Educational Firms New Oriental and Xueersi Receive CNY 500,000 Ceiling Fine

Consumer Discretionary Author: EqualOcean News, Nan Tang Editor: Jiahao Yang, Yuzhe Zhang Apr 25, 2021 12:32 PM (GMT+8)

According to the survey conducted by the Beijing Municipal Bureau of Market Supervision, GSX, TAL, Koolearn Tech (New Oriental’s online platform), and Gaosiedu illegally used fabricated prices for false marketing and for price violations in preferential activities through the official websites.

Online education

The Beijing Municipal Bureau of market supervision also said that, in the future, it would continue to strengthen the law enforcement of off-campus education and training institutions and focus on the investigation and punishment of illegal activities such as price fraud, gimmick propaganda, lack of permission, absence of relevant qualifications and infringement of consumers' rights.

In recent years, the online education market has continued to grow and change at a feverish pace. According to iResearch, the market scale of the online education industry will show growth by 35.5% to CNY 257.3 billion for 2020, and the overall online rate will be 23-25%. This year, the total financing amount of online education enterprises hit CNY 103.4 billion, of which five firms accounted for 80%.

Simultaneously, chaos also began to appear: some online education enterprises frequently commit false publicity, engaging in 'blind' expansion and various illegal operations.

Just two days ago, the Beijing Municipal Education Commission reported that four institutions, including TAL, GSX, Youdao, and Yuanfudao,  were compromised by these problems. The commission announced that it will work with the online information market supervision department to strengthen the investigation of the industry in the future.

On January 18, the website of the Central Commission for Discipline Inspection and the State Supervision Commission once published an article entitled 'online education under the capital vortex,' pointing out the problems existing in online education. The article mentioned that, while online education and training are becoming significant, this prominence intensifies the competition among enterprises and causes severe internal friction in the industry, resulting in unique problems.

With increasing attention at the national and local levels, the governmental agencies might implement a series of notification and penalties in the online education industry; this, in turn, will require online education players to continuously optimize their business models, pay more attention to the quality of courses and effects of teaching, and compete in a legal and orderly manner.