China's Education Crackdown Wipes Billions From Tech Billionaires
New Chinese regulations that ban for-profit tutoring cause massive wealth destruction for edtech founders. Larry Chen of Gaotu loses his billionaire status as the sector faces its harshest-ever government curbs.
China implements strict new regulations that ban private education companies from making profits, raising capital, or going public. These unprecedented rules target the country's $100 billion tutoring sector and cause immediate financial devastation for industry leaders.
Larry Chen, the former teacher who founded Gaotu Techedu, loses his billionaire status as his wealth plummets to $336 million. Other major figures suffer similarly, with TAL Education CEO Zhang Bangxin losing $2.5 billion and New Oriental Chairman Yu Minhong also dropping out of the billionaire ranks.
The regulatory blow compounds existing troubles for Gaotu, whose stock loses 98 percent of its value since January due to previous ties to the Archegos Capital Management implosion and ongoing SEC investigations. Despite the massive financial hits, the affected companies release statements pledging full compliance with the new government rules.