Fifteen tutoring companies have been fined millions of dollars for alleged fraud, according to Chinese official media on Tuesday (Jun 1), as the government’s crackdown on the tech sector spills over into the private education sector.
Fines amounting to 36.5 million yuan (US$ 5.7 million) were imposed on the companies, which included significant names like Zuoyebang, which has Alibaba as an investor, and Tencent-backed Yuanfudao.
Beijing has recently shifted its attention to teaching start-ups, many of which are online, after issuing fines and warnings to Internet companies covering e-commerce, gaming, video streaming, and food deliveries.
President Xi Jinping warned of flaws in the education industry in March, including excessive pressure on young pupils, prompting the punishments.
According to Bloomberg News on Monday, a number of planned initial public offerings for companies that run learning apps have come to a standstill, with Zuoyebang and Yuanfudao among those delaying preparations. According to the article, the education ministry reportedly intends to establish a section to monitor private education platforms.
China’s market watchdog said on Tuesday that an examination into the 15 institutions – which include online applications – concluded they had participated in “false advertising,” with several also having engaged in “price fraud.”
According to state broadcaster CCTV, Bond Education is accused of inflating a bundle of trial classes to 420 yuan and marketing it at an apparent discount of 12 yuan.
According to the State Administration for Market Regulation, further wrongdoings included “fabricating teacher qualifications, misrepresenting the effectiveness of training… and fabricating user reviews.” According to officials, the services were designed to persuade parents to give up money.
Intense competition from a young age has intensified the pressure on China’s parents to pay the extra bucks to get their children ahead in the congested education system.