Education Crackdown Creates 'Zombie Companies' In Need Of Transformation

Summary

• Beijing has become the first major city requiring all after-school education companies to become non-profits, according to announcements from the companies.
• Companies are unlikely to be shut down, but may have to sell core assets and look for new businesses to take advantage of their core skills and technologies.
• The flatlining might actually be considered a somewhat good thing, as it ends a period of steady declines that have seen most companies’ shares lose 85% or more of their value since the start of the year.

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China’s bustling crowd of after-school tutoring providers are increasingly looking like field of “zombie companies.”

That’s one key takeaway from a look at these companies’ stocks, which have essentially flatlined since July 26 - the day specific measures to