SOURCE / ECONOMY
China’s private tutoring institutions face delisting risks but may survive after transformation: analyst
Published: Jul 27, 2021 11:38 AM
Education

Education



China's A share market listed private tutoring companies' shares continue their downwards trend at the open of trading on Tuesday. Shares of Xueda (Xiamen) Education Technology Group Co reached its daily drop limit. Shares of Doushen (Beijing) Education & Technology Inc and Offcn Education Technology Co were down by 9.11 percent and 4.16 percent respectively than the last trading day as of time of press.

Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, told Global Times on Tuesday that the A share market's private tutoring institutions faced the risk of delisting.

"China's A share market has its own delisting regulations, company will be delisted if it meets one or several rules of regulations," said Dong. He also mentioned one important delisting rule is that a company will be delisted if it reaches daily decline limit in 20 continuous days. 

According to published regulations, curriculum-based tutoring institutions were barred from raising money through stock market listings or sourcing foreign capital to control or participate. Dong said investors in private tutoring institutions have to accept the losses. 

Dong stated that the latest regulations target the market of curriculum-based compulsory education period and private tutoring institutions can transform their education products to extracurricular or adult training sectors in order to maintain their operations.  

However, Dong suggested that the transformation will require significant investment and time. "For those tutoring institutions focusing on curriculum sectors, most of their finished education products including courses, textbooks and teachers might be wasted," said Dong. 

He noted that tutoring institutions have to develop new products and recruit employees with extracurricular or adult training experience following new regulations, backed by new investment. 

"Some large-scale institution can finish the transformation based on their strong financial support and some small and middle-sized institutions may fail before or during the transformation," said Dong.

Global Times
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