BEIJING, October 21 (TMTPOST)— China’s leading educational service provider continued to flounder amid the country’s harsh crackdown. New Oriental founded Beijing Sikuyunshu Software Technology Co., Ltd. on Wednesday, with the registered capital of RMB10 million (US$1.6 billion). Besides the software development and services, the new subsidiary, as its registered business scope showed, can also provide services in sectors such as internet information, television and radio program production, online sales of publications and publications retailing outside sales in brick and mortal stores, the internet-based cultural industry, all of which pending for authorities’ further approvals.
Image Source: Visual China
If obtaining the relevant business licenses, the subsidiary is allowed to carry out production, duplication, export, distribution, broadcasting of online music and other music-centric entertainment, online games, online shows or programs, online artworks, online comics and other products in cultural industry backed by the internet.
To establish the new unit covering such diverse industries is no doubt New Oriental’s latest effort for survival after Beijing introduced so-called "double reduction" policy to reduce burdens of both homework and after-school tutoring on students. In July, the government new rules to ban on tutoring services during weekends and vacations and after school tutoring classes that teach school curriculum, forbid education firms teaching school subjects to go public and order all the existing firms in the sector to go non-profit.
Last month, New Oriental announced to stop offline enrollment for tutoring services on subjects in China’s compulsory education system in primary and secondary schools, and cities across the country will gradually shut down offline learning centers for these offerings accordingly. The move suggests an exit of its most important business as financial results showed after-school tutoring for students in the K12 group contributes nearly 86% of the company’s revenue in the fiscal year of 2021. “You know, the Chinese livestreamer Viya can record sales of more than ten billion dollars in a year alone, and if dozens of teachers and me divert to salesperson, could we notch over ten billion dollars annually through live-streaming?” the founder and chairman Yu Minhong even raised the possibility in live-streaming e-commerce industry with an air of joking at an executives’ meeting that month.
Coincidently, on Wednesday, the same day which New Oriental’s subsidiary was born, Yuandudao, a leading K12 education unicorn in China, was reported to turn to sell down coats as business adjustment. Reports cited insiders of the startup confirmed that it is currently building its designer team.