China’s largest private education firms are moving swiftly to overhaul their businesses to adjust to a harsh new reality after Beijing launched a sweeping crackdown on the $100 billion sector.
Two of the sector’s biggest names have in past days reached out to reassure investors and managers their businesses remain viable and won’t abruptly collapse, according to people familiar with the matter. Yuanfudao, the $15.5 billion startup backed by Tencent Holdings Ltd. and DST Global, plans to yank all advertising after already curtailing part of its marketing earlier this year, one of its largest expenses, the people said, asking not to be identified talking about a sensitive matter. But the startup also said it has ample cash on hand to sustain its business, one of the people said.
TAL Education Group President Bai Yunfeng told his lieutenants during an internal meeting it’s in no danger of failing but will have to adjust course. It’s considering providing certain after-class courses for free while creating more self-study online resources, a person familiar with the proceedings said. Fresh layoffs are possible, the person added. And Rise Education Cayman Ltd., controlled by Bain Capital, is expanding its non-academic curriculum — such as science or drama courses — to offset declines in its specialty of English-language teaching, a person with knowledge said.