(Yicai Global) Nov. 16 -- Shares of New Oriental Education and Technology Group and Gaotu Group fell after the educational technology giants said they will stop offering curriculum tutoring services for kindergarten to ninth-grade children, or K-9, in the Chinese mainland by the end of this year. Xueda Education Group also fell after saying it will end off-campus training for kids in compulsory education.

New Oriental [HKG:9901] ended 2 percent lower today at HKD16.72 (USD2.15), after earlier slumping as much as 6 percent. Its Nasdaq-listed shares [NYSE:EDU] fell 3.2 percent to USD2.13 yesterday, while Gaotu [NYSE:GOTU] lost 1.9 percent to USD3.07. Xueda [SHE:000526] ended down 2.4 percent at CNY17.16 (USD2.69) today.

China’s online education sector is in the process of overhauling itself after government guidelines were issued in July to ease the ‘twin pressures’ of excessive homework and off-campus tutoring on students in compulsory education. In statements released yesterday, New Oriental and Goatu said they plan to focus more on adult and vocational education.

A transition to these fields is the least risky, but also the most difficult because demand is weak and the market is saturated, Xion Bingqi, vice president of the 21st Century Education Research Institute, told Yicai Global.

New Oriental will shift focus to examination preparation, adult language training, and textbooks, the Beijing-based company said in a statement, after pulling out of the K-9 business. Income from the K-9 business accounts for half to 60 percent of the firm’s total revenue, New Oriental said, noting that the move will impact future income.

Gaotu said it will stop offering tutoring on academic subjects for K-9 students also by year-end. The Foshan-based firm, which expects the withdrawal to have a major impact on revenue, will concentrate on adult, vocational and quality-oriented education as well as intelligent digital products, it added.

Xueda will cease school subject-related education and training to kids in compulsory education on Jan. 1, but continue teaching senior high school students and non-school subjects, it said. The Beijing-based firm will diversify its vocational and quality-oriented education along with its scientific and technical training, it said, adding that the adjustment will not have a great impact on business.

Editor: Futura Costaglione