Thursday, September 07, 2006

New Oriental 新东方 IPO, Take Two

Of course, New Oriental sells dreams along with solid English teaching to children, college students, and young professionals. One of the major dreams that New Oriental peddles is chuguo 出国 or “leaving the country”, usually for New Zealand or Australia. Indeed, English education has this as one of its primary goals (and the ultimate endpoint, improving the self, making money, and becoming successful, is still achieved with chuguo). Many students, including one of my friends from 2000, swallow this dream whole and take classes, buy supplies, and pay tuition to New Oriental to achieve the dream. My friend from 2000 indeed did make it to New Zealand, although instead of a rigorous overseas education, he found a party-like atmosphere where rich children from China went to sow their oats.

A coin has two sides and education is a commodity, as difficult as it is to make teaching, learning, testing, and studying into a thing, much less a product or commodity. But that’s my two cents.

New Oriental Vignette

Along the Fourth Ring Road, to the east of Zhongguancun Avenue, is an enterprise that some of my friends only half-jokingly referred to as the most successful enterprise in Zhongguancun: New Oriental English-language school. On an otherwise inauspicious day in May, 2004, some poverty-line migrants, as they often do, were selling pirated English-language teaching and testing materials on bed sheets in front of New Oriental. As I passed the school I saw a sudden movement -- one of migrants grabbed his blanket and ran down a nearby alleyway. The others quickly followed. One unlucky migrant was too slow: several dozen CD-ROMs and teaching books spilled on the ground. He did not stop to retrieve them. Next, a police car and van pulled up, out of which four police officers emerged. They looked around, picked up the pirated CD-ROMs and books, and put them in the van.

Wondering what would happen next, I stopped and stood in front of the school. The police officers looked around and milled about for a few minutes. Then they drove off. Moments later, a young man standing in front of the school went to the corner of the alleyway, stood on top of a street post, and motioned down the alley. Minutes later, the migrants returned to the front of New Oriental to continue plying their pirated wares.

While piracy is ubiquitous in Zhongguancun, I argue here and elsewhere that neither ubiquity nor criminality is piracy’s greatest significance. Instead, one could even view these education material-peddling migrants as promulgaters of pedagogy.

I thought this vignette might be relevant to write about in light of today’s happenings.

新东方 (Xin Dongfang) or “New Oriental” Lists on NYSE

New Oriental is, according to Zhongguancun technocrati, the most successful enterprise in Zhongguancun. This is partially a joke since the most well-known companies in Zhongguancun are all technology companies: Sina, Lenovo, UFIDA, Founder. Further, Zhongguancun is a high-technology development zone, so the fact that New Oriental, an educational company that focuses on English, is so profitable is a little embarrassing but eminently understandable.

Peking University, Tsinghua University, Renmin University, and other famous universities, as well as national academies such as China Academy of Sciences and China Academy of Agricultural Sciences, are all located in Zhongguancun. The need for extracurricular education, such as that offered by New Oriental on nights and weekends, is one way to stay ahead at these education institutes.

Further, parents, with disposable income and no place to spend it, focus their financial might on singletons?the only children who have resulted from decades of the one-child, one-family policy. Singletons and New Oriental are another happy synergy, where children learn English and the school plies its wares.

Another level is migrants. Migrants come to Beijing, and to Zhongguancun in particular, for a variety of reasons. Mostly, it is to improve their lives, make some money to send back some, and become successful. One way to improve and succeed is to study English (or accounting). Hence, many migrants who are hesitant to spend their paltry pittances on consumer goods will instead opt for New Oriental hoping for a skill that will push them up and help them succeed.

All of these levels converge in Zhongguancun. Hence, despite the rise and fall of high-tech companies, the Internet wave, portals, and blogs, the one constant in Zhongguancun has been New Oriental. After so many years, a listing on the NYSE (and not tech-heavy Nasdaq) seems appropriate. New Oriental is reaching places that Sina and Lenovo perhaps cannot.

In any case, I welcome another Zhongguancun enterprise to the world.

Zhongguancun Enterprise Strikes Again

This morning, the most profitable, and some would say the most successful, enterprise in Zhongguancun listed on the New York Stock Exchange. The reasons for this, and a story about New Oriental piracy are forthcoming this evening… Stay tuned.