Lessons to be learned from failed training centers

Safeguards need to be put in place to protect parents who lose money intended for their children's education

At the beginning of a new semester, Xingkong, a well-known piano teaching institute, suddenly went out of business, causing the parents of students huge losses in prepaid tuition fees.

Its announcement that it will partly reopen its centers has not eased people's worries. Similar cases were reported last year, as operators of private education and training institutes in cities such as Beijing, Shanghai and Shenzhen pulled down their shutters and disappeared with prepaid fees.

Although such cases comprise only a small percentage of the tens of thousands of training institutes nationwide, the amount of money involved in these cases adds up to more than 1 billion yuan ($156 million; 130.85 million euros; ￡116.08 million). And among those that have closed with prepaid fees are not only small community training centers, but also nationwide chains.

These cases have exposed the loopholes in the management of training institutes, as well as users' over-expectations and blind trust in these institutes. It's likely that the closed institutes had financial disputes or lacked liquidity.

To prevent such cases, first the authorities should play an active role in market management and regulation. Their policies for registration, management and taxation, as well as supervision, of training institutes should be consistent.

Second, consumers should learn to protect their legal rights and interests. Some people purchase the services of training institutes because of attractive promotions, without knowing much about their actual situation.

For instance, one victim paid in advance for painting, English and memory training lessons for his 10-month-old child - a blind pursuit of academic and artistic perfection on behalf of a child who hadn't even learned to talk. Also, some consumers choose unqualified training centers just because their fees are lower than others.

This shows that service purchasers have to realize they must choose qualified training institutes for their kids. They need to check whether an institute has qualified teachers, proper resources and enough liquidity, and keep the payment receipts as proof for further reference, especially during emergencies.

Third, potential operators should learn how to run a training institute before opening one. Few of them intentionally defraud consumers. Many of those ones that have shut down did so after encountering problems. For instance, some are not professional enough to win public trust and keep attracting consumers. As a result, they run out of cash and are unable to fulfill their promises. In some cases, unforeseen accidents undermine day-to-day operations.

And fourth, judicial authorities should resolve such cases promptly, in order to protect the legal rights and interests of the parties involved. However, the reality is that, once the organizer of a training organization shuts down owing prepaid tuition, it is very difficult for the victims to safeguard their legal rights. Current circumstances will actually increase the incidence of such cases.

The authorities should give priority to improving the appropriate laws and regulations to prevent such cases, which is far preferable to dealing with a case in which the institute operator has disappeared.

Maybe we should learn from the good examples set by other countries in this regard. The prepaid tuition model, which is common among training centers, should be improved to minimize financial risks to consumers. For instance, the period for which tuition has to be paid in advance could be reduced, or consumers could be given the option to pay in advance for the first three months and then month by month. The third-party payment model, such as that adopted by online shopping platforms, is also worth considering.

In other words, the government, consumers and training institutes should make joint efforts to solve the problem.

The author is a researcher at the National Institute of Education Sciences. The views do not necessarily reflect those of China Daily.

(China Daily Africa Weekly 09/22/2017 page11)