism may have motivated policymakers: “They are very concerned about the influence of foreign countries on education in China.”

Read more from EdSurge about Americans witnessing abuse online while tutoring Chinese students.

Watching industry giants fall has Jiao conflicted. He already suspected that the education market was “overheated,” he says. As a citizen, he sees the value in trying to diminish “unnecessary competition” in education. But as an investor, he wishes the policy didn’t punish entrepreneurs.

“I’m feeling bittersweet,” Jiao says. “We all have this memory of going to New Oriental classrooms, TAL classrooms, when we were a kid. It’s kind of sentimental,” he adds, naming two of the most popular tutoring companies.

But the news hasn’t dampened the entrepreneurial spirit entirely. Companies are already pivoting, by cutting off arms of their businesses that violate the new rules or by spinning up alternate services. So as Jiao comforts his spooked colleagues, he’s already thinking ahead.

“What we’re focusing on is soothing the emotions of the founders and our investors, by telling them what we see from the new policies and what we believe are the new directions—new opportunities,” Jiao says. “We’re trying to learn from the new policies. What are the implications?”

He predicts several ways for edtech companies to rebound. One is marketing technology directly to the country’s enormous public school market. Another is supporting vocational training, which the Chinese government wants to grow. A third is selling families instruction in extracurricular subjects like dance or art, which so far is still permitted.

“If students spend less time in tutoring, will they spend more time cultivating their interests?” Jiao asks. “I don’t know, but we will keep on looking for some evidence.”

Chasing Shadows

On the second floor of her sister’s shop, Kali Yan coaches children in English grammar, writing and recitation. Their families pay her 200 RMB—about $30—an hour for one-on-one lessons, or less for group instruction.

Yan says she started her one-woman tutoring business in Guangdong in the south of China more than six months ago. It’s part-time work, but she says it pays better than some full-time jobs. She’s noticed that demand for tutoring seems higher than it did a decade ago, when she worked in the industry part-time while attending college.

“The parents have more and more—they’ve become richer,” Yan says. “They are willing to invest more in the education of their children.”

Taking stock of the government’s new stance on tutoring, she draws a distinction between what it could mean for large operations and small providers. She thinks it is “a disaster” for giant edtech companies, noting that “the restriction is very harsh.”

Yet for independent tutors such as herself, she adds, “This is a thriving chance for them.”

That’s because Yan thinks many tutors will simply get creative about how they do business. For example, she imagines a scheme at a theoretical bookstore that starts selling textbooks for noticeably higher prices.

“Why is it so expensive? Oh, when you buy the book, one of our services is to help you read the book,” she says with a laugh.

Investors, too, will adapt, Jiao believes. If they can’t offer tutoring, they’ll sell education in other ways.

“Will there be hardware, new e-books and other e-learning materials?” Jiao asks. “We are definitely hoping to see more ventures.”

The trouble with shadows is they’re hard to catch. And China’s new rules might drive shadow education deeper into the dark.

It may all come down to parents like Hu, torn between competing visions about what’s best for their children.

“Sometimes I fear I may rob my girl of the opportunities to have developed capabilities,” Hu says. “Even though I don’t push her, I still don’t want to miss any possible potentials.”

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