China's New Oriental education giant finds new life in English live streaming

New Oriental Education & Technology

15/06/2022 11:46

BEIJING, June 15 (Reuters) - Shares in China's New Oriental
 9901.HK  climbed for a fourth straight day on Wednesday, with
analysts saying its new live-streaming 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 enforced sweeping new rules on private education that
barred tutoring for profit. New Oriental's shares plunged and it
dismissed tens of thousands of staff.  urn:newsml:reuters.com:*:nL1N2TQ07E
    It tried to pivot to sectors unaffected by the regulations,
including dancing 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 undertakings, occasionally hosting the sessions.
    The company's sales were lacklustre, however, until late
last week when its hosts, former New Oriental teachers, started
using the sessions to teach English to viewers as well. 
    In one video that went viral on Chinese social media, the
New Oriental host, after promoting a set deal for steaks, pulls
out a small whiteboard where he wrote words including "steak"
and "seasoning" in English, explaining how to use them in
sentences before encouraging viewers to buy.  
    Sales from New Oriental's live-streaming platform, which had
been stuck at less than 1 million yuan ($148,858) a day, leapt
past the 15 million yuan mark on Friday, according to data from
live-streaming tracking platform Huitun. 
    Shares in Koolearn Technology  1797.HK , which operates New
Oriental's live-stream e-commerce business through a studio
called Dongfang Zhenxuan on Douyin, surged 54.2% on Wednesday.
    Shares listed in Hong Kong in New Oriental, which holds
55.7% of Koolearn, jumped 22.5% on Wednesday and are up 54%
since the open on Friday. 
    However, they are still only worth about a third of their
value before the new rules came in last year. New Oriental
 EDU.N  is also listed in the United States. 
    Citi analysts, who have a "buy" rating on New Oriental,
called Koolearn's online live broadcasting a bright spot and
estimated it could achieve more than 7 billion yuan in annual
gross merchandise value if it maintained the current run rate. 
    China banned tutoring for profit in an attempt to ease
pressure on children and parents, but it also led to a wave of
school closures and layoffs across the private education sector.
    Some customers who purchased products from New Oriental
after watching the live streams on Friday said they were
impressed by the company's never-say-die attitude. 
    "I burst into tears when I watched it," said Kong Ling, a
tech worker in Hangzhou. "I'm watching a warrior who stands up
firmly despite being beaten by the iron fist of life and I
wanted to buy to show my support."
   ($1 = 6.7178 Chinese yuan renminbi)

 (Reporting by Sophie Yu and Brenda Goh; Editing by David
Clarke)
 ((Sophie.Yu@thomsonreuters.com; 861056692136;))