The situation of Larry Chen, a former school teacher who is one of the richest in the world, has turned upside down in 6 months. Chen lost his billionaire status after the Chinese government imposed strict rules on the private education sector.
Chen, who is the founder, chairman, and chief executive officer of Gaotu Techedu Inc., (GOTU) now has assets worth $ 336 million (₹ 24,98,22,38,400). Shares of his online-tutoring firm fell nearly two-thirds in New York trading on Friday, according to the Bloomberg Billionaires Index.
The Chinese government on July 24 released new regulations regarding the education sector. Institutions that teach the curriculum under these regulations should not make profits and should not raise capital. Larry Chen whose business is teaching faced a hard blow because of this regulation his fortune, valued at $ 15 billion fell to Rs. 2,498 crores.
The GOTU stock price has fallen sharply over the past six months. GOTU “abides by the rules and fulfills social responsibilities,” Chen told Chinese on a GOTU social media Weibo late Saturday. Chen was not the only one to lose his wealth.
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Tang Education Group CEO Zhang Bangsin’s wealth fell from $ 2.5 billion to $ 1.4 billion as the company’s shares fell 71% in New York Stock Exchange.
Also, New Oriental Education and Technology Group Inc. Chairman Yu Minhong has lost his billionaire status. Both companies have issued statements promising to abide by the new rules.
Chen, who founded GOTU in 2014, amassed huge fortunes during the corona epidemic. In January 2020, his company’s stock price rose 13-fold. The share price, which was $ 142 on January 27, 2021, fell to $ 2.72 today. Private companies in China do not have the same freedom and independence as companies in our country. Every company there has to abide by government directives.
Many business tycoons and educators who were billionaires have come down to nothing due to China’s strict rules and regulations.
Earlier last year the Jack Ma controversy made huge news. After the Chinese Businessman issued a statement about the Chinese banks in an event. China immediately clipped his wings. They started imposing rules on his company Alibaba and made his dream for future ventures a far long road. The billionaire and his companies are at the moment lying low from the Chinese government.
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