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Caixin

China online education companies raise -- and burn -- cash fast

Most of the money goes to marketing rather than to improving service quality

Online education companies in China are often spending 1.5 times their sales revenue on reaching new customers and managing their operations, according to Yu Jinyong, the co-founder of education-focused investment firm Z-Edu.   © Reuters

After the pandemic drove demand for remote services of all kinds, Chinese online education companies are building their war chests for another round of fierce competition, which investors say will likely continue until one emerges as the industry's dominant player.

After-school tutoring startup Yuanfudao told Caixin it had secured $300 million in a December financing round, on the eve of Chinese schools' one-month winter holiday, when demand for online education spikes.

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