In January, four of China’s biggest online tutoring platforms made an embarrassing gaffe. They aired ads all featuring the same actress to promote their new online courses.
In an ad for the NYSE-listed education provider Gaotu, for example, the actress claimed to have 40 years of English teaching experience. In another ad for tutoring platform Yuanfudao, the same actress posed as a primary school teacher who said she had been teaching math her whole career. “Getting grades is not a matter of intelligence,” she said, adding that “90% of mothers make mistakes.”
The lookalike ads epitomized the successful sales strategy of a booming sector—guilt-tripping parents to get them to spend their hard-earned money on a shot at giving their kids the brightest possible future. But the companies also appear to have have drawn attention from an unwanted quarter. In addition to fines on the offending companies, in the months since the marketing blunder Beijing has intensified measures to restrict private after-school tutoring, which saw an influx of funding as user numbers shot up amid the pandemic. But experts believe the moves reflect broader goals than merely curtailing an overheated market and easing pressure on students.
By clamping down on services that cater to aspiring college students, opportunities in education programs that align better with the country’s vision—such as expanding vocational training–can then open up. And by limiting the type and cost of tutoring services the startups can provide, the government may also hope to address a frequently stated reason for why people in China don’t have more kids: they can’t afford it.
But the crackdown doesn’t do anything to address the economic concerns of the country’s “baby chick,” or ji wa (鸡娃) parents who spend hundreds of billions of yuan on the promise that investing early and heavily in academic achievement will deliver success.
“The rise of the jiwa phenomenon has much to do with the anxiety people have surrounding social inequality,” said Yun Zhou, assistant professor of sociology and Chinese studies at the University of Michigan, whose work examines state-market-family relations. Chinese parents have a deep fear that their offspring might “end up worse on the social scale than where they started.”
An “infusion” of after-school tutoring
The term “baby chicks” emerged in online parenting groups to describe children brought up under an intensive parenting style—a counterpart to helicopter parenting in the US. It’s a reference to the infusions of chicken blood touted as a cure-all for illnesses in 1960s China. Instead of injecting chicken blood, the phrase suggests, parents are strengthening their kids with a heavy slate of tutoring and extracurricular activities, which is increasingly happening online.
In China, education resources remain unevenly distributed between urban and rural areas, a disparity that is widened by policies that require local governments to bear partial responsibility for funding public schools—which can leave less affluent areas without sufficient resources. In cities, where the better schools are, access to good public schools is also determined by a family’s household registration or hukou. And even among the affluent there’s an awareness that the best spots are scarce, pushing parents to enroll their kids in additional education at a young age. A 2021 industry report by market data firm iResearch shows that half of urban families with school age children spend more than a fifth of household expenses on education—much of that on tutoring.
A popular reality TV series, Xiao She De (A Love for Dilemma), captures the pressure parents face. In the show, one family tries to take a more “free range” approach to their daughter’s education, allowing her to play and be herself. When her bad grades come in, the parents decide to change tack, and sign her up for a slew of after-school courses. Her scores improve—but her spirits decline. Viewers have described the show as an effective “contraception tool.”
While parents have long turned to offline tutoring to help their children crack the dreaded life-determining college-entrance gaokao exam, online startups cropped up in the last decade to offer more convenient and personalized versions of these services. By 2020, China’s online education market size was estimated to be nearly 260 billion yuan ($40 billion), while the overall tutoring market is upwards of $100 billion.
Yuanfudao, backed by Chinese social media giant Tencent, and rival Alibaba-backed Zuoyebang, are the biggest players. There are also more specialized sites, such as VIPKid, which offers English-language tutoring, and online STEM platform Huohua Siwei. And as veteran private education groups, such as Tomorrow Advanced Learning (TAL) group and New Oriental, expand virtual offerings, the line between offline and online is increasingly blurring.
The pandemic gave the growing sector even more of a boost. Last year, Yuanfudao became the world’s most valuable edtech company with a $15.5 billion valuation after a $2.2 billion funding round in October, while Zuoyebang, valued at around $10 billion, raised $1.6 billion. Meanwhile ByteDance, better known as TikTok’s parent, also unveiled plans to bet big on the edtech space.
But then officials began sounding an alarm.
“A social problem”
In March, at the annual legislative Two Sessions gathering, president Xi Jinping called after-school tutoring services a “social problem.” In May, Xi again lashed out at the industry’s “disorderly development” and ordered that rules on tutoring institutions be strengthened. The following month, China’s education authority set up a dedicated department to supervise the sector, including tutor qualifications and fees.
Attempts to regulate the tutoring sector are not entirely new. But what’s different about the latest moves, notes Andrea Previtera, a consultant to private equity firms focusing on the edtech sector, is the level of enforcement.
Quickly, the scope of clampdown on after-school tutoring has extended far beyond advertising. Regulators revised the Law on Protection of Minors to ban tutoring institutions from teaching preschoolers primary school materials, effective June 1. The industry is now bracing for harsher rules to restrict tutoring for K-12 students, for example by preventing services on holidays and weekends. Last month, China’s market regulator also imposed $5.7 million in fines on 15 education companies over illegal activities.
The efforts have hit particularly hard at the edtech startups that were doing so well last year. Many online tutoring service providers have since announced plans to slash jobs and downsize operations, as well as seen their share prices slashed. Business news publication Yicai Global reported that Gaotu will stop registering children aged 3 to 6, and lay off as many as a third of staff, while VIPKid reportedly decided to delay plans for a US listing. Some expect the size of the after-school tutoring industry to shrink by 30%. VIPKid declined to comment while Gaotu did not respond to a request for comment.
Given the regulatory uncertainty, investors are pulling away from China to invest in other growing markets for educational services, such as Vietnam, Thailand, and Indonesia, added Previtera.
“Private tutoring companies will not be allowed to teach anything that’s already in school, for example, language training and STEM,” said Previtera. This is the part of the regulation that is the most concerning for private tutoring players, he added. “We are waiting for the big names to start lobbying and see if they can achieve anything in terms of easing the regulation.”
China’s labor force conundrum
In the late 1990s, China government adopted measures—including building schools, hiring teaching professionals, and offering scholarships—to encourage college enrollment.
But alongside the one-child policy, in place until 2015, this created an unintended consequence: a shrinking labor force with an increasing share of workers with advanced degrees. This year, the country expects to churn out a record 9.1 million college graduates, but depending where they studied, not all of these graduates are equally employable. The unemployment rate for Chinese aged 16-24 is now nearly 14%, compared with an overall rate of 5%.
“China dreams of becoming an industrial giant, but the problem is the current curriculum taught in universities is not enough to cultivate such talents…there is a supply-demand gap in terms of skill sets,” said Claudia Wang, partner at management consulting firm Oliver Wyman, who believes this mismatch is also a key part of the reason authorities are committed to regulating the tutoring sector.
Those kids who might be able to go to the top colleges will likely stay on that track. But China needs to find better paying paths for rural students who used to forgo college for factory work, as more parts of manufacturing get automated. Students who aren’t able to get into a top-notch college may also be better served by an advanced vocational degree.
To address this, over the past few years, the education ministry has worked hard to expand, improve, and fund vocational education. In May 2020, China’s education ministry announced a plan to merge some independent colleges with vocational schools. But recent student protests over plans to merge a Nanjing college in eastern Jiangsu province with a vocational institute reflect the prestige around university degrees (and the fear of being a job applicant without one).
Until blue-collar jobs are perceived to offer comparable compensation models and career runways as white-collar jobs, it will be difficult to shake the stigma around technical and vocational schools, said Wang. In the meantime the crackdown on tutoring is unlikely to deter parents from seeking ways to ensure their children gain advantages and avoid downward mobility.
A mother working for a tech company in Shanghai told Quartz she feels tutoring is very necessary part of her child’s education. Many families she knows feels the same way.
Her child started online tutoring for math and English at age 3. Now five, her daughter is still at an age where she’s too easily distracted during virtual classes, so she recently decided to opt for offline tutoring.
“When she’s a bit older, I’ll re-consider the online options,” the mother said.