China’s New Legislation Knocks the ESL Industry.

On July 23rd, China’s highest governing body, released new rules banning for profit companies from teaching in core curriculum subjects. They stated that no new licenses would be issued and all existing companies must register as non profits or face closure.

The new legislation has been created to reduce pressure on both parents and students in China’s highly competitive education market. There have been growing concerns in China over the past decade about the increasing cost of raising children and the growing disparity between education inequality within the country.

The change in policy also hopes to stimulate the plunging birth rate in China. The move aims to reduce the cost of living for would-be parents and help promote larger families and enable upward social mobility.

The decision was at first met with doubt by industry insiders. There was a presumption that there would be some kind of a way to work around the new legislation to enable parents to continue with their children's extracurricular activities.

These hopes have been thwarted as emails began being sent out on the 7th of August stating the intent to either close or significantly downsize.

Recent emails sent by some of the largest education providers within China, such as VIPKID, Whales, Zebra English, and Gogokid, have all released these statements.

Zebra English:

“We are really sorry to inform you that, being influenced by recent policies, our business will not be developed in the future. Currently, we are not able to recruit any new teachers, and your recruiting process has been terminated.”

Magic Ears:

“They are allowing us to honor our contractual obligations with the parents who have already purchased classes. This is good news because #1) Most parents have purchased many months or even a year of classes in advance and they would prefer for their children to attend class rather than get a refund and #2) Our teachers can still count on steady work from our classes for months to come…We feel confident that the booking rate will be stable as usual and will not fluctuate much for the next 6 months.. So contrary to some rumours, Magic Ears will not close…we feel confident that we will be functioning well for approximately another year.”

Gogokid:

“Dear Teachers，

This letter is to inform you that as of Aug 5th 2021, GOGOKID will suspend the curriculum offered to all Chinese students.

This decision is in light of the recent educational policy revisions in China. All classes starting on Aug 5th will be cancelled from the system. Your remaining July classes will be paid no later than Aug 15th, and those of August will be paid no later than Aug 31st.

Your continued support and partnership mean more than you know. If there is anything more for which you may require our assistance, don’t hesitate to contact us.

Sincerely,

Gogokid”

The ramifications for these changes cannot be underestimated as hundreds of thousands of teachers, sales staff, administrators, and IT workers have all found themselves without a job.

There have also been many online teachers working in the likes of the US, UK, Canada, and Australia who have fallen back to online work during the pandemic. Working from home has become something of the new normal for many and the flexible hours enabled many to hold second jobs.

This will come as a huge blow to tens of thousands of teachers in China and across the world who had come to rely on English teaching as their primary source of income. China has always been the largest market and one of the highest paying ESL countries and the closures will create a huge gap in the English teaching industry.

The ramifications of these changes are still unknown. The immediate change is that many teachers who had jobs last month, suddenly find themselves without a job this month. The knock-on effect to the industry as a whole can only be speculated.

The teachers working in China will have to face the option of either returning home; moving to a new country to start again; or to try and remain in China working within the new regulations.

The teachers working online from their home countries will face a different challenge. They have lost the largest market of online work and competition that comes from countries like South Korea, Saudi Arabia, and Taiwan will not be sufficient in replacing it.

The new legislation will have a profound influence on the ESL industry. The ripple effect, as of yet unknown, will be seen and felt for years to come.