New Oriental, losing $876 million, is seeking new ways to survive
Published: Feb 23, 2022 11:08 AM
A New Oriental school in Beijing Photo: VCG

A New Oriental school in Beijing Photo: VCG

Shares of Chinese education provider New Oriental rallied in Hong Kong on Wednesday, closing up 5.39 percent to HK$11.74 ($1.5), after founder Yu Minhong sought to calm investors over the company's huge loss in the latest quarter, saying its business transformation is progressing.

During the six months that ended on November 30, 2021, the firm's operating revenue stood at $1.967 billion, according to results released by the company on Tuesday. It recorded a net loss of $876 million, compared with a profit of $229 million in the previous period.

New Oriental said that it has stopped providing curriculum-based tutoring courses to students from kindergarten level to the ninth grade, which significantly hit revenue.

Costs for the period increased due to expenses arising from the termination of many tutoring contracts and the implementation of layoff plans.

Yu said that "New Oriental can continue to develop" and various new businesses and business transformations are in progress, with some initial results.

Yu said on his official WeChat account on Wednesday that New Oriental has reached a cooperation agreement with the China Overseas Study Talent Development Foundation to focus on international training along the routes of the Belt and Road Initiative.

Yu said earlier that New Oriental cut 60,000 jobs and saw its operating income plunge by 80 percent in 2021, after Chinese regulators tightened scrutiny of curriculum-based private tutoring.

After abandoning school curriculum tutoring services, New Oriental is aiming to provide more targeted projects for students' personal growth, and increase investment in the college student market and the overseas market, Yu said.

New Oriental Education & Technology Group will carry out live-streaming services and operate an e-commerce platform centering on the sales of agricultural products.

The transformation of New Oriental into a live-streaming platform has just begun. Since the debut on December 28, 2021, the company has introduced 335 products. But cumulative sales were worth only 4.54 million yuan ($0.71 million) after two months.

Although in terms of performance, the sales of New Oriental's products in the past two months were lower than the daily sales of some leading live-streamers, the spirit of exploration is worthy of recognition, especially when a large number of education companies have chosen to give up and go bankrupt, Liu Dingding, a Beijing-based independent analyst, told the Global Times on Wednesday.

"Live-streaming can be an attempt, but it will not become the focus of New Oriental's transformation. It will definitely make some explorations in the education market, and there is large potential in quality education and non-disciplinary education," Liu said.

Liu noted that before the double reduction policy, New Oriental had invested in dozens of non-disciplinary education brands, which are expected to gain better development opportunities due to the double reduction policy.

Global Times