Chinese regulator fines top domestic edtech giants for false advertising - PingW...

Chinese regulator fines top domestic edtech giants for false advertising

Chinese regulator fines top domestic edtech giants for false advertising

May 10, 2021 2:34 pm

The State Administration for Market Regulation, China's top market regulator, imposes the maximum penalties on two of the country's fastest-growing tutoring apps for violating competition and pricing laws. 

Detail: According to the statement issued on Monday, Tencent backed Yuanfudao and Alibaba backed Zuoyebang were penalized fines of 2.5 million RMB ($389,000) for their marketing materials that mislead consumers. 

Complaints about the two edtech giants received by the market watchdog include falsifying teaching staff's qualifications and faking user reviews. Also, two companies were found using false discounted prices to lure customers. 

Yuanfudao and Zuoyebang announced on social media that they accepted the penalties and rectified the relevant problems.

Context: China's private education sector has been under fast growth during the pandemic, but illegal pricing and advertising have also existed with the boom. Two weeks ago, Beijing's municipal market regulator imposed the maximum fines on four online education providers, including GSX Techedu, New Orientals, as well as TAL Education Group, for violating pricing laws.

Both the latest fined companies have eyed IPO this year. Yuanfudao sought at least $1 billion in fresh funding ahead of a possible initial public offering in 2022. 

Zuoyebang was considering an initial public offering in the US as soon as possible in the second half of this year, aiming to raise at least $500 million.

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