Imagine that you are a student or a worker with a low salary and you want to improve your English proficiency.
You might want to try services offered by companies such as the English-training agency called Webi, which has been operating in China for more than twenty years. The cheapest entry-level course package for English classes from Webi costs RMB 11,980 (USD 1,690) while the highest comes at above RMB 40,000. The firm has more than 154 training centers in 62 cities in China, according to its official website.
Webi also offers loans that can be repaid by installments, backed by Chinese tech giants such as JD.com and Baidu, or traditional banks like China Merchants Bank and China Guangfa Bank.
You sign for one of these loans and start to attend courses, dreaming you could be more competitive in the labor market.
All seems good, but there is a catch. Chinese media reported that many brick-and-mortar classrooms of Webi, in cities including Beijing and Shanghai are currently shut down with no teachers showing up to meet students, as they had not got their salaries for months.
As a result, an undisclosed number of classes have been canceled and over 5,000 learners are reportedly trying to get their training fees back without success. What’s more, 80% of them once funded their courses by loans worth more than RMB 100 million (USD 14 million), according to a report of Nanfengchuang, a Chinese media outlet, on Saturday. The courses are gone but the loans are still there, which is a frustrating event for those involved.
Du Xiaoman Financial, a consumer loan platform affiliated with Baidu, told KrASIA on Saturday that it has been offering a slew of aids to its borrowers involved in the Webi scandal, such as forsaking interests, and is also offering legal assistance to those who are willing to sue Webi.
JD.com’s fintech arm JD Digits has not responded to KrASIA’s request for comment.
Webi’s founder Gao Weiyu confirmed in an open letter to its employees that the company’s capital chain has broken due to worsening performance under external competition, rising operational costs and failed fundraising moves.
Gao added that Shanghai-based training agency Education First (EF) is willing to accept some learners, while a group of investors are willing to take a stake in Webi’s kids-facing English teaching platform called Happygoal.