CHINA CURRENTS
Wall Street Struggles Why is Wall Street English Filing for Bankruptcy in China? By Joshua Cawthorpe and Alistair Baker-Brian
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ore than 1,000 customers of Wall Street English who are owed refunds have risen in online chat groups to seek legal counsel as the English tutoring company files for bankruptcy. According to Global Times , the outstanding liabilities in refundable tuitions could exceed RMB100 million. As WSE representatives were continuing to sell courses in late July, the impending lawsuit will likely allege fraud. The company was already penalized for false advertising practices in June with a RMB2.5 million fine from Shanghai market regulators. However, a Beijing-based lawyer told Global Times that it will be very difficult for complainants to receive compensation if the company doesn’t have the financial ability to provide refunds. Customers spent RMB20,000, on
average, for tuition and then would be called repeatedly by representatives to ‘upgrade’ their courses. Representatives often pressured customers to take out loans from banks and other short-term loan providers, among which Baidu-owned Du Xiaoman Financial holds the greatest exposure of outstanding WSE-related loans. According to Caixin Weekly , there are no protections in place for borrowers, and some of these loans have already negatively affected former WSE students’ credit scores. The company entered the Chinese market in 2000 and, at its peak, held 71 training centers in 11 Chinese cities. As of mid-August, less than 30 schools were operating with only 1,000 employees nationwide. WSE began closing training centers during the pandemic last year. Although some employees were given
termination packages in accordance with Chinese labor laws, others claim that they haven’t been paid in months and were being encouraged by managers to voluntarily resign. Netizens on Weibo are using the hashtag ‘Wall Street English will go bankrupt.’ One user commented, “Great! It’s a trash school.” Another argued the bankruptcy was part of a “trend of out-of-school-hours training centers going bust” concerning recently announced regulations. WSE primarily offers Englishlanguage training to adults who wish to further their job prospects. In late July, government regulators announced tough regulations to the K-12 after-school tutoring industry. It is not clear if these regulations will affect adult language training programs, but foreign investment in the education sector for children has been banned.
SEPTEMBER 2021 | 07
