Edtech companies under pressure as China publishes new set of restrictions

China’s Ministry of Education has published a new set of restrictions that limit the fees and operating times of private tutoring services for primary and middle school students. Among the new requirements is the standardization of daily operations, with companies offering non-curricular tutoring having to end physical classes by 8.30pm and online by 9pm. The new set of rules also limits one-time charges to $720 and mandates a special trust account with state-designated banks for pre-paid fees. "The training fees of non-disciplinary training institutions are managed by designated banks, special accounts, and special funds. The fees charged by training institutions should all be entered into the special account of the institution for charging, and other accounts of the institution or accounts other than the institution shall not be used to collect training fees, and the charging account shall be disclosed to the public," stated the Ministry of Education. Publicly traded companies in the space, such as Gaotu Techedu (GOTU), TAL Education (TAL), and New Oriental Education (EDU), are under pressure in premarket trading. Reference Link