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Chinese Govt guides the Education Industry

Chinese Govt guides the Education Industry

The Chinese government announced its new regulation on its’ domestic $100B education industry.

The provisional regulation rules will be administered by a new government branch that was stood up only this past June. Along with rules to control the what, when and cost of tutoring, the government signalled it is even considering turning the industry to non-profit. This is dramatic and its effect on the market leaders’ share prices are painfully real.

🔻 Gaotu Techedu -53%
🔻 TAL Education -47%
🔻 New Oriental Education -41%

For what reason has the central government expressed as its motivation? It is the reduction of excessive tutoring burden and fees that young pupils and their families endure for the hope of a better future. Every individual and organisation naturally pursue “better”. But in China, the college entrance exam, Gaokao is rated to a bell curve. Teenagers face pressure and anxiety, fuelled by industry, chasing top marks that get scaled to a curve

And so the government has stepped in to cap fees firms can charge, imposed time limits on after school tuition programs and restricted online tutoring for children under 6 years old.

As a business executive, I would find this bone chilling if faced with this in my industry, but as an individual I read the message as:

Prioritise people over profits

For governments, industries and organisational leaders - take care of the people by adding to their betterment.

Do you think the government should be involved to this degree? At this speed? Should markets just be allowed to self organise?