Summary

China’s Ministry of Education, together with the Ministry of Commerce and the State Administration for Market Regulation, has recently issued a notice on regulation of overseas-invested language training institutions. Regulations on overseas investment in this type of teaching institution were previously unclear, with foreign investment not directly banned but with no clear unified way to receive approval to operate except in specific free-trade zones.

Foreign investment in this sector has previously mainly been in the form of so-called variable interest entities (VIEs), where a foreign entity controls a nominally Chinese-owned company through contractual arrangements. The new regulations create a unified national pathway to approval for directly foreign-owned or joint-venture companies.

The new regulations apply to any for-profit language training school that delivers non-academic education (i.e. education that does not lead to formal Chinese educational qualifications) and has any amount of foreign investment, including wholly-owned foreign enterprises and joint ventures. Regulations also require that all overseas teaching staff working for these training schools should possess relevant teaching qualifications as well as valid work permits and visas.

The regulations state that foreign-invested training schools should apply to the relevant county or district-level education bureau for a license to run a training school and to the corresponding market supervision administration for a business license with the appropriate scope. Additional branches should be also be approved by county-level education authorities. Any foreign-invested language schools of this type that already operate within China have one year to register through the same process.

Other related government activities include a crackdown on after-school training institutions that began in February 2018, with the General Office of the State Council, China’s Cabinet, issuing a set of regulations to after-school institutions. In August that year new regulations were imposed to ease the academic burden on primary and secondary school students, including the requirement that these institutions must not give students homework and must end classes by 8:30pm.

Online training institutions have also seen new regulations in recent months, including a requirement that online education platforms publicly display the names, qualifications and teaching experience of any overseas teachers and follow the same teacher qualification requirements as physical institutions.

Analysis by Kevin Prest, Senior Analyst, British Council International Education Services

Although some media outlets have presented these new regulations as a tightening of restrictions on foreign-invested training schools, they are actually aimed to set and clarify requirements for direct foreign investment in the field. The registration requirements are similar to those faced by domestically-owned institutions.

After-school language training institutions have long been a major market in China, with a study earlier this year finding that 60 per cent of children aged between 3 and 15 were taking additional classes outside of school. Online education is starting to play a more prominent role in this market, particularly for language tuition because it allows students to learn from overseas teachers without needing these teachers to live in China.

Sources

1. Ministry of Education – Notice on registration of foreign-funded language training institutions http://www.moe.gov.cn/srcsite/A03/s3014/201908/t20190829_396500.html (in Chinese)

2. China Daily – Oversight increased on foreign-funded schools: http://www.chinadaily.com.cn/a/201908/31/WS5d69b3fba310cf3e35568eac.html

3. FutureNet: Three ministries issued a document regulating the management of foreign language training institutions; which institutions will be affected?: https://edu.news.k618.cn/yc/201909/t20190909_17787860.html (in Chinese)

4. South China Morning Post – Chinese parents say intense competition forces them to send children to after-school classes: https://www.scmp.com/news/china/society/article/3024578/chinese-parents-say-intense-competition-forces-them-send