High And Dry: China’s Vanishing English Academies

From Ni Dandan at Sixth Tone:

On Nov. 1, the school was forced to close its doors after Turchinova was unable to resolve the company’s legal status.

This prompted anxious parents to report Turchinova to the police, fearing she planned to become the latest school operator to run away with her clients’ prepaid fees.

Ironically, the calls from the police scared Turchinova so much, she decided to drop everything and move back to her hometown of Barnaul in Western Siberia that night.

So what’s happening?

Stories of English tutoring centers vanishing and leaving clients out of pocket for thousands of yuan have spread like wildfire across the Chinese internet in recent months.

….In October, the industry was rocked by the bankruptcy of Web International English, one of the country’s most well-known English training firms with a network of 154 schools spread across 62 cities. The announcement triggered a crisis of confidence among parents and investors, which soon dragged other companies into financial difficulties.

Within weeks, Happy Goal Kids Education, a former subsidiary of Web International, was forced to close all its outlets. The firm cited the collapse of Web International as a major factor: Prospective learners became reluctant to prepay for classes for fear of the company folding, while current students applied for refunds on their own prepayments, the company said in a statement.

Many other firms have faced a similar fate. Though comprehensive data on the number of training school closures is not available, the Chinese venture capital industry news service PEdaily.cn has identified more than 20 instances of extracurricular training companies shutting down for financial reasons in 2019.

The Chinese government, meanwhile, launched a campaign to clean up irregular practices in the English training industry in August 2018 that has forced yet more companies to shut down temporarily or permanently. According to China’s minister of education, Chen Baosheng, officials had investigated more than 401,000 training organizations as of March this year, finding illegal practices in 273,000 of them.

Turchinova tried to follow the rules.

As a new arrival, however, Turchinova spoke little Chinese and was not familiar with the local laws and regulations governing language schools. She had found a local business partner who promised to deal with any administrative issues associated with operating Step Up, but in December 2018, she received a visit from police inspectors. She realized her partner’s assurances had been empty.

“The police told me that I was running an illegal school and that it was a very serious issue,” says Turchinova. “They gave me six months to figure out what I should do about it.”

It turned out that Step Up, like many other schools in the city, was only registered as a regular business, rather than an educational organization. The requirements for obtaining the educational license were much higher and more complex.