New regulatory turn of the screw: after having reframed its technological giants, Beijing is toughening its tone against the lucrative education sector, whose shares unscrew on Monday.
The support courses and exam preparation industry is an extremely juicy niche in China, where education is particularly competitive and elitist.
The sector weighed in 2018 some 260 billion dollars (220 billion euros), according to the research firm LEK Consulting.
Obsessed with the success of their children, Chinese parents have a habit of spending lavishly on school support activities, which has allowed education giants to emerge – some firms are even listed in the United States – United.
But the excessive workload of Chinese schoolchildren and the prohibitive costs associated with education are increasingly criticized.
According to new guidelines released by the government on Saturday, tutoring companies will now have to register as non-profit associations.
And they will no longer be able to give lessons on weekends, on public holidays and during school vacations.
This turn of the screw made the shares of Chinese champions of private education plunge into the stock market on Monday.
New Oriental Education, one of the market leaders, lost in the session up to 40% on the Hong Kong Stock Exchange.
Koolearn Technology, specializing in online courses, lost 35%; while China Maple Leaf Educational, which prepares students for admission to foreign universities, fell 16%.
These values plunged the Hong Kong Stock Exchange, which lost more than 3% Monday in the early afternoon.
The new measures, which aim to alleviate the overload of Chinese schoolchildren and the financial pressure on their parents, are decreed as Beijing seeks to boost the birth rate against the backdrop of an economic slowdown.
The financial burden is often the most detrimental for young Chinese couples to have a child.
– “Rectifier” –
This regulatory tightening in the education sector is reminiscent of the current one in the field of tech, where relatively lax data legislation, and the absence of foreign competitors, have allowed local giants to emerge.
In recent months, the government has shown more firmness and launched proceedings against several heavyweights in the sector, asked to “rectify” practices until then tolerated.
Alibaba, the Chinese e-commerce giant founded by the whimsical billionaire Jack Ma, was ordered in April to pay a fine of 2.3 billion euros for obstructing competition.
Didi, which dominates the market for the reservation of cars with driver (VTC) in China, is the target of an investigation in connection with its collection of private data.
Sign of the seriousness of the procedure: regulators and investigators from several ministries arrived at Didi headquarters earlier this month to review security issues around personal data.
These setbacks come after the raising of 4.4 billion dollars (3.7 billion euros) by Didi when it joined the New York Stock Exchange at the end of June – which Beijing was not in favor of.
The internet juggernaut Tencent is the latest company to find itself in Beijing’s sights.
The group, which is ultra-dominant in the music streaming market in China, was pinned on Saturday by the regulator for anti-competitive practices and asked to give up its exclusive music rights.
Early Monday afternoon, Tencent shares lost more than 7.6% on the Hong Kong Stock Exchange.
sbr / bar / els
TENCENT HOLDINGS
ALIBABA GROUP HOLDING
Didi
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