China’s “Godfather of Education” Faces Existential Trials

When Toshihiro was an old man in a wheelchair, he once went to the classroom and told his students, “I am the founder of this university.”

But today, the 58-year-old Chinese-educated “The Godfather” is fighting for the survival of his empire.

New Oriental Education – 1993 in Beijing of the dilapidated New York-listed group that Yu from a single classroom to the largest private education provider in the most populous country in the world has been brought up in the building – is by drastic reform to 習近 Xiaoping led Lowered, President of China.

Beijing is limiting “Non-profit” based tutoring for elementary and junior high school studentsImpressive at the heart of Yu’s business model.

The crackdown is on students, teachers, and Parents all over China, When Investors around the world.. Stock prices plummeted as the tutoring industry’s annual revenues are projected to decline from $ 100 billion to less than $ 25 billion.

Investors are working with Yu’s friends, colleagues and ex-students on two important questions. How did he foul the Chinese government? And can he perform a comeback?

“Yu told me a few days ago that his wealth had shrunk dramatically and he was becoming poor, but he said it wasn’t a big deal, he was alive before. I have experienced a death situation, “said a close companion.

The rise of Yu is legendary in China. From rural poverty to the 2006 New Oriental blockbuster listing in New York. His fame grew even more ten years ago after the company survived an investigation by the US market regulator Securities and Exchange Commission. A high-profile attack by short-selling Muddy Waters following an allegation of accounting fraud.

His story anthropomorphizes the generation’s dream that education can provide a way out of poverty. His company sold the means.

By May of this year, the group had approximately 70,000 employees and 12,000 contract teachers in more than 100 cities. Since its inception, the school has enrolled a total of approximately 65 million students.

In conversations with students, frequent interviews and speeches, Yu often talked about the difficulties he had overcome. He suffered from his parents’ illiteracy, failed many times at school and college, and did not earn the grades or money to study at a prestigious US college.

“He said he was once kicked out by the landlord and had to sleep outdoors under a plastic cloth,” said former student Michael Lee. “His dream of the night was to build an apartment in Beijing.”

His early students praised his determination. One former student said Yu appeared late to teach only once. After his daughter’s birth, he was 30 minutes behind schedule.

But what the student paid was the content. Initially, his course more or less reflected the language proficiency assessment required by foreign universities. This highly test-focused approach has been extended to cover the entire Chinese educational curriculum for all ages.

“What really made his class stand out was the use of real test questions, which the staff remembered when Yu was taking the exam. Elsewhere it Could not be found, “said another ex-student.

Yu became a symbol of education and created many imitators. Not only was his timing good in China, but he also took advantage of the enthusiasm of international investors for fast-growing Chinese companies.

Prior to the initial public offering in New York in 2006, he was told by bankers Credit Suisse and Goldman Sachs, who undertook the sale, that the share price would be about $ 8. After the investor roadshow, they raised it to $ 15.

Despite the storm, Yu exudes humility, claiming that he and his wife are living a “simple life.” [who] I have a yacht, “he said in 2009.

He was also interested in philanthropy, primarily in education and child welfare. “Unlike many Chinese philanthropists who want to take full control of their donations or write checks and leave them altogether, Yu didn’t tie them up as long as the actual results were obtained,” said a Beijing Associate. Said.

From time to time, Yu flirts dangerously with government policy and criticism of Chinese society. In 2009 he said the entire generation was growing in an “unhappy” environment. “Chinese students study hard and get very high scores, but they are not happy.” In 2018, after sexist comments about Chinese women came to light, his public The image is dented.

He did not hesitate to show his favor to the Chinese Communist Party through donations to the Communist Youth League and participation in the Chinese People’s Political Consultative Conference, an advisory body to Beijing, which is held in parallel with the Diet.

But people near him say he lacks strong ties to the top levels of government. “Yu’s political ties could only help him in a small area,” said the associate.

Indeed, his deviation from the course charted by Xi-or President’s warning According to critics, the tutoring sector’s “chronic illness” in March was likely to have contributed to his downfall.

“For many years he focused on providing commercial training and did not link his business to national policy. How can we do this without becoming part of the national interests? Can you run a large-scale business? “said a consultant who worked closely with Yu.

The consultant said that under Yu’s leadership, New Oriental has basically competed with public schools for students and teachers. “It’s part of a business that wasn’t allowed in China’s political system.”

But experts at the intersection of the University of Michigan’s Yuen Yuen An and China’s business and political elite said the broader issue was unequal access to the education Xi was trying to fight. “The real problem here is that wealthy families have privileged access to education through tutoring,” she said.

Anyway, Yu’s personal wealth has been hit hard by the market backlash. The value of his 12% stake in New Oriental has dropped from about $ 3 billion to $ 500 million. His next step is unclear. This week, the company abandoned its planned earnings announcement due to regulatory uncertainty. The company and Yu declined the interview.

“There is no way for him to recover,” said one former student. “It’s a disaster.”

Others believe that the godfather is not so easy to be beaten.

“He recreates the whole concept of the tutoring industry — with more social responsibility and less market-led behavior,” a close friend told the Financial Times.

Additional report by Sherry Fay Ju in Beijing

China’s “Godfather of Education” Faces Existential Trials

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