China's Tutoring Overhaul Stuns Online Education: Zhangmen Education's Downsizing

Consumer Discretionary Author: 马渭淞 Editor: 张宇喆 Aug 01, 2021 07:00 AM (GMT+8)

A WeChat screenshot shows that the company started carrying out large-scale layoffs on July 30.

Leader education

A person familiar with the matter said that this round of layoffs will mean the company will only retain a small number of people in the headquarters to engage in new projects: "if it doesn't work, they will all be dissolved." The person also pointed that, at present, a group of employees are lining up for "collective resignation", whereby labor contracts will be terminated on the same day. Not only that, according to another employee of this leading platform, who posted on Maimai (Chinese: 脉脉), a workplace social platform, that "Zhangmen Education cuts 70% of its staff".

In this regard, on the evening of July 30, Zhang Yi, CEO of Zhangmen Education, outlined that according to the requirements of the latest national policies, the company is adjusting the products and teams accordingly, with the aim of making the company's development more in line with the national expectations. Therefore, this optimization mainly targets the project team for early-stage children in terms of violations of the policy. Other product teams will also adjust teaching times and other compliance issues according to the requirements, but they have been carried out normally. 

"At present, all teaching teachers, class teachers, curriculum consultants and other jobs are running as usual. The overall operation is stable," Zhang Yi said. In addition, he also stressed that the funds are abundant and healthy. 

It is worth noting that, although the company denied that the company is experiencing large-scale layoffs, it also reflects the current dilemma of the education industry. On July 25, the day after the release of the 'Opinion on Further Reducing the Burden of Compulsory Education Students' Homework and Off-campus Training,' Chen Xiangdong, founder and CEO of Gaotu Techedu Inc (NYSE:GOTU), set the layoff target when convening the management meeting: 13 local centers in China would be closed before 1st August, leaving only Zhengzhou, Wuhan and Chengdu. This means that the equivalent of 1/3 of employees will leave.

Moreover, on July 27, Zhang Bangxin, founder and CEO of TAL Education Group (NYSE:TAL), also confirmed the fate of the company to his employees in the live broadcast of the bimonthly meeting of the middle and senior management of the company. He said that "layoffs are sure to happen," and businesses without demand will be closed. Employees will be transferred first if they can transfer internally, but if not, the company will also compensate in accordance with national laws.