Can China’s $48b edtech market survive the regulatory storm?

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Hi readers,

A few years ago, I took up Japanese lessons with the ambition of watching anime without subtitles.

Well, I dropped out after a year because I was terrible at memorizing the 92 characters and exhausted from the one-hour journey to class after work every week. So, a shout out to the readers who are trying to pick up a new language, skill, or hobby. May your lessons last longer than mine did – especially since you can learn everything online these days.

Edtech platforms have become commonplace as people stay indoors more often in the aftermath of the Covid-19 pandemic. But in China, a new policy threatens to throw the future of e-learning platforms in the country into doubt.

Today we look at,

• How China’s new policy is hurting edtech startups in the country
• A Singapore-based game developer’s fundraise
• Other newsy highlights such as Shopee’s plans to enter Poland and Chinese police ending an investigation into an ex-Alibaba’s manager

PREMIUM SUMMARY

The regulatory hammer drops on China’s edtech market

2020 was the year for China’s edtech market as stay-at-home policies and quarantine measures in cities fueled the industry’s boom. Almost a year later, Beijing rolled out its “Double Reduction” education reform, which has severely shackled these online learning platforms. Most significantly, it prohibits edtech platforms that cater to students in the first nine years of schooling from raising funds through stock listings or foreign companies.

• More harm than good: The reform was introduced because of a few reasons: Edtech companies in the country have been accused of worsening inequality, increasing child obesity rates, and using deceptive and manipulative tactics to sell services to parents, among other social ills.
• The impact: Since the reform was enforced, publicly listed Chinese edtech companies have seen their stocks plunge. Fresh graduates and teachers have been left in the lurch about their future because edtech platforms – which used to create millions of jobs across the country – are scaling down their operations.
• Pivot like a startup: Some Chinese edtech companies have already begun pivoting to survive. TAL Education Group and Gaotu Techedu are shifting their focus toward adult education, while Yuanfudao’s Zebra mobile learning app has started offering classes in fine arts, hand lettering, and beginner-level programming.

Read more: Inside China’s crusade against the education sector’s excesses

STARTUP SPOTLIGHT

Who says games don’t make you money?

Virtuos has got its A-game on. The video game developer based in Singapore recently secured US$150 million from a fund under Baring Private Equity Asia.

I like big data and I cannot lie