Tutorial giants score on fees fillip

China said local governments should set fees for after-school tutoring institutions that offer compulsory education subjects, another step in the country's efforts to overhaul the private education sector.

New Oriental Education & Technology Group (9901) shares rose 3.54 percent to HK$18.14 while China East Education (0667) jumped 5.83 percent to a one-month high of HK$9.26 yesterday following the news.

Local officials should establish benchmark fees and floating ranges, and include them in pricing catalogs, according to the National Development and Reform Commission. Price increases from the standard level will be capped at 10 percent. Local officials need to release standard prices for private tutors and related policies by year-end.

After-school class providers should not spend more than 3 percent of revenue earned from classes on advertising, and class brochures, teachers' certificates, and financial reports should be submitted for government review annually.

Beijing unveiled a sweeping overhaul of its private education sector in July, banning companies that teach school curriculums from making profits or raising outside capital. It also banned tutoring for school subjects during vacations or holidays, sending the then stock market darlings tumbling.

That was a dizzying reversal after the sector had surged from robust demand and drawn funding from venture capital firms and public investors. The out-of-school education system had been "severely hijacked by capital", according to an article posted on the site of the Ministry of Education.

Bloomberg