On the same day that China’s “three-child policy” was launched, China’s State Administration of Market Supervision and Administration (SAMSA) on Tuesday (June 1) fined 15 out-of-school training institutions, including Monkey Tutor, a tutoring app in which Tencent has an investment, and Alibaba’s Job Help, for false advertising and price fraud. The local market authorities in Guangdong and Shanghai penalized 14 institutions with a total of 24 million yuan for false advertising and price fraud. China’s official encouragement of private births, but the high cost of starting a family, is seen as a move by the General Administration of Municipal Supervision (GAMS) to pave the way for a “three-child policy” to encourage people to have children.
The State Administration of Municipal Supervision announced at a press conference on Tuesday that a total of 15 out-of-school training institutions had been fined a maximum of 36.5 million yuan for false advertising and price fraud. Among them are Tencent’s market-leading Saru Tutoring and Alibaba’s Homework Help, as well as a number of education companies listed in Hong Kong and the United States. According to the report, the companies’ violations were mainly related to “fiction, exaggeration and baiting,” with false advertising mainly involving fictitious teacher qualifications, fictitious education history, exaggerated training results and institutional strength, and fabricated user reviews. The 15 penalized education companies, including the U.S.-listed “Good Future”, Hong Kong-listed “New Oriental” and “Think Happy “and Tencent and Alibaba.
Meanwhile, local market authorities in Guangdong and Shanghai both punished private out-of-school training providers for “misrepresentation” and “price fraud. Guangdong’s market authority said it fined six education companies a total of 14 million yuan, while Shanghai’s market authority announced via WeChat that it punished four English education companies, such as “Da Da English” and “Wall Street English,” a total of The Shanghai Market Administration announced through WeChat that it had penalized four English education companies, such as “Da Da English” and “Wall Street English,” with a total of RMB 10 million.
Many education companies exaggerate the qualifications of their teachers, such as “Blue Sky Education”, which claims to have “a teaching and research team of 121 people, with more than 85% of teachers coming from prestigious universities of 985 and 211”. In fact, less than 15% of the teachers of “Blue Sky Education” come from 985 and 211 universities. As for “New Oriental Online”, among its 103 teachers, the actual teaching experience of 76 teachers was exaggerated in the publicity, and the exaggerated years of experience ranged from 1 year and 4 months to 4 years.
In terms of price fraud, the original prices of tutoring packages of many education companies were fictitious. For example, “Bond Education” advertised that “2 trial lessons plus the final high score secret, the original price is $430, now the price is only $12”, which exaggerated the discount of the course. In addition, “Nascent Academy” stated in its promotion that the original price of a one-on-one course with a total of 40 hours of class time for all subjects was RMB 8,000, but the actual cost of the class was exaggerated.
China’s State Council launched an investigation into Ape Tutor and Homework Help back in May, “to strictly rectify the chaos of out-of-school training institutions.” With China’s fertility rate falling in recent years, many voices in the private sector point to the high cost of starting a family in China, and the prevalence of tutoring in several first-tier cities, it is believed that the rectification is aimed at easing the concerns of students and parents. In addition to the introduction of the “three children policy” on Monday (31), it is believed that the General Administration of Municipal Supervision (GAM) is rectifying the off-campus training machines in preparation for the implementation of the “three children policy”.
Tencent and Alibaba, the companies behind the two educational institutions “Monkey Tutor” and “Homework Help”, along with a number of Chinese giants including Meituan, Jingdong and Jindo, were all interviewed by Chinese officials earlier.