(Bloomberg) -- China’s largest private education firms said they will stop providing classes taught by foreign-based tutors to students in the country, in response to a recent government directive aimed at rectifying the $100 billion sector.
Tencent Holdings Ltd.-backed VIPKid said it will cease selling new such classes effective immediately, and existing customers can renew lessons only until Aug. 9, according to a notice on its Wechat account Saturday. Students will be able to finish taking classes from foreign teachers that they have already paid for.
China’s government enacted its harshest ever curbs on the after-school tutoring industry last month, banning companies from hiring foreigners outside the country as teachers or introduce school curricula to children under six. The regulations marked the culmination of a months-long campaign to rein in ad spending wars and cut-throat competition that’s come to define a sector critical to China’s future workforce.
While Beijing’s new rules banned foreign teachers, it originally wasn’t clear whether tutoring companies would be able to keep using those teachers if they were contractors, rather than employees. A company like VIPKid could argue it was simply a platform for matching students with teachers. The latest developments suggest such arguments haven’t worked with Beijing’s regulators.
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Classes sold to overseas Chinese students won’t be impacted, VIPKid said.
“While the new regulations will impact our business in China, we remain confident in VIPKid’s future,” said Adam J. Steinberg, a company spokesman. “Over the past year, we have been piloting several education programs outside of China. We will now accelerate our efforts on these and other programs as we continue to execute on our mission to inspire and empower every child for the future.”
On Friday, VIPKid sales called up users to encourage them to pay for new classes, hinting they won’t be able to do so after this weekend due to the new regulations.
Another similar one-on-one English tutoring app, ByteDance Ltd.’s GoGoKid, said it suspended all classes offered to Chinese students from Aug. 5.
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51Talk, which previously thought it wasn’t affected by the new regulations, is also planning to target overseas and adult markets, said a person familiar with the matter. The company has yet to issue an official notice.
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