Shares of China’s New Oriental soared for the fourth straight day on Wednesday, as analysts said its new direct sales strategy could help it recover from a regulatory crackdown that decimated its education business.
The company was once one of China’s largest private tutoring firms, but its fortunes changed overnight in July last year when Beijing imposed sweeping new rules on private tuition that banned the for-profit tutoring. New Oriental shares plunged and it laid off tens of thousands of employees.
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It has tried to pivot into sectors unaffected by regulation, including dance and drawing classes, and in December ventured into selling agricultural products online via live streaming, with its founder Yu Minhong, well known in China for his entrepreneurial ventures, occasionally moderating the sessions. .
The company’s sales were lackluster, however, until late last week when its hosts, former New Oriental teachers, began using the sessions to teach viewers English as well.
In a video that has gone viral on Chinese social media, the New Oriental host, after promoting a fixed deal for steaks, pulls out a small whiteboard on which he has written words such as “steak” and ” seasoning” in English, explaining how to use them in phrases before enticing viewers to buy.
Sales of New Oriental’s live-streaming platform, which had been stuck at less than 1 million yuan ($148,858) a day, topped the 15 million yuan mark on Friday, according to data from the platform. live tracking Eightun.
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Shares of Koolearn Technology, which operates New Oriental’s live e-commerce business through a studio called Dongfang Zhenxuan on Douyin, jumped 54.2% on Wednesday.
Hong Kong-listed shares in New Oriental, which owns 55.7% of Koolearn, jumped 22.5% on Wednesday and 54% since opening Friday.
However, they are still only worth around a third of their value before the new rules came into force last year. New Oriental is also listed in the United States.
Analysts at Citi, which has a “buy” rating on New Oriental, called Koolearn’s online livestream a bright spot and estimated it could reach more than 7 billion yuan in annual gross value. goods if it maintained the current rate.
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China has banned for-profit tutoring in a bid to ease pressure on children and parents, but it has also led to a wave of school closures and layoffs in the private education sector.
Some customers who purchased products from New Oriental after watching live streams on Friday said they were impressed with the company’s unyielding attitude.
“I burst into tears when I looked at it,” said Kong Ling, a technician in Hangzhou. “I’m looking at a warrior who stands firm despite being beaten down by the iron fist of life and wanted to buy to show my support.”
($1 = 6.7178 Chinese yuan renminbi)
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