New Oriental to lay off 40,000 staff after launching its overseas sector Blingo-...

New Oriental to lay off 40,000 staff after launching its overseas sector Blingo- PingWest

New Oriental to lay off 40,000 staff after launching its overseas sector Blingo

September 26, 2021 6:24 pm

New Oriental, the largest provider of private educational services in China, will no longer enroll new students after the fall semester and will gradually shut down operations in many cities, according to LatePost, citing the company's founder and CEO Minhong Michael Yu at a senior meeting.

A senior executive at the meeting said New Oriental would lay off over 40,000 employees by yearend. This is a drastic downsize considering New Oriental had 100,000 employees at the beginning of this year.

Details

K-12 education is one of New Oriental's most prominent and profitable sectors. According to a research report by UBS, after-school tutoring for elementary and high school students contributes to 80% of New Oriental's 2021 yearly revenue.

New Oriental published its financial report for the first two quarters of 2021 last week. Its operating profit was $11.7 billion, a 70.6% decline compared to last year, and net profit at $230 million, a 35.03% decline compared to last year.

Context

This 28 years-old company, like others in the industry, once flourished with its K-12 education programs. As China's regulators continue to crackdown on private tutoring, New Oriental might have to return to its roots — language education.

New Oriental started as an education company specializing in teaching English to students who plan to study abroad, regardless of age. With its announcement of launching "Blingo" last month, New Oriental aims to expand in international markets by teaching Chinese to Chinese immigrants overseas.

The potential is huge. According to China's Ministry of Foreign Affairs' data, over 180 countries and regions are offering Chinese language education, with 70 of them incorporating Chinese into their national education system. Roughly 20 million people are learning Chinese, and 200 million speaking Chinese in total.

However, New Oriental is not without competition overseas. The exodus of China's k12 education is drifting to Southeast Asia, India, Korea, Japan, and North America. For example, Yuanfudao, the largest online course platform in China with over 1 million userbase, has backed ODA Class, a digital education platform in India, founded by Yuanfudao's CEO. Meanwhile, according to the company's website, Lingo Bus, a mandarin learning platform for kids aged 5 to 12 under VIPKID, has serviced over 85,000 students from 108 countries.

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