"the cash on the account is enough for us to explore and develop for three to five years. "

On the evening of July 30th, Gaotu Techedu Inc. founder Chen Xiangdong announced in an internal letter the layoffs and the future change and development of the company. "We must change our business model and focus on our manpower." "

Two days ago, Zhang Bangxin, founder of TAL Education Group and CEO, announced to tens of thousands of employees in a live broadcast of the bimonthly meeting that businesses without demand would be shut down.

The topic of change pervades the whole industry. According to the Burning Financial report, at an internal meeting of New Oriental Education & Technology Group not long ago, when people were discussing the issue of company transformation, some people even suggested turning into a nursery.

For educational institutions, transformation is imperative.

CITIC believes that discipline training institutions should transform or even change careers as soon as possible, and it is estimated that listed institutions may face the risk of delisting or divestiture of discipline business.

Guoxin Securities also said: "in the future, apart from choosing to become non-profit organizations, educational institutions will face the pressure of withdrawing from the market or business transformation." "

For the sake of "sustainable development", an urgent transformation of the education and training industry has begun.

On July 28th, Yuanfudao launched a new brand "Pumpkin Science" focusing on STEAM science education and announced the transformation of quality education in a high profile. Yuanfudao official said that this is Yuanfudao's first transformation action, in addition to pumpkin science, Yuanfudao is also exploring a series of quality education products, including ape programming, zebra, etc.

Not only Yuanfudao, but TAL Education Group is also substantially increasing the business of quality education, off-campus trusteeship, and educational consulting services; the new version of APP, which Gaotu Techedu Inc. launched on July 19, has begun to focus on the discipline setting of vocational education; vigorously Education, NetEase, Inc youdao, and others are adding educational hardware.

An online education practitioner said, "at this stage, each family shows its own talent. As long as there is an opportunity and transformation, everyone in all directions may try." "

After all, there is not much time left for the education and training industry to make adjustments. In the last week of July alone (July 23-28), TAL Education Group lost $9.1 billion in market value, New Oriental Education & Technology Group lost $6.92 billion and Gaotu Techedu Inc. lost $1.52 billion.

The capital that once stood in line to enter is also being evacuated quickly. In the "money-burning war", how can the education and training enterprises, which are already riddled with holes, quickly transform to find an exit? The market opened the countdown.

Capital withdrawal

In 2020, online education is regarded as the best track in the field of education. A large amount of money poured into the head enterprises, triggering a "money-burning" marketing war with full coverage offline and online. Education stocks such as TAL Education Group, New Oriental Education & Technology Group, and Gaotu Techedu Inc. also soared across the board, and many online education enterprises lined up for IPO.

But in the hot at the same time, the business model of online education has been questioned, corporate profits are meagre, in addition to Gaotu Techedu Inc., CHINA ONLINE EDUCATION GROUP once announced profits, many enterprises are due to excessive marketing and losses.

Not only that, in this industry, inferior courses, false advertising and other phenomena emerge one after another, excessive promotion of out-of-school training, but also caused the general educational anxiety in the society.

During the avalanche, not a single snowflake is innocent.

Sharp capital has been withdrawn ahead of schedule, and Hillhouse Capital cleared TAL Education Group and education in the first quarter of this year; in the same period, Tiger Global Fund cleared Gaotu Techedu Inc.; Jinglin Capital significantly reduced its holdings of TAL Education Group. This week, investors in the secondary market also sold a large number of education stocks.

Since the beginning of this year, New Oriental Education & Technology Group's share price has fallen from $18.53 / share to $2.17 / share, TAL Education Group has fallen from $71.56 / share to the current $6.07 / share, and Gaotu Techedu Inc. has also dropped from $51.44 / share to $3.19 / share.

The online education company that wanted to catch the last IPO bus finally missed it.

Spark thinking, which has submitted its prospectus, has terminated the listing plan, according to LatePost later. And such as Yuanfudao, homework gang and other head online education institutions, the possibility of listing is also slim. An investor who invested in an online education company once told all-weather technology: "We have already lost money by default." "

"the rectification of industries related to people's livelihood, such as education, will also affect capital market sentiment in the short term and change some investment concepts and pricing logic in the long run. Guoxin Securities said in the research newspaper.

Whether it is the industry, or the capital that does not have time to retreat, are looking forward to enterprises to give countermeasures.

The transformation is urgent to find a new way out.

Under the general trend of stripping the subject training business, education and training enterprises urgently need to find a new way out.

In the past, quality education, which has not been included in the core business by most teaching and training institutions, has become one of the races competed by many enterprises.

For example, Yuanfudao launched the "pumpkin education" on July 28th, focusing on STEAM education, that is, comprehensive quality education such as science (Science), technology (Technology), engineering (Engineering), art (Arts), mathematics (Mathematics) and so on.

According to its official introduction, the project, jointly built by Yuanfudao and the original zebra R & D team, has been in trial operation for a year. But Yuanfudao began to incubate Pumpkin Science as early as 2019, according to ZAKER News. But the business was "abandoned" at one point, when an insider revealed that almost the entire business line of pumpkin science had been cut.

As one of the protagonists in the "marketing war" of online education in 2020, Yuanfudao raised a total of more than $3.5 billion, valued at $17 billion at one point, and had more than 300m users.

However, at present, there is no way out for the software of K12 subject education and problem searching. It is not surprising that Yuanfudao restarts pumpkin science.

In fact, not only Yuanfudao, NetEase, Inc youdao, TAL Education Group and other institutions are also increasing investment in STEAM.

Open the recruitment software to search NetEase, Inc youdao, and you will see that the company is vigorously recruiting positions such as principal of STEAM directly operated school, STEAM science lecturer, STEAM teaching and research of AI interactive course, and so on. According to a former practitioner of Youdao, Inc K12 business line, they joined 16 people at that time, but only 3 people have not left yet.

Also in July, TAL Education Group changed the scope of business in many branch schools across the country, adding quality education training in language, art, sports, science and technology, and so on. Its children's English brand "Li Bu English" has been changed to "Li Bu", adding quality education products such as English drama, aesthetic education, calligraphy and so on.

At the same time, TAL Education Group has launched the Bixin after-school growth Center, which has opened two campuses in Beijing, mainly for primary school students and their families. The main activity of the students in the after-school growth center is to write their homework, first by the students to do the homework, and then to revise it independently, and finally by the teacher to guide. TAL Education Group said that the aim is to cultivate students' habit system.

However, according to TAL Education Group's latest quarterly financial report, more than 90 per cent of TAL Education Group's revenue still comes from primary and secondary education and training business. CITIC believes that it is difficult to divest his assets, and the company is currently transforming the "Bixin" after-school hosting business, but the specific model and effect still need to be observed.

On this track, New Oriental Education & Technology Group's old rival TAL Education Group laid out even earlier. According to later LatePostbaodao, a TAL Education Group war investor said that he had also inspected "after-school care" before and found that it was difficult to make a profit, the unit price was not high, and the market was scattered. "but now it doesn't matter, just do what you can do. "

Another popular way of transformation is adult vocational education.

In the explosion of the education and training industry from 2019 to 2020, the vocational education industry has benefited a lot. According to the data of Ai Media Consulting, the trial production scale of vocational skills education in China reached 141.5 billion yuan in 2020, and the market size is expected to expand to 171.9 billion yuan in 2021.

Although K12 is restricted, vocational education is an industry supported by policies. In June this year, the National Vocational Education Reform implementation Plan clearly defined the equal status of vocational education and general education.

In the "cold winter" of the education and training industry, according to IT Orange data, so far this year, there have been 30 investments in the field of vocational education and training in China, with a total financing of more than 7 billion yuan. Some star capital, such as Tencent Investment, Sequoia, IDG Capital, Hillhouse Capital and so on, have turned their attention to vocational education.

New Oriental Education & Technology Group also aims to invest in vocational education, investing in two vocational education institutions, "nitrogen guide education" and "curriculum view education" this year. The former has been valued at 1.5 billion yuan, focusing on serving public service examinations, while the latter is valued at 500 million yuan, providing financial job seekers with services such as career planning, job application, written test evaluation, interview guidance and so on.

In addition to the investment, New Oriental Education & Technology Group's own adult business revenue is also considerable. CITIC disclosed that New Oriental Education & Technology Group's income from adult business (books, overseas study consultation, college students' exam preparation, etc.) in fiscal year 2020 reached 7.5 billion yuan. The organization believes: "New Oriental Education & Technology Group has the possibility of divesting the subject training business and continuing to develop as a listed company." "

Aiming at this track, Gaotu Techedu Inc. is also making great efforts to transform.

In April this year, we announced that the group had changed its name to "Gaotu Techedu Inc. Group". The main business was divided into "Gaotu Techedu Inc. classroom" and "Gaotu Techedu Inc. College", which is committed to meeting the business needs of adult education.

In order to lay out the field of adult education, Gaotu Techedu Inc. hired New Oriental Education & Technology Group's famous teacher for the postgraduate entrance examination at a high price, promoted the postgraduate entrance examination program to a strategic height, and plans to serve 100000 + candidates in 2021, according to media reports.

On July 19th, Gaotu Techedu Inc. launched a new version of App, focusing on language training, college student exams, finance and economics, public examinations, teaching funds, studying abroad, management, medical care and other vocational education services.

It is worth noting that Gaotu Techedu Inc. 's adult education business does not account for a high proportion of revenue. According to Gaotu Techedu Inc. 's report for the first quarter of 2021, Gao Tu's adult business had revenue of 123 million yuan in that quarter, accounting for only 6% of the group's total revenue.

This also means that the labor pains of Gaotu Techedu Inc. 's transformation may last for a long time.

At present, educational intelligent hardware has also become the "straw" of teaching and training institutions.

In the field of educational intelligent hardware, where the market scale has not yet reached the 50 billion threshold, there has been an influx of online education enterprises, Internet enterprises, traditional education hardware manufacturers and other participants.

Highly homogenized smart lights, with byte beats, Tencent and BABA grab the food market. Some people in the industry said that TAL Education Group, New Oriental Education & Technology Group, homework gang, Yuanfudao and other head education companies are also interested in carrying out homework lamp projects.

In addition, a previous dictionary pen supported NetEase, Inc youdao's hardware revenue of 202 million yuan in the first quarter of 2021, accounting for 15.07% of the revenue.

But on the same track, there are not only peer education and training enterprises, but also iFLYTEK, Hanwang, XIAOMI and other hardware manufacturers. It is revealed that Baidu, Inc. and Byte are also willing to lay out the dictionary pen project.

Who can live?

There is no way to survive without transformation, but transformation is by no means smooth.

At present, what is more important is to test the ability and resources of education and training institutions that have been deposited in the past. NetEase, Inc youdao Business Operations Director Guan Buyang said in an interview with the media: "although everyone is talking about transformation now, but the improvement of the success rate of transformation, there are technical bottlenecks, content threshold, team level and other problems." "

Cash flow may be the first test.

According to New Oriental Education & Technology Group's financial report, as of February 28 this year, its cash and cash equivalents amounted to US $1.57 billion; in the same period, TAL Education Group was US $3.243 billion; as of the end of March this year, Gaotu Techedu Inc. Group cash and cash equivalents totaled 2.91 billion yuan. Chen Xiangdong also mentioned in his internal letter that at present, the funds in the account are enough for Gaotu Techedu Inc. to explore for three or five years. In the short term, listed companies with good cash flow still have the ability and time to make a deep layout in the transformation.

Secondly, it will test the existing channels, brand awareness and influence of teaching and training institutions.

In contrast, established enterprises such as New Oriental Education & Technology Group, Learning and thinking, with the help of the basis of offline training institutions and brand awareness, have certain first-mover advantages in marketing and customer acquisition costs.

In the past expansion, online education companies that have fallen into the "trap" of spending money on advertising may first have to solve the problem of customer access channels and high marketing costs.

In addition, educational institutions that do not rely heavily on K12 discipline education and achieve a diversified layout in business will have a relatively shorter labor pains period and have a better basis for vigorously developing new business.

However, in terms of business value, each popular transformation track has its own limitations.

For example, in order to carry out quality education, the first thing to challenge is the pressure of further study in China. Preschoolers are strictly restricted to participate in training, which also means that the market for quality education will be reduced.

Although the market scale of adult vocational education is predictable, in this track, veteran players such as Zhonggong Education and Huatu Education have occupied a larger market share and have more foundation and accumulation. And vocational education involves the entry threshold of many industries, which also puts forward higher requirements for new entrants in terms of talent reserve, courseware resources and so on.

And educational intelligence products are now being questioned. At present, such products are generally gaudy and versatile, so they are regarded as "high price and low performance-to-price ratio". At the same time, there is no lack of "photo search" function in smart lamps and smart screens, which may also face the risk of being removed from the shelves in the future.

Xiong Bingqi, director of the 21st Century Education Research Institute, told the media, "Supervision hopes that education and training will become commonweal and cannot stimulate social anxiety and increase the burden of family expenditure on education and training." "in his opinion,If excessive profit-seeking occurs again, regulatory measures will be treated equally.

In any case, the off-campus teaching and training industryMaybe we'll never find another one, such asK12A market as big as the track.

Chen Xiangdong said in his internal letter: "if Gaotu Techedu Inc. makes a comeback one day, I hope everyone will come back." "it's just that no one knows when this day will come.