Core Viewpoint - The article discusses the transformation of anxiety into income within the education and training industry, particularly focusing on the civil service examination training sector, which has seen a significant increase in applicants but a decline in revenue for leading training institutions [4][5]. Group 1: Industry Dynamics - The number of applicants for civil service examinations has increased by 1.4 times over the past five years, reaching 3.718 million in the latest round of applications [8]. - Despite the surge in applicants, leading training institutions like Zhonggong Education and Fenbi have reported revenue declines of 20.2% and 8.5% respectively in the first half of the year [5][8]. - The training model known as "agreement classes," which allows for refunds if students do not pass, has contributed to a significant increase in refund rates, from 44.14% in 2019 to 68.46% in 2021 for Zhonggong Education [14]. Group 2: Financial Challenges - The financial strain on training institutions is evident, with Zhonggong Education reporting cash reserves of 1.77 billion yuan and pending refunds amounting to 4.82 billion yuan [12][14]. - The business model has shifted from earning "tuition fees" to "result fees," where institutions rely on a small number of successful students to cover the refunds for the majority who do not pass [14][16]. - The investment income for Zhonggong Education has decreased significantly, from 79.27 million yuan in 2021 to 5.78 million yuan in 2024, indicating a decline in profitability [14]. Group 3: Market Competition - The civil service training market is experiencing increased competition from smaller institutions and new entrants leveraging social media platforms, which has intensified the market dynamics [10][11]. - The influx of competitors has led to a decrease in sales efficiency for leading institutions, with Zhonggong Education's sales expense ratio increasing by 6 percentage points to 25.4% [8][10]. Group 4: Strategic Shifts - In response to the challenging environment, Zhonggong Education has begun restructuring, reducing its workforce from 45,000 to 7,888 and cutting down its direct branches from 1,669 to 681 [16]. - The company is exploring new business avenues, including health services and AI employment training, although these initiatives currently contribute less than 3% to overall revenue [16][17]. - The strategic focus has shifted towards becoming an "employment and re-employment service provider," indicating a pivot from traditional training to broader employment services [17].

Core Viewpoint - The article discusses the challenges faced by Zhonggong Education, a leading public examination training institution in China, highlighting its declining revenue, increasing refund liabilities, and the impact of its business model on its financial health [5][6][9]. Group 1: Company Performance - Zhonggong Education's revenue has significantly decreased from 6.9 billion in 2021 to 2.6 billion in 2024, with a cumulative loss of 3.68 billion over the past years [6][8]. - The company reported a refund liability of 4.82 billion while having only 1.77 billion in cash on hand as of the first half of this year [8][9]. - The "agreement class" model, which initially contributed 75% of the company's revenue, has now led to 82% of its litigation cases, indicating a severe operational risk [7][9]. Group 2: Business Model and Risks - The "agreement class" model, which promised refunds for unsuccessful candidates, has become a liability, with a refund rate reaching 68.46% in 2021 [30][39]. - The company has heavily invested in short-term financial products, totaling 889 billion from 2018 to 2021, but has faced increasing refund demands that outpace its investment returns [27][35]. - The competitive landscape has intensified, with new entrants offering attractive refund policies, further straining Zhonggong Education's market position [47][48]. Group 3: Industry Trends - The public examination market has seen a surge in applicants, with the number of candidates nearly doubling from 2021 to 2024, while the acceptance rate has dropped from 1.6% to 1.3% [31][32]. - The article notes that the public examination training industry is evolving, with competitors diversifying into other sectors, such as health and wellness, to mitigate risks associated with the public examination model [45][46]. - Zhonggong Education is attempting to pivot towards employment services, recognizing the need for adaptation in a challenging market environment [50][52].