(Yicai Global) March 7 -- Hujiang Education Technologies, one of China's biggest online teaching platforms, has denied reports that 1,000 staff, or 95 percent of its total workforce, have been laid off.
Hujiang still aims to go public, founder Fu Cairui said in an internal letter, adding that the Shanghai-based firm would choose a suitable time to list based on domestic and international capital market conditions for business development.
The company aims to leverage the capital market through the listing to provide better science and technology education while reducing costs for students and boosting their results.
The company was reportedly cutting more than 1,000 people, several insiders had told Yicai Global, adding its three major business departments would be reduced to only one focused on minority languages.
Founded in 2001, Hujiang runs one of China's earliest non-profit English learning online schools. The firm has completed nine rounds of financing to date but posted net losses of CNY280 million (USD41.7 million) in 2015, CNY421 million in 2016 and CNY537 million in 2017. The firm's total loss over the three years was more than CNY1.2 billion, according to a listing prospectus from last year.
The main reasons for the three years of net losses are the continual investment to expand its team of experts in technology, research and development, rising advertising and marketing costs, as well as the expansion of sales teams, the letter said.
The firm has cut wages for its core management group by 20 percent to 50 percent, It has asked all executives to share their independent offices for business development, work and meetings so that the company can integrate itself better with the capital market and further improve operational efficiency, according to an internal letter from the beginning of January. It has also made changes to its office of the board of directors and brought in a new chief technology officer.
The company offers a variety of courses focused on English, Japanese, Korean, postgraduate exams and finance. It also uses CCTalk, an open course platform, where users can choose to become online teachers. More than 94 percent of its business revenue comes from its own branded course sales. CCTalk only produced a profit of CNY500,000 (USD74,520) in 2017.
Online education users are scattered, so the costs of securing real paying customers are high as are those for operations, an online teaching company manager told Yicai Global. "The sector is basically a black hole for investment and with the ongoing price war, course fees only cover teachers' salaries," he added.
Editor: William Clegg