Yu Minhong, who founded the leading Chinese tutoring company New Oriental Education & Technology, has stepped into the world of ecommerce to fight for his survival following the Chinese government’s clampdown on for-profit tutoring.
Also known as China’s “Godfather of English Training,” Yu hosted a livestream on Douyin (China’s TikTok) last Sunday, during which he revealed a plan to save the New York-listed company from financial ruin.
The plan seems entirely out of left field: New Oriental will transition from an education-focused business to one that sells farm produce online.
The company plans to start an online ecommerce platform that will allow Yu and his teachers to hawk agriculture products through livestreams. In addition, Yu announced the closure of 1,500 training centers, adding that his company would donate nearly 80,000 pieces of school equipment to rural schools.
As a part of its repositioning, New Oriental will use its cash reserve to reimburse tuition fees to affected customers and pay all wages owed to workers. (New Oriental will continue offering adult education products.)
Yu Minhong, founder and CEO of New Oriental, is interviewed after a government meeting in Beijing in 2014
The move comes after China established its ambitious “double reduction” policy in July. The sweeping changes, meant to alleviate pressure on students both in and out of the classroom, required private education institutions to suspend after-school classes.
The clampdown quickly made waves across the private tutoring industry. According to state-backed media outlet Sixth Tone, many staffers at New Oriental left the company, while others faced sharp salary cuts.
Reactions were swift following Yu’s announcement — from social media to the stock market. On China’s Twitter-like platform Weibo, at least three trending hashtags reached more than 20 million views each.
One notably lengthy hashtag — ‘Yu Minhong is going to do livestream ecommerce with hundreds of teachers to sell agriculture products’ (#俞敏洪将带百名老师直播带货卖农产品#) — has attracted 23 million views.
South China Morning Post notes that following Sunday’s livestream, the company’s stock price was down 90% compared to its February peak.
Related:
But while the latest announcement may have shaken investors, the pivot to farm produce is likely to curry favor with the powers that be, by contributing to the Chinese government’s rural revitalization campaign, which emphasizes modernizing agriculture.
Also, the move might not be surprising to those familiar with Yu, who grew up in a rural area.
In April 2020, Yu appeared on a charity livestream on China’s TikTok platform Douyin to sell products and raise money for rural children. In March this year, he addressed the challenges and changes of rural education at the China Rural Education Revitalization Symposium.
Whether the pivot from tutoring to an agriculture-focused ecommerce business can turn a profit for New Oriental remains to be seen. However, one thing is sure: Business people always have a backup plan when times get tough.
All images via Depositphotos
