context: The impact of ‘double reductions’ is more far-reaching than many anticipated, yet the centre is determined to push through. Not only are firms struggling to survive, but employees and parents also bear the financial brunt. Lacking the resources to transition, SMEs could vanish from the sector. Inequitable access to legitimate, quality tutoring could also be exacerbated.

Ministry of Education issued a hurry-up call on 12 Oct 2021, urging local authorities to set a firm deadline for re-registering private tutoring firms as nonprofits. Contract templates were also released to further scrutinise operations and resolve future conflicts regarding fee reimbursement.

However, 120,000 firms have dissolved until 13 October and many have already exited without paying workers or reimbursing parents, reports Caijing. One Education, an NYSE publicly traded company, announced ceasing all operations while owing 100-200 million in salaries and 2.7 bn in pre-paid course fees. New restrictions on operations make it hard for firms to stay open, reports Caixin. More importantly, the unsustainable financial reliance on prepayments now implodes as all recruitment and fee charges are suspended before they complete the transition to nonprofits.

Small and medium-sized organisations are hit the hardest. Not only do they lack the resources to transition to non-academic ed or move online, they are also confronted with limited policy support provided by local authorities eager to meet the deadline. For example, some regions are telling them that closing down is the only option.

Yet even when firms are able to transition to non-academic types, the requirements on upgrading infrastructure are too pricey. There is also a lack of setup guidelines as non-academic tutoring now falls under the authority of sports, culture and tech, which have been slow to adapt. Until better mechanisms for local implementation are in place, the transition will stagnate and many firms will be forced to close down.