Fifteen tutoring firms have been hammered with millions of dollars of fines over alleged fraud, Chinese state media said yesterday, as the government’s chastening of the tech sector seeps into private education businesses.
The groups, including major brands such as Zuoyebang (作業幫), which counts Alibaba Group Holding Ltd (阿里巴巴) as an investor, and Yuanfudao (猿輔導), which is backed by Tencent Holdings Ltd (騰訊), were hit with fines amounting to 36.5 million yuan (US$5.7 million).
After issuing fines and warnings to tech companies spanning e-commerce, gaming, video streaming and food deliveries, Beijing has turned its attention toward tutoring start-ups, many of them online.
The penalties follow a warning by Chinese President Xi Jinping (習近平) in March of problems in the education sector, including excessive pressure on young students.
A number of potential initial public offerings (IPOs) for companies running learning apps have since ground to a halt, Bloomberg News reported on Monday, naming Zuoyebang and Yuanfudao among those that were holding off preparations.
The Chinese Ministry of Education also plans to create a division overseeing private education platforms, the report added.
Yesterday, the Chinese State Administration for Market Regulation said that an investigation into the 15 institutions — which include online apps — found that they had allegedly engaged in “false advertising,” with many also found to have conducted “price fraud.”
For example, Bond Education (邦德教育) is accused of inflating a package of trial classes to 420 yuan and offering it at an apparent discount of 12 yuan, China Central Television reported.
Among other wrongdoings were “fabricating teacher qualifications, exaggerating the effects of training ... and fabricating user reviews,” the state regulator said.
The services aimed to induce parents to fork over money, it said.
This follows similar practices by Zuoyebang and Yuanfudao that authorities flagged in May, including a false claim by Zuoyebang of collaboration with the UN.
Intense competition starting from a young age has amped up the pressure on China’s parents to pay extra to get their children ahead in the congested education system.
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