China recently initiated a ban on ‘for profit’ online tutoring businesses, operating in China. Whilst many agree this is a good idea, this $100 billion dollar, education tech, overhaul, has impacted hundreds of thousands of foreign, online ESL teachers around the world and has changed the infrastructure of the online ESL industry. Digiteachonline.com discusses how this affects foreign ESL teachers and their students and what steps should you be taking now to protect yourself in the future against such massive industry shifts.
If you have been working as an online ESL teacher for at least the last three years you will be aware of what could now be seen as the first ripple of this gigantic educational reform that China has now enforced in the online ESL tutoring world.
In 2020, China enforced regulations for ESL tutoring platforms contracting foreign teachers who taught English online to Chinese students. Formally any native or near-native speaker could teach English for big ESL platforms like Whales English, VIP kid, Magic Ears, Palfish, ITutor Group, Say ABC, Bling ABC, and Education First as well as many other platforms, with very little to no credible qualifications. This was the first massive change and as we can see now, was an indicator of bigger changes to come, because in July 2021 China announced a further change – a complete ban on online tutoring. See the table below for the Online ESL tutoring companies currently affected by the ban.
|Name of ESL Company
|Affected by ban
|EF English First
|Enlai Total Educational Solutions
This further change was that all ‘for profit’ tutoring platforms were banned for providing online tutoring for a period of twelve months. This was the third biggest blow for many ESL teachers that impacted their income from teaching. The second biggest blow was indeed the pandemic. One may have thought that the demands of online education could have increased the need for online ESL teachers! It did, however, China saw this as an opportunity to use the economic strategy of supply and demand to reduce the rate of pay being formally agreed with foreign, online ESL teachers because of the pandemic.
Simply put, these monumental tutoring platforms like VIP kid who were boasting profits in the region of $760 million in 2018 were as result of the surge in demand for online education as a result of the pandemic, reducing teachers’ rate of pay, oddly enough.
ITutor group was another huge ESL tutoring platform that enforced new contracts on foreign ESL teachers, stating that should teachers wish to continue working with them they had to accept new contracts with new pay conditions. These new pay conditions were to accept a lower rate of pay for lessons due to the massively enlarged workforce, brought about by the pandemic. Therefore making online ESL teachers even more indispensable than they had already become by the vast majority of these mega, ESL platforms.
However whilst many foreign ESL teachers, who now had to possess at least one degree as well as a host of other teaching qualifications to teach with these Chinese platforms being paid an average of $5 – $10 per lesson, thought that they were being hugely taken advantage of by these Chinese tutoring monopolies … so, it would seem were the Chinese parents.
These huge ESL platforms were monopolising the ESL industry and as a result of this were also charging the parents, in some cases for an entire year of English lessons in advance. Charging the parents at least five times what they pay foreign teachers with their string of degrees and in most cases at least ten times.
As an example, VIP kid announced in 2019 that the entry package to their online English lessons was $3670 for 96 lessons and these lessons are within the time frame that VIP kid decide. So the parent will spend on average about $300 per month per child, just on English classes whilst some families are spending up to $65K a year on private tuition. To put this into perspective, on average, the average Chinese parent will earn a lot less than $2500 a month as a salary.
But have these inflated prices been the downfall of these ESL platforms that sought to monopolise the ESL industry by overcharging parents and underpaying teachers?
According to the president of China, it would seem so because VIP kid announced that they would not be selling any more foreign English classes in July 2021, shortly after the President of China announced the ban but was this the only reason that the Chinese president announced this ban?
Why did the president bring in the ban?
According to the Chinese President, Xi Jinping the ban on online tutoring affects ‘for profit’ organisations as part of the new ‘double reduction’ policy. This means that private companies that teach core subjects, like English, Maths and Science in China to Chinese students have to become ‘not for profit’ organisations and the reason for this policy is two fold.
Firstly, the policy responds to the extreme reduction of China’s economy. China is a very competitive culture but within education, that competition is extreme. Parents will and often do make extreme sacrifices to ensure their child the private education required to give their child as much opportunity as possible for their future education and career paths. However due to the cost of these classes, parents have stopped having large families and in some cases have stopped having families altogether. This has seen the lowest birth rate in China in over a decade with Chinese people choosing to have smaller families or choose to have no children at all. Equally whilst families are saving to pay for private, online lessons, they are not spending in the Chinese economy generally and that is a big issue for the Xi Jinping.
The sharp decline in birth rates in China
|Natural Growth Rate
The second main reason for China banning private, online tutoring platforms is for the well-being of the child.
Up until 2020, it was not uncommon for children as young as 6 years old to continue receiving private English lessons online through these Chinese platforms after completing hours of homework from their own Chinese school on weekdays and even more at the weekend and in holidays. The double reduction policy seeks to slash the endless mountain of homework also for children as well as banning private tutoring classes at the weekends and on the holidays which used to be the most popular time that these esl platforms would offer lessons.
#China's crackdowns have led to a market meltdown.— David Chau (@ChauDave) August 18, 2021
Eg. shares in private tutoring firm New Oriental plunged 88% (since Jan 1), after the Govt imposed a policy - banning these co's from earning profits!#Alibaba & co tanked as they're being probed for anti-competitive conduct. pic.twitter.com/GhML7276or
As a result, many of these giant ESL companies have become literally worthless overnight with TAL education and New Oriental losing up to 60% of their share market value at the start of the ban in July 2021 and now as much as 90% just one month later, in August. Larry Chen who was one of China’s riches men, making his millions in this online education industry has reported losing $22 billion since the beginning of 2021!
Whales English not refunding parents
Whales English issued an email to parents that politely but firmly told them that they would not be refunded stating that ‘irrational refunds’ caused an ‘increase in communication costs.
Will they still be paying the teachers because teachers have already reported more than once that Whales English have not paid teachers correctly! However it is interesting to note in this email that Whales English sent to Chinese parents that they would not be using ‘foreign teachers’ to teach their English classes and hinted at the arrival of another foreign language program which makes one think, are these ESL platforms considering using Chinese people to teach English?
ESL teachers - How to find the path forward ...
So now with a very rocky last two years, online ESL teachers teaching English online to Chinese children via these monopolizing companies have finally had the rug pulled out from under them. Many ESL teachers are trying to register with ESL companies outside of China, however, the majority of these are as saturated as the Chinese ESL companies given the requirement for many people working online as a result of the pandemic.
A lot of ESL teachers have diversified, by starting their own online Freelance teaching programs whilst working in brick and mortar companies once again in their own countries. The pandemic has defintely brought about a lot of change in many areas and the employment sector has seen a well awaited shift in online working. It it not uncommon now to be employed by a large company on a ‘remote’ contract or by having work from home days.
In fact, many brick and mortar companies are issuing employees with ‘work from home’ kits just in case we are forced into a lockdown again in these uncertain times.
Diversify, not detract
ESL teachers and English teachers and tutors that have been working online for these companies have learned valuable skills whilst working for them, even if they were poorly paid.
The plus in this situation is in the ability to pivot, using those same skills to increase your income with the multiple streams of income approach. Many ESL teachers started doing this back in 2020. Most people know that the average millionaire has seven different steams of income but those that are not yet millionaires but are shrewd Teacherpreneurs also know that by having multiple streams of Income and English teachers are perfectly well positioned to enable this for themselves.
The first stream is by creating an evergreen digital product. A small digital course or online course. You can find out more about why this low cost, high yield approach is the best here. Creating your own additional income streams has been highlighted by many successful entrepreneurs over the last decade but the pandemic has seen many very successful Teachers become Teacherpreneurs, making a more than decent income from using their teaching knowledge in different areas of industry, outside of teaching. For further details on this look at our Teacherpreneur program.