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What Do China's New Private Education Policies Mean for Global EdTech?

In July 2021, China announced a sweeping set of new rules for China’s after school tutoring industry, casually referred to as the “Double Reduction” policy ( 双减 ) on July 24.12 The tutoring law went into immediate effect in pilot regions, with nationwide rollout expected soon.

Scope: These new policies will affect many stakeholders in Chinese. The most deeply and directly affected players are after school tutoring companies that deliver Compulsory Education to students. Compulsory education includes the core required subjects taught to students in grades 1-9.

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New Rules Include:

• Tutoring companies that work in compulsory education (Grade 1-9) will be converted into non-profit organizations. They cannot pursue IPOs, foreign investment, or investment from local listed companies. They cannot use foreign curricula. They cannot run core academic subject classes during weekends or school holidays.

• Online tutoring companies cannot hire foreigners outside of China to teach.

• Chinese primary and middle schools (Grades 1-9) must now offer more after school services.

Takeaways for global EdTech:

• Companies with large numbers of users in China should understand whether they fall under the scope of “Compulsory Education” and update the language on their Chinese websites if this is ambiguous.

• The K-9 private tutoring space will shrink, and regulators are targeting the biggest names in Chinese tutoring. However, low-profile SMEs and private tutors in the space will flourish, creating new opportunities as smaller players fill some of the void left by the giants.

• As schools will be required to offer more after school services, opportunities to work with schools directly will grow.

• The market for K-9 extracurricular education and vocational training for all years will expand as the government endorses public-private cooperation in these areas.

• Investments in Chinese EdTech will decline substantially. That might be good news for overseas companies with less exposure to the current law.

• China doesn’t have a clear way to force overseas companies with no local entity to comply, but the apps and websites of some larger international platforms are getting blocked. Chinese students may become more interested in virtual full-time schools and platforms that still work in China.

• B2C digital marketing will change as advertisements for training services are banned.