NEW Oriental Education & Technology Group Inc. dismissed 60,000 employees and saw operating income plunge by 80 percent after China enforced new rules on the country’s private education industry that barred for-profit tutoring last year, according to its founder.

Yu Minhong, founder and chairman of the tutoring giant, published the figures on his official WeChat account over the weekend in a disclosure that showed how China’s overhaul of the once-lucrative sphere in July 2021 hit what was once one of China’s largest private tutoring firms.

The WeChat post did not specify a time period for the drop in operating profit.

Prior to the new rules, New Oriental had employed 105,200 staff including 54,200 teachers, according to its website.

“In 2021, New Oriental encountered too many unforeseen events from factors such as policy, the pandemic and international relations,” Yu wrote. “Much of our business remains in a state of uncertainty.”

Once one of China’s leading private education providers, New Oriental saw 90 percent of its market value wiped out last year after China banned tutoring companies from making profits and raising capital.

A combination of severance payments, tuition refunds and terminated leases for teaching sites cost the firm nearly 20 billion yuan (US$3.1 billion), Yu said in the post.

Operating losses may be wider than expected at US$500 million in the fiscal year ending in May, said Catherine Lim, a senior industry analyst for Bloomberg Intelligence. New Oriental and rival TAL Education Group could see losses extend to 2024 as government-imposed price controls on classes and bans on weekend and holiday lessons handicap revenues, she wrote in a research note.

New Oriental has sought to increase investments into businesses targeting college students and overseas Chinese markets, while exploring new areas such as livestreaming and the sale of agricultural products. Finding a new direction will be a focus in 2022, Yu said, adding that he took part in a one-hour live broadcast last week that sold nearly 200,000 books.

The regulatory shifts in the edtech space have forced major players to adapt to survive, including by expanding non-academic curricula and providing some after-school classes for free. (SD-Agencies)