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Will Wall Street China crash?

Wall Street English Language Schools in China, which was sold back to its 82-year-old founder, Luigi Peccenini, in September of 2020, is expected to declare itself bankrupt this week. Italian Peccenni founded Wall Street English Language Schools in 1972.

In moves which echo the great Spanish language school crash of 2003, teachers have been posting on the Glassdoor website claims they have not been paid for three months, while 6,000 students stand  to lose up to a total of some US$80 million in paid-in-advance fees, according to Pandaily. EF in China had reached out to stranded students, the same source claimed,

Some students are reported to have taken out loans to fund their courses, according to press reports .”Once consumers register for WSE’s basic course, they will be bombarded by phone calls from sales representatives, persuading them to spend more to ‘upgrade’ their courses,” an anonymous student told China’s Global News. “Some will be advised to pay the hefty upgraded tuition fees with loans from financial institutions,” the student added. 

In June this year the company was fined by the Chinese authorities  for “false advertising”, according to a report from the South China Morning Post in Hong Kong. 

Such stories have dogged the blended-learning chain before. In 2003, in the midst of a major market crisis in Spain’s English language industry, a Madrid court found the company guilty of misleading advertising. 

Loans also played a large part in the Spanish crash, which was triggered by the collapse of Wall Street competitor Opening English. When it went bust at the end of 2002, 45,000 students were left owing banks money for courses at schools which no longer existed. Wall Street, some of whose franchises reportedly also operated loan schemes, offered to teach all Opening English students for free, but the crash continued through 2003, leaving 100,000 students out of pocket and taking down at least three other chains.  

By the end of 2003, Wall Street had closed some 77 Spanish franchises and five wholly owned schools. In 2005 Peccenini sold the Wall Street global portfolio to US company Sylvan Learning, while keeping Wall Street China, which he founded in 2000. He then sold the China operations to Pearson in 2010, but bought it back in September 2020 from the then owners, Barings Private Equity Asia, at a “knock-down price”. 

All language school advertising was banned in China under the recent crackdown on the market for under -16s, as was any form of foreign ownership. However, since Wall Street English has always been strongly focused on the adult market, this is unlikely to be the direct cause of the Chinese chain’s problems. All its face-to-face centres closed when the pandemic began in the country in January 2020 and most remain shut. The company was slow to shift students online and was struggling when it was re-acquired by its Italian founder.

Outside China, Wall Street English, which is a separate company, remains trading in 27 countries, according to its website. 

Image courtesy of Shutterstock
Melanie Butler
Melanie Butler
Melanie started teaching EFL in Iran in 1975. She worked for the BBC World Service, Pearson/Longman and MET magazine before taking over at the Gazette in 1987 and also launching Study Travel magazine. Educated in ten schools in seven countries, she speaks fluent French and Spanish and rather rusty Italian.
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