The International EdTech Race : Is Asia Still Leading?

Projections for EdTech growth — Japan, 2020–2026 (Statista)

So…..what happened?

On the 24th of July 2021, the Central Committee of the Chinese Communist Party (CCP) released detailed guidelines for companies working in the education sector. These guidelines required all tutoring agencies to have regulatory approval as well as existing private tutoring companies to register as NPOs (Non Profit Organisations) and they banned extracurricular tutoring from going public. In addition, private tutoring for children aged six became prohibited and extracurricular programmes for students were limited. What had been China’s more-than-prosperous education industry subindex dropped by 14 percent in about a week, due to some company stock valuations falling from 30 to 40 percent.

What Does This Mean for Chinese Ed-Tech Giants?

These new regulations resulted in the shares of the three largest US-listed Chinese EdTech companies : TAL Education, New Oriental Education and Gaotu Techedum, completely crashing, all three loosing over 75% of their market value. ‘Sovereign Group’ report that analysts at Goldman Sachs predict a distressing overall reduction in the size of China’s tutoring market of 76%. However, if China is no longer the world’s EdTech leader, then…who is? Arguably, many would now state that the US is winning the EdTech race, with an EdTech market valued in August 2021 at over $8.38 billion dollars. However, even with these new restrictions, many Chinese Education Technology companies are still growing strong, with companies such as Yuanfundao reaching nearly 4 million active students.

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